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Issue Wrap, No. 528, Jul 18, 2011


See Below: The Bureaucratic Nightmare of Setting up a Charity in China

China’s Illegal Foreign Workers

News, cover

~ According to what people working in the human resources sector in Guangxi province, factories in Guangdong, Fujian and Zhejiang are involved with hiring illegal workers from Southeast Asian countries, such as Vietnam, Cambodia and Myanmar. The majority of these illegal workers are young women, some as young as 13, and they are being hired to work in factories that manufacture shoes and clothing and also take positions cleaning circuit boards. And some of them are also very young. Due to their dark complexion, these women are sometimes referred to as “chocolate workers” (巧克力工人 qiǎokèlì gōngrén) by locals.

~ Illegal foreign workers are being smuggled into China by people smugglers who themselves have often worked illegally in China. Their travel expenses are usually paid for by the factories in China that are recruiting them.

~ The EO also learned that some large international recruiting agencies are involved in the illegal trade. According to Singaporean Chen Yun (陈云), who works for a company that illegally recruits workers from Southeast Asia, told the EO that data provided by China’s immigration authorities in regard to the number of illegal workers who have been repatriated, doesn’t fully reflect the number of people making it across the border to work. Chen told us that it only takes a few days for his company to organize the “delivery” of one or two hundred workers across the border. “Business is very good,” said Chen.

~ These illegal workers get paid less than Chinese labor, and are living in poorer conditions. For example, in one shoe factories in Guangdong, Chinese workers can earn 1,300 yuan a month, while Vietnamese workers only get 600 yuan. Chinese workers share a six-bed dormitory with air conditions, while the Vietnamese workers sleep two-to-a-bed in a room with 9 others and without air conditioning. However many are still keen to come as they can earn more than in their own country.

~ The agency fees paid to the people smugglers are said to be deducted from from the wages of the illegal workers. An insider told the EO that the boss of the factory would, citing inefficiency, deduct an amount from the first pay packet of the illegal workers – and bass on 60 to 80% of the amount deducted to the people smugglers,

~ Local authorities are having difficulty stopping the illegal flow of workers. This May, officials in Dalang (大朗镇), a well-developed town about midway between Guanzhou and Shenzhen, received a report regarding illegal hiring of Vietnamese workers in a local factory, but when they went with the police to investigate, they didn’t find any illegal foreign workers.

~ In the past, Yang Yiyong (杨宜勇), director of the NDRC Social Development Research Institute, has suggested that Chinese policy makers could consider legalizing the situation for cross-border workers.
~ But one of the sources for our story told the EO, “nobody wants it to be legalized, once it become legalized, then the benefits that the various sides gain from the illegal trade will disappear.”

Original article: [Chinese]

Inflation Control Is China’s Top Priority

News, cover

~ An official from the National Development and Reform Commission (NDRC), says the country now faces two problems: one is inflation and the other is a slowdown in economic growth. The government will put inflation at the top of its agenda.

~ Since June, the NDRC and central bank have conducted various research projects on the economy. One of the researchers says, “if we don’t focus on tackling inflation the consumer price index will be much higher in the second half of the year”.

~ An official from the Chinese Ministry of Commerce says that the country’s tight monetary policy will be maintained in the second half of the year.

~ Some Chinese economists, like Ba Shusong, Chen Dongqi and Wang Jian think over-regulation is slowing down Chinese economic growth.

~ Yuan Gangming, a researcher at Tsinghua University’s Center for China in the World Economy, says the aim of macroeconomic policy should be to reduce inflation and maintain growth. However, inflation in China is still very high while economic growth has been slowing down.

Original article: [Chinese]

Where to Build Affordable Housing Projects?

News, page 3

~ Some market analysts and officials from central and western China think the location of planned affordable housing projects are unbalanced. Some rich provinces have been given lower quotas. While some less-densely populated poorer provinces have been given higher quotas that they’re struggling to fulfill.

~ Provinces like Shandong, Guangzhou and Zhejiang have a relatively large population and attract many workers from other provinces. They’ve been tasked with constructing 332,000, 310,000 and 185,000 units of low-cost affordable housing respectively. However, Shanxi, Anhui and Hubei have been told to build 474,300, 430,000 and 378,600 units respectively.

~ An official from a southern province said: “In our province, the price of affordable housing is nearly the same as commercial housing. It’s not easy to sell all the affordable housing even if we were to build as much as required.”

~ Another complaint from these poorer provinces is that they lack the funds and resources to construct so much housing.

~ In general, these affordable housing targets have been set by higher levels of government in response to the central government’s target and passed down to the lower levels, there has been no real effort to establish how much demand there really is for low-income housing in some of these areas.

Original article: [Chinese]

Bangladesh - A Rising Rival for China’s Clothing Industry

News, page 4

~ Given the pressure from an appreciating yuan, rising raw material prices and labor shortages, how long will China be able to maintain its competitive advantage in labor-intensive industries?
~ We spoke to a clothing processing manufacturer in Nanjing who has an answer: “China’s clothing industry will be able to stay ahead about 3-5 years,” said the man who wished to remain anonymous. His view was based on a recent visit to factories in Bangladesh, Vietnam and Cambodia.

~ Bangladesh has gradually become a strong rival for China’s clothing industry. First, in Bangladesh, a country with 160 million people, labor is cheaper. Secondly, Bangladesh adopted preferential tax policies in order to attract more foreign investment. Thirdly, Chinese textile has to pay anywhere between 18 and 23 percent in tariffs when exporting to Japan, Canada and Australia, while no tariff applies on Bangladeshi textile exports to these countries.

~ “That means if we transferred our manufacturing firms to Bangladesh, we could increase our profit margin.” said Wang.

~ Since Jan 1 2011, the EU lowered the tariff on clothes made in Bangladesh (using imported fabrics as raw materials) to zero. Mr. Li, one of the clothing manufacturers, said “this change will hasten the transfer of the center for the global clothing industry to Bangladesh.”

~ Some clothing manufacturers are urging the Ministry of Commerce to reform existing tax rebate policy so that the tax rebate on clothing is lifted but that on textiles and material is lowered.

~ An official from the Ministry of Commerce told the EO, “at present, there is no plans to reform the tax rebate within any particular industry.”

Original article: [Chinese]

The Bureaucratic Nightmare of Setting up a Charity in China

Nation, page 13

~ On May 23, Li Liguo, the Minister of Civil Affairs said that social welfare foundations, charities and social services no longer need to be affiliated to government departments, a move that might make it much easier to establish such organizations.

~ Until now, it has been hard to set up charities in China. Founders still require approval from the State Council and the Central Bank - for example, the country’s Red Cross Foundation took more than four years to establish, Jet Li’s One Foundation also ran into trouble.

~ In 1993, Liang Tao (梁涛) decided to set up a charity for the deaf - the Audiology Development Foundation of China (中国听力医学发展基金会). Firstly, he sought an affiliation with the Ministry of Health and made contacts at city, provincial, and national level. His first application to the central bank was rejected, so he provided free treatment to their relatives and invited an 81-year old doctor to persuade them of the merits of his foundation.

~ The whole process of approval lasted more than one year, during which Liang Tao went to Beijing 13 times.

~ Many foundations employ retired officials to attract funds from their contacts.

~ Liang Tao says being affiliated to a government department is like having a mother-in-law - you have to obey their principles.

Original article: [Chinese]

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