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Asia: Building Blocks At next week's East Asia Summit,
there will be talk of creating a regional common market and, eventually, a
single currency. Are those plausible ideas or a pipe dream? The East Asia
Summit (EAS) is set to bring together representatives from the ASEAN+3 countries - that's the 10 Southeast Asian nations plus China, Japan and South Korea
- and their counterparts from Australia, New Zealand and India. The idea has been percolating for years,
but this is the first time that key players in the region have come together
for the explicit purpose of deepening integration, not just economically but
also politically. The agenda remains vague, but participants will probably talk
not only about reducing tariffs and other trade barriers but also about how to
intensify cooperation on other fronts, such as energy, avian flu and
counterterrorism. The
Asian
Development Bank
recently revealed that it has started monitoring exchange rates—a move that
lays the groundwork for a future Asian currency unit. Newsweek International http://www.msnbc.msn.com/id/10313726/site/newsweek/ China Is On The
Move By
Stephen Glain, Newsweek International, Dec. 12, 2005 The conventional view
of China counts three basic threats to its economic boom: corruption and
disrespect for the rule of law, environmental degradation and the tide of rural
migrants who threaten to overwhelm its cities. It's no accident, however, that
while Beijing is officially campaigning to end corruption, impose the rule of
law and clean up the environment, it welcomes internal migration. Over the past
few years, China has steadily loosened restrictions on the movement of its
citizens—accelerating a trend begun in the late 1970s—most recently by
extending welfare benefits to peasants looking for work in urban areas. Indeed,
central authorities are pushing this plan over the objections of security
forces and provincial officials, who fear that huge population shifts will
stoke unrest and burden social services. What this battle shows
is that China's senior leaders are on the same side as a growing number of
economists who believe that the benefits of a mobile labor force far outweigh
the risks. By freeing its proletariat to move about the country, China has
created a dynamic labor market that is closer in character to America's
flexible work force than to the static societies of Europe or Japan.
Increasingly, worker mobility is rated as important a factor in measuring
economic health as productivity and money supply. A recent report on global
employment by the Organization for Economic Cooperation and Development devotes
an entire chapter to worker mobility and its potentially salutary impact on
joblessness and income disparity. In part, that's due to
the boost internal migration has given the U.S. economy—led by the shift of the
American population toward jobs in the Southwest—which has had its mirror in
the shift of China's population to the southeast. Economists say it is no coincidence that the world's
most powerful engines of growth, the United States and China, also have the
highest rates of worker itinerancy, while Europe and Japan lag behind. ''In the global
economy, two of the most important factors are mobility of capital and mobility
of labor," says Mohamed El-Erian, the incoming president of Harvard's
trust funds and a noted emerging-market bond expert. ''Capital trades
internationally, but labor does not, which is why domestic migration is so
important." Beijing clearly
understands this. Over the past few years, it has encouraged the efforts of
private job-placement agencies and municipal officials to match job hunters
with openings nationwide. Government representatives from central Sichuan
province, for example, act as full-time brokers for the unemployed, finding
jobs in other provinces, arranging transportation and even mediating disputes
with employers. In southeastern Guizhou province, one of China's most
impoverished areas, municipal officials have set up sister-city programs in which
bright young Guizhounese are enrolled in urban training courses. ''If you're a
cadre younger than 30 years old, you'll go to the city and come back with
either a skill or an investor," says Daniel Wright, a director and China
specialist at the National Bureau for Asian Research in Washington, D.C. ''It's
a very fluid dynamic." The flow of Chinese
from rural villages to cities has swelled into a mangliu, or peasant flood, and it is perhaps natural that outsiders
tend to dwell on the dangers. The
estimated average annual movement of 200 million rural Chinese over the past
six years is historically unprecedented, dwarfing the annual average of 40
million Americans who moved during the same period, though as a percentage of population
the rates are about the same. The big difference is that in the US, migration swells the
number of McMansions in suburban Phoenix. In China it has carved a grimmer
landscape, as peasants advertise their availability for work with hand-scrawled
placards on Shenyang street corners, and sleep 6 to a room in Shanghai. But the
economic effect is the same: far more rapid growth than in sit-at-home
countries. ''One cannot underestimate the value of labor mobility in
China," says Wright. ''China's skylines and export-driven economy were
built with the sweat of rural labor." Migrants are the key
component of ''the China price," a corporate buzzword that implies the
lowest possible amount of money buyers are prepared to pay for a given commodity
and which developing countries, from Mexico to Pakistan, are struggling to
beat. In Beijing, laborers from the southeastern coastal city of Wenzhou have
established a garment district over the past decade that now competes head-on
with the city's established clothiers. They are now major investors in
Shanghai's booming real-estate market. A universal yardstick
for comparing worker mobility is hard to come by. The World Bank calculates that 18 percent of
American laborers spend less than six months a year in their areas of primary
residence, the highest such rate in the world. In China, the ratio is 14 percent, followed by
the European Union at 11 percent. Those figures, however, reflect only
temporary moves, not permanent shifts—which are more important for matching
skills to job openings in a dynamic economy. It's hard to find
precise comparative data on permanent moves for China, but the OECD report
makes clear that the rate of gross internal migration in Europe lags behind
that of the United States and Asia generally. According to the report, while 3 percent of
working-age Americans move within their home country each year, only 1.5
percent of Germans and just over 2 percent of the French do (and the French
tend to move for reasons unrelated to work—family or retirement, for instance). Among the factors that keep Europeans
from moving, says the OECD, are generous unemployment insurance and high
relocation costs. ''When an American citizen loses his job in Detroit and he is
offered a job in Denver, he takes his wife and children and travels across the
United States to take that new position," says former French Finance
minister Dominique Strauss-Kahn. ''When this sort of situation arises in France
and you offer jobs 100 kilometers down the road, people say, 'Forget about
it'." China's leaders have
shown a clear understanding of the upside of internal migration since Deng
Xiaoping first launched economic reform back in the late 1970s. Deng replaced
communal work units in the countryside with a Household Responsibility System, which effectively gave farmers control
over their own land and output and allowed them to generate profit. Travel
restrictions were eased to allow farmers to transport their goods to markets in
town, creating a demand for hostels where visitors could spend the night. By
the mid-1980s, Deng was further easing the rules that had defined where farmers
lived and went to market. All of this encouraged more movement between towns
and cities. ''No one in the central government declared, 'You are now allowed
to do these things'," says Zai Liang, a professor of sociology at the
State University of New York at Albany. ''It just evolved on its own as a way
to meet demand and the party cadres let it happen." The reforms made
China's farms more efficient, creating a surplus of rural labor just as Deng
was spreading his free-market policy to the coastal cities. After his historic
''southern tour" of booming Guangdong province in spring 1992, the
migration pattern changed. Instead of just commuting to market towns, peasants
began journeying cross-country for urban work on a permanent or semipermanent
basis. And far from converging exclusively on China's coastal cities, as is
often presumed, the trail of labor migration crisscrosses the entire country. Migrant farmers are heading west to
Xinjiang province to stake out their own plots of land, for example, while
itinerant carpenters, masons and traders are participating in the construction
boom there.
"In general," says Kam Wing Chan, a geography professor at the
University of Washington who has studied itinerant labor in China,
"craftsmen and traders head west, where their skills are in short supply,
while those who head for the coastal regions tend to be among the unskilled." Of course, outsiders
are not the only ones who worry about the risks of mass migrations inside
China. Family-planning
agencies say it makes policing the country's one-child policy all but
impossible. Security officials say it fuels rising social unrest and urban
crime. (An epidemic
of bicycle theft in the southern coastal city of Shenzhen, for example, is
blamed largely on migrant workers.) Last month leaders at the Communist Party's
Central Planning Committee meeting declared the objective of China's new
five-year plan to be a ''harmonious society," implicitly acknowledging the
fine line between an itinerant work force and a restive one. Nevertheless, Beijing
has consistently defended the migrants' right to move. Early this year the government announced
it would loosen Mao-era rules that restrict rural migrants from receiving
education and health-care services in urban areas. Last year Prime Minister Wen Jiabao warned
employers against exploiting migrants after a woman petitioned him on behalf of
her husband, who had gone months without pay. For China's leaders,
encouraging worker mobility is as radical as it is underappreciated. Beijing
has been widely praised for assuming the risks of opening its markets rapidly
to the outside world, particularly in the 1999 deal that made China a member of
the World Trade Organization. But opening national borders to multinationals
like HSBC or Microsoft is no more threatening to stability than opening
internal borders to mass worker migration. The payoff for both gambles has been
huge, measured by the tens of billions in new foreign investment and factory
orders flooding into China. ''China and the U.S. are true capitalists at
heart," says Tim Cook, president of Kailas Capital, who has spent much of
his career living and working in East Asia. ''While much of Europe is still
locked in a socialist mind-set, the Chinese have gotten over this speed bump called communism and they're simply returning to their true instincts." For all the dire warnings about
migrant-worker unrest, Beijing now seems very comfortable with the risks. http://www.msnbc.msn.com/id/10314334/site/newsweek/ |
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