When we hear negative news about China, it's usually been about intellectual property and censorship issues.
But as China continues to concentrate the attention of automakers for its growing market potential, manufacturing capacity, and its steady steps into major markets with their own-brand cars, a much more serious problem threatens the country: social unrest due to the country's widening income gap.
China is facing an "alarming" situation, says Labor and Social Security Ministry official Su Hainan, as reported in a Feb. 2 report by official news agency Xinhua.
Social unrest is escalating as the gap between rich and poor has grown to an "alarming and unacceptable level", according to China's National Development and Reform Commission. Urban per capita income is 3.2 times that of rural areas, up from 2.5 in 1978, when China started to open its economy to the world.
In 2005 there were some 87,000 major protest incidents, up from 11,000 a decade before, according to China's Public Security Ministry.
This problem is exacerbated by the government's focus on health and education in the cities. Ninety percent of rural dwellers have no health coverage, half of rural towns lack running water. Millions of farm workers have lost their lands and income due to expropriations, sometimes without permission or adequate compensation. And corruption is also a problem.
The Chinese Youth Party China has been pushing for a more equitable system and asking that farmers be heard through increased municipal participation. The National People's Congress recently approved a 5 year plan that looks to address this problem, meanwhile local critics are against the fast speed of pace of liberalization.
Discussions will begin in March as Chinese policy makers and citizens debate new laws to strengthen the rights of workers, including regulations on social security and labor disputes, and an employment promotion law. And, as Business Week reports,
"At the same time China is continuing its drive to unionize foreign and private employers across the mainland. Chinese unions have traditionally focused on minimizing labor disputes in order to support the Communist Party but are increasingly active in supporting workers' rights."
Traditionally, major policy changes are very slow to be implemented in China, if they are at all, and sometimes new regulations don't reach the far reaches of China.
"Even when China has very good laws, implementation lags far behind," says RDI's Li Ping. Adds Kent D. Kedl, executive director of Shanghai-based business consultancy Technomic Asia: "They talk about the law, then they issue the law. Then it is another two or three years before it is finally enforced, and then only selectively."
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