business

Rice Bowl Protests Have Beijing Quaking

Desperate to get back wages owed by their ailing state-run cotton factory, more than 500 Chinese workers blocked bridge traffic in a town in central China's Hunan province in mid-January. Police sent them away peacefully. In Beijing, several hundred investors in a failed investment company regularly gathered last fall outside government leaders' residences to protest their losses--and police permitted them.

As China's economy continues its wheezing slowdown, such actions are growing ominously common. While authorities crack down on urban dissidents who register political opposition, they allow workers and others with economic grudges the right to protest--as long as the protests are peaceful. Beijing may hope to vent tension caused by growing unemployment with this safety valve.

Yet the government is clearly scared. The gloomy economic situation is likely to worsen and spark more such protests. Unemployment will surge as state enterprises, bloated government ministries, and the military all lay off people. With millions of youngsters entering the workforce, the government estimates unemployment will reach a record 16 million by yearend. Some analysts say the real total is much higher, as much as 20 million, or 15% of the workforce. "How to create jobs for laid-off workers is the government's No. 1 task," says Hu Angang of the Chinese Academy of Sciences.

EXPLOSIVE SITUATION. In a year strewn with politically sensitive milestones, from the 50th anniversary of the founding of the republic to the 10th anniversary of the Tiananmen Square crackdown, Beijing is worried that the situation could spin out of control. Indeed, in recent days, bombs have exploded on buses in both Hunan and the northern province of Liaoning, and unemployed workers are suspected.

Local government budgets already are stretched tight, and a planned social welfare program that would guarantee unemployment and pension benefits is still a long way off. Some municipalities are providing short-term service jobs as a stopgap measure. Beijing, for example, has opened 20 centers that hire out laid-off workers for temporary jobs ranging from cooking and cleaning to security. And the city plans to put 10,000 unemployed to work cleaning its streets.

Authorities also fear political dissidents will recruit the economic ones to their cause. So police have arrested four political activists since late last year, handing out harsh sentences. Particularly telling was the case of democracy activist Zhang Shanguang: For citing farmers' protests in a radio interview, he got 10 years in jail. "The government is really scared that those who have tried to organize opposition parties will take their movement to the farmers and workers," says Han Dongfang, a Hong Kong-based labor activist.

Beijing's level of concern is also reflected in an ongoing campaign against corruption, a perennial irritation for upset workers. Though crackdowns on graft have been going on for years, this time the dragnet is claiming victims who were once protected by political connections. They include a Yunnan province tobacco company head and a high-ranking official responsible for combating smuggling. "The leadership knows how much resentment people feel toward officials who have benefited from their positions," says one Western diplomat.

For now, worker protests have been mainly limited to blocking traffic and to impromptu sit-ins at government offices. But all that could change rapidly. Chinese leaders "are sitting in the fire," says activist Han. And it may not be long before the fire spreads.

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