If this blogger will forgive me, I want to quote in its entirety an email he received and posted on his blog today, because many, many people are going to read it and perhaps walk away with a less than complete picture:
I went through my first recession during my freshman year of college after 9/11. I remember the most tell-tale sign of the slowdown was that construction sites, ubiquitous in Florida, slowed or stopped entirely. I’m living in Shenzhen, China, now during an even bigger recession….
Except it’s not really a recession. China will likely be pulling 5-6% growth this year. While the IHT and other major papers carry a story a week about how bad the Pearl River Delta is doing, I just haven’t seen it.
Everyone talks about things slowing down but few people are talking, or seeing, things closing up. Projects I saw started a year ago are finally begin to shape up as the scaffolding comes down and beautiful “gardens”, apartment complexes, emerge. New projects are breaking ground and cranes are almost as ubiquitous as they were three years ago. My best friend here – a Hakka man in his late-20’s who grew up able to eat meat just once a month – turned down a sales job paying, literally, 8x more than he makes now because he’s convinced his current one-man operation is going to explode any day now.
As a foreign teacher I’m making more than I ever have. I’m making $35 an hour doing private lessons preparing a brilliant student to study in the US. I can treat a few friends to an exceptional dinner for half that. Four hours a week pays the rent for my 29th story apartment. My sister, a single mother who just got her Bachelor’s degree, is making $8. Enough for a Happy Meal and Big Mac dinner, perhaps.
A final note is that it’s surprising how well China’s Maoist legacy acts as a safety net inside a capitalist economy. Shenzhen and cities like it, effectively, have half of their population living not as citizens, but as long-term temporary workers. Most of these workers who are getting downsized now will be returning to homes and farms in the countryside because they mostly were not allowed to sell. Most never made permanent residence because the archaic “hukou” household registration system ties delivery of government goods and services to those hometowns. If it works out well, they’ll be going back to a rent-free home with decent savings and severance to start their own projects, where their children have free education and increasingly subsidized health-care. As terrible as these policies looked during the boomtimes, they’re looking increasingly wise today.
First, let me say I think this teacher is overly optimistic. When growth grinds down from years in the double digits to 5-6 percent, that’s an enormous shock to the economy, nothing short of a calamity. And whether he can see this or not in Shenzhen, it’s real and it’s painful. Often what we see in front of us can be deceptive. Just because people aren’t rending their garments in the street and lighting themselves on fire doesn’t mean there’s not misery aplenty. I own a home in America’s second most depressed housing market (after Las Vegas) and when I went back in November things looked just fine. I didn’t see a single person looking any less happy than in the good old days. But there were indications things weren’t quite right: for-sale signs on house after house, some of which have now been on the market for nearly two years. Lots of seats at the higher-end restaurants. Absurd discounts at the malls. The thinnest help-wanted section I ever saw (on-line and in the local paper).
Even though there’s all that new construction and entrepreneurial enterprise going on in Shenzhen, that doesn’t mean there’s “not really a recession.” I have so many success stories to tell you from Beijing, some of which I’ve related on this blog, including my own easy search for a new job. Many people I know are making money, and some see this as a new golden age. Really. But I also know how some companies in recession-prone markets are doing, and it’s worse than disastrous. I have friends there, and they’re at their wit’s end.
I did a lot of train travel over the past month and saw all the migrant workers sleeping outside of the stations waiting to go back to their hometowns. I’ve seen the half-finished buildings and the ghost malls. I’ve read some debates on whether the Chinese characters for “economic crisis” really mean “danger-opportunity” (my Chinese teacher insists it does, but I’ve seen the arguments disproving this, at least to the blogger’s satisfaction). No matter who’s right about it, this much is a fact: every crisis will mean an opportunity for somebody. Those lucky enough to get contracts from the government stimulus package, for example, will have a ball. But for many, this crisis is as real as can be.
I also think our teacher’s perspective on the plight of jobless migrant workers and the ingenuity of the “Maoist legacy” is a touch rosy. I think most of these workers will do alright; they’ll at least have enough for them at home to eat and sleep, which is enough to keep them from taking up arms and revolting. But I had to gulp when I read, “If it works out well, they’ll be going back to a rent-free home with decent savings and severance to start their own projects, where their children have free education and increasingly subsidized health-care. As terrible as these policies looked during the boomtimes, they’re looking increasingly wise today.” (Isn’t Maoism cool?)
I won’t dissect this. I’ll just say I think this fellow means well, but his analysis is simplistic, failing to take into account certain realities, like the the tragic state of rural education here, the crushing poverty of most of China’s countryside and its notoriously inadequate health-care system.
But I can understand why he’s feeling positive. There’s an optimistic, even euphoric mood in Beijing and Shanghai at the moment, and that’s probably the case in Shenzhen, too. A flurry of news headlines from all over the world seem to have created an impression that China’s stimulus plan is a winner, that it will pull out of the slump soon and even that the worst is over. China seems to be heading for a new leading role in the new world order. Or at least that’s the recent buzz. It’s at moments like this that I become especially cautious. I don’t think it’s time yet to uncork the Champagne.
Richard Burger is the author of Behind the Red Door: Sex in China, an exploration of China's sexual revolution and its clash with traditional Chinese values.