Hainan, China: Market Crunch

Surprise! Blogger.com is not blocked here in Hainan, though my blog is. This is illogical to me. I'm not sure what I have done to deserve such an honor. This also means that I can log in and post, but can't view my blog normally – quite ironic really.

Let me come to the main point quickly. I returned to China with the lingering question of how people fare in the financial crisis. (Apparently I'm not the only one who is concerned. An American writer friend wrote me to say she "would be fascinating to hear how China is weathering this amazing economic descent into wherever we're going. How is it affecting the people there? I'd love to hear." PekingDuck also had a post on this subject titled "China is the place to be," which attracted quite a few comments.

I've been throwing questions around since my arrival Friday (AA delayed my trip by one day, hardly a surprise). And this is the impression I got:

For urban people, the financial crisis is largely a Western issue. Life and business in Chinese cities are humming along as usual. If anything, the purchasing activity has only increased in the run up to the Spring Festival. A relative who works in the financial sector for a private company tells me that, since last fall, the government has changed its position from discouraging general consumption (in order to slow down the overheated economy) to encouraging domestic consumption (as the world braces for recession). Now, "to consume is to be patriotic," and people seem to be more than happy to follow this calling.

I was in Shanghai Thursday night and saw on CCTV that some cities were subsidizing grocery prices to help stimulate holiday shopping. My experience in Hainan, hardly a rich place, seems to question the necessity of such a policy.

Here are a few photos I took Saturday in a huge supermarket named Da Ruenfa owned by a Hong Kong company, where I went grocery shopping with my sisters and their husbands. I haven't been in such an overwhelmingly crowded store for decades.

Supermarket: an entrance ("New Year Goods Avenue")

The supermarket is one of the biggest I've ever seen, yet there wasn't even enough space for a single shopping cart to turn around. I was told it had been like this crowded for over a month. At the pork counter, people fought like looters ("as if the meat were free," my sister Maple complained). However the fact is that nearly all prices have increased because of the high demand. It was near the meat counter that a staff member came to stop me from taking photos. "We are a business, not a journalism unit. No photos," he insisted. Afterward my brothers-in-law said he probably thought we were from a competitor.

Supermarket: meat counter

After my sisters finally snatched their pork (to make dumplings for New Year eve), they went to the next counter to have it ground, a free service provided by the supermarket. However the staff working there simply ignored all such requests. Instead they were busy selling pre-packaged ground pork for 13 Yuan a pound, a 75% increase from the 8 yuan/pound of our pork. My sisters had a brief conference between themselves on whether to go for the expensive price and abandon their hard-earned unground pork, but they had little option.

There were about 40 check-out lines, each looked like it would take an hour or longer to reach the cashier. We diverted to look for the shortest line, another bit of hard work. Eventually Maple's husband found one at the farthest corner of the supermarket and called by cell phone for us to converge. "Line 15!" he ordered. It took a sweaty battle to push the packed shopping cart through layers and layers of human walls.

Supermarket: an exit

Presumably, it is premature to make a general conclusion from this thrilling shopping scene. For one thing, the biggest holiday season of the year may have colored things. At the dinner table with my family members, who came from different cold-weathered cities to gather in this warm island, Maple's home, for the Chinese New Year, I asked about housing markets and the situation of migrant workers. The consensus was that the export business (in which one of the men works) has been hit hardest (surprise!), especially the light manufacturers such as textile factories in Canton and other coastal cities. Those producers had been the biggest employers of migrant workers. The estimated contribution from the export business to China's GDP is about 20%. There had been about 200 million migrant workers across the country, and among those about 20-30% lost their jobs due to the financial crisis. That 40-60 million people was a big number to cause a stir, and the government worried intensely about the holiday season's "harmony and stability."

That was when I asked if they had heard Charter 08. The answer was uniformly "No," though they knew the name of one of the signatories Liu Xiaobo. My brief description of Charter 08 did not generate much interest. "Useless," one of the men said, in an immediate reaction. Then he thought about it a bit more and said tolerantly that such things were not that bad to have. "The democracy activists and foreign media complaints about our government help to improve policies sometimes. Just one of those natural noises that should be allowed to exist. But if they attack too much they will get attacked back by Chinese people." His assessment was that right now the government enjoys the highest trust ever in history, and others agreed with him.

Their guess on why the government has blocked the spread of information on Charter 08 was it 's timing, with the clouds of financial crisis hanging above the migrant workers and the Spring Festival approaching. At a time like this the government is most nervous about potential chaos and tends to overreact.

My relatives mentioned that local governments such as those in Sichuan, one of the provinces that supplies a large number of migrant workers from its countryside, were ordered to arrange local jobs for the newly unemployed who returned home from coastal cities. There is no concept of unemployment insurance for those people, but apparently actively putting them to work is part of the mandate. Many did get new jobs, I heard, though no one could say to what extent the problem had been resolved. I may find out more about this when I go back to Sichuan after the Spring Festival.

About the housing markets: I heard Canton was again hit the hardest, with an estimated 40% plunge in real estate prices. People say this was mainly the result of bankrupt factories selling no-longer-wanted properties cheaply. Chengdu's real-estate market, where my younger sister bought a yet-to-build house last year, went down 10-20% in the last several months, but it has stabilized since the government began to encourage domestic consumption. Chongqing's housing market has actually been going up, because its prices were low to start with. These two cities are among my planned next visits.

The Chinese stock market has crashed badly, but none of my family members were affected because they are not players. Lucky for them.