Manchuria Not Yet Candidate for a New Economy

HARBIN, China —  Manchuria used to boast proudly that it was the first Chinese territory to embrace the socialist state-planned economy, employing thousands of workers in cradle-to-grave factory complexes that took care of all their needs, from the apartments where they lived to the shoes on their feet.

The problem facing the frigid industrial region bordering Russian Siberia and North Korea these days is that it is also among the last places in China to break with the state model.

“In the south of China,” said Harbin sociologist Li Debin, “even teenagers know how to make money and cut deals. Southern people think it is good to make money. But people here in the north do not think it is glorious to get rich, to do business. They still think highly of [Communist Party] cadres and managers of state-owned enterprises.”

As a result, while much of the country prospers, Manchuria--China’s own Rust Belt and home to 104 million Chinese in three northeast provinces--remains an economic dinosaur that has been slow to evolve.

And in recent years, the region has begun to suffer from a new and troubling problem: high rates of unemployment.

Here in heavily industrialized Harbin, capital of Heilongjiang province famed for its Russian architecture and winter ice festival, more than 20% of its 3 million adults are unemployed.

In Shenyang, China’s fourth-largest city and capital of Liaoning province, laid-off factory workers gather in Lu Xun Park seeking any kind of day labor.

In Changchun, the country’s automotive center in Jilin province, the local government estimates that one out of five state enterprises is in “hopeless” condition.

The Communist government is so sensitive to the issue that it refuses to officially classify millions of the jobless as “unemployed”--listing them as “surplus labor” or keeping them on factory books even when they no longer receive paychecks.

But evidence of the downsized Chinese state economy is clear to anyone who visits the northeast region.

With the advent of the Chinese New Year today, local television programs have been broadcasting nightly features about senior officials visiting unemployed workers’ homes with gifts of cash and food for the holiday. The municipal governments in most major cities have been petitioned by local workers with grievances ranging from tardy paychecks to lack of heat in the bitterly cold winter.

Nervous about the specter of more and bigger labor protests, the local governments attempt to defuse the potentially volatile atmosphere with cash outlays before major holidays.

In Shenyang’s Lu Xun Park, named after the modern Chinese writer famed for his descriptions of social injustice in pre-revolutionary China, unemployed or unpaid factory workers stand under signs that announce: “I will work as a cook.”

On a recent afternoon when temperatures dipped below zero here in Harbin, Wu Liye, 30, a laid-off worker from a state-owned candy factory, was selling edible silkworm cocoons, brine shrimp and peanuts from a street-side stand.

“I was let go last year,” said Wu, mother of an 8-year-old daughter. “There is just too much competition in the candy business. They kept my husband on the payroll but only half time. We needed the extra money so I’m doing this. I’m hoping that things get better so I can go back to work at the factory in July.”

Wearing a wool scarf and a thin denim jacket, Wu shivered in the subzero temperatures as she gamely delivered her sales pitch about the dietary virtues of the thumb-size, purple silkworm cocoons, arranged before her on a folding table at Gexin Market.

“You boil them with water and salt, then you fry them,” she said. “Each one has three times more protein than an egg.”

According to a recent report by the Geneva-based International Labor Organization, more than 70% of China’s industrial workers still work in state-owned enterprises or labor collectives set up by the state-owned enterprises. Unemployment rates for these industries are more than 21% and growing, the ILO estimates.

“The emerging picture indicates that labor surplus is an immense problem in the urban industrial sector,” the report said.

Sociologist Li, a member of the Academy of Social Sciences who has written several books on China’s growing migratory labor population, estimates that 130 million to 150 million Chinese are either unemployed or do not have permanent jobs. He estimates that by 2000 the number could reach 200 million, including 50 million in China’s cities.

That could create a volatile situation, especially given the political uncertainties China faces as it moves toward naming a successor to ailing, aging leader Deng Xiaoping.

The unemployment trend also poses a significant social welfare problem for the Chinese state. Under the old system, the state-owned industries provided social benefits for more than 35 million workers.

The full impact of China’s new experience with unemployment may not have been felt yet.

Take the case of Xu Wei, 38, whose job was cut to half time last year by his state employer, Harbin’s electric bus company. To make ends meet, he opened a stand selling children’s socks and underwear in a local street market.

“I make three times as much from this as I did at my regular job,” Xu said.

The government might hold up Xu’s case as a success story showing how Chinese citizens can recover after losing their state jobs. But the transition is not clear-cut. Xu and his family are able to survive because he still has his company-subsidized apartment, which costs him only $2.50 a month in rent and an average of only $6 a month for electricity and heat.