The End of the Chinese Miracle | Question Mark

In many of my blog posts, I have tuned off the voices of the people I met along my journeys across southwest China. I focused rather on the ancient villages, how history and a changing society are shaping them. Recently, I stumbled upon a brilliant short documentary by the Financial Time titled “The End of the Chinese Miracle”, in which we follow Mr. Yang, a migrant worker (mingong 民工 in Chinese), who shares his life story with us. Laid off from a Shenzhen (深圳) toy factory where he had been working in for ten years, he explains how difficult it is for him to find another job and how many migrant workers like him decide to leave the city for good. The documentary makes a point in showing that the end of cheap China is over, and with many migrant workers deserting factories; we are witnessing the “end of the Chinese miracle”.

Deng Xiaoping Shenzhen

Shenzhen | Deng Xiaoping who instigated the economic reforms of the 1980s that contributed to the ‘Chinese miracle’

Once I was buying food for a long bus ride in a convenience store near the bus station of Tongdao (通道), a small town of southwest Hunan province. After I had told the owner, Mr. Wang, curious of my presence in this remote part of the country and my good level of Mandarin, that I was working as a supply chain manager and sourcing agent in Guangzhou, he started telling me about his past life as a migrant worker in Dongguan (东莞), one of the industrial hub of the Pearl River Delta (珠江三角), between Shenzhen and Guangzhou (广州). Like the Mr. Yang of the Financial Time documentary, Mr. Wang worked in factories, providing cheap labor and producing goods for export.

“You know, I have lived so many years in Dongguan, working in a factory to try and make a decent living. It was hard. We worked many hours for a low pay, and for what? Dogs were treated better!” Mr. Wang hammered his fist on the counter. “I was sending parts of my income back home to my parents”, he said with a voice charged with emotions. “After the financial crisis of 2008, the factory shut down. We all left. We had no choice. There were traffic jams all the way up here in Hunan and to go to Guizhou province to.” He laughed. “We are better poor at home than in Dongguan” he added with a dismissive gesture of his hand. “Now, I have open this convenience store and I’m better off here than working at the factory”.

Humen Guangdong

Humen | Industrial area part of Dongguan between Shenzhen and Guangzhou in the Pearl River Delta, south China

Mr. Wang’ story was the other side of what I knew. While sourcing for manufacturers in the Pearl River Delta, a region that includes cities like Shenzhen, Dongguan, Guangzhou, Zhongshan (中山) or Foshan (佛山) and known as China’s manufacturing belt, many factory owners said they had to lay off more than half of their workers following the 2008 financial crisis. Their exports to the US, only source of revenue, had plummeted. For them shifting from an export-based model and manufacturing for the domestic market had become their only way of survival. One factory I visited had 1500 employees before 2008 and was operating with only 150 workers in 2011.

The 2008 financial crisis was just the tip of the iceberg. The Financial Time documentary about migrant workers going back home for good makes it clear that we are witnessing the end of cheap China, with Chinese factories delocalizing to Southeast Asian countries. Factory managers were keen to explain that the price of raw material was going up, that workers wanted higher wages and that the end price of the products I needed would rise consistently by 10% each year. Many of my clients decided to stop manufacturing in China and moved to the new El Dorado of cheap labor, in Vietnam, in Indonesia, or the Philippines.

Guangzhou Guangdong Migrant

Guangzhou | Migrant workers taking a lunch break near their construction site in downtown Guangzhou, the capital of Guangdong province, China

We have here all the elements that make the point of the Financial Time short documentary. The end of cheap China is also ‘the end of the Chinese miracle’. Since the economic reforms of Deng Xiaoping in the 1980s, the Chinese economic miracle was built on the back of poor migrant workers who were ready to work hard for low wages. They manufactured cheap goods that flooded the world; they built the skyscrapers that make up Chinese cities’ impressive skylines. Migrant workers, because they were rural who moved to the city, were second-class citizens and were not given the same social benefit their urban counterparts enjoyed. Back in the countryside, millions of children are being taken care of by their grandparents in deserted villages. They are the ‘left-behind’ children.

Every Chinese New Year, as millions of migrant workers go back home to celebrate with their family, many ponder like Mr. Yang whether they should go back to the city. Many choose to never go back to the cities.

Chinese Slogan Guangzhou

“The [Chinese] Communist Party is good, the common people are happy”

What to understand from the Financial Time’s documentary title ,“The End of the Chinese Miracle”. First, we need to keep in mind that Chinese economy is not going to collapse, but it is going through a phase of adjustment. Indeed, the days of the miraculous double-digit economic growth are over. The continuous rising of living standards cost of life and wages, in cities or in rural areas, show that the central government policies have been, to some extent and in spite of a widening gap between the wealthy and the poor, successful. The rising of living standards have also raised the expectations of migrant workers who want to be part of the “China Dream” and are no longer willing to toil in factories for a miserable pay. The focus of the Chinese government is to shift away from export and stimulate domestic demand. In this phase of adjustment, Beijing is planning to move 250 millions rural people to the cities in an attempt to create a new domestic customers-based economy. Right now, after the miraculous years of economic growth, we have to observe how the “China Dream” is unfolding and what the consequences for the country and the rest of the world will be.