so, Shenyang is now known not only for its fast growth but also for its mass unemployment, which affects workers in both the state sector and private sector. The mass layoffs here are largely a result of the conversion of state-owned enterprises (SOEs) since the era of reform and opening up.
Previously, all enterprises in China had been publicly owned and managed, and the state was the largest employer, providing work for more than 75 million people. But since the late 1970s, the government under Deng sought to increase the competitiveness of the economy by dismantling or privatizing them, a process that took more than two decades. In the first stage, 1978 to 1984, greater autonomy was given to the management, and enterprises were allowed to keep a portion of their profits instead of submitting them to the state. In the second stage, 1984 to 1992, this autonomy was increased, as enterprises were given freedom to hire and fire staff and to establish direct links with suppliers. Increasingly, traditional administrative relations between the state and entrepreneurs were replaced by contractual relations. In the third stage, 1992 to the present day, the central government has limited its ownership to 500 to 1000 large-scale SOEs, allowing all smaller SOEs to be leased or sold; by 1998, a quarter of China’s 87,000 industrial SOEs had been restructured. By the end of 2001, this number had grown to 86 percent, 70 percent of those having been partially or fully privatized.7
The result was mass unemployment. From 1998 to 2004, six in ten workers in SOEs were laid off, or 21 million workers from 1994 to 2005, according to the Ministry of Labour and Social Security (MOLSS). In the northeast, as the centre of heavy industries, which were all state-owned, layoffs were nearly twice the national average.8 Although workers are entitled by law to compensation when laid off from an SOE, there is no national standard for the amount of compensation: It is completely up to the individual enterprises. In certain enterprises, particularly in those SOE-concentrated provinces such as the northeast, workers often receive no compensation at all from a corrupt management. In March 2002, 10,000 workers at the state-owned Liaoyang Ferro-Alloy Factory in Shenyang embarked on a series of protests against the corruption of factory managers during the forced closures of the local state-owned enterprises.9 While company assets disappeared, the company failed to pay workers their pension contributions and full wages. Following a closure, workers were promised only the minimal compensation of 600 yuan for each year of their service. After receiving this compensation for two years, workers would not be eligible for further unemployment benefits. As the workers’ petitions had brought no solution to their misery, they took to the streets. Adding insult to their injuries, the worker activists Yao Fuxin and Xiao Yunliang were arrested and convicted of ‘subversion of state power’. Yao was sentenced to seven years in prison, Xiao to four.
A report titled ‘No Way Out’ put it this way: ‘The government’s failure to implement clear policy guidelines for the process [of the enterprise closures], combined with a lack of transparency, flawed auditing of company assets, and widespread corruption, left millions of workers out in the cold, with no job and barely enough income to support their families…’ In 2006 alone, according to the report, a total of 2.05 billion yuan was owed in unpaid wages and a total of 700 million yuan in unpaid compensation by SOEs that were undergoing closures in eleven provinces.10
There is a basic living subsidy that the laid-off SOE workers are entitled to receive for up to three years, but this is lower than the minimum wage. The monthly minimum wage in Shenyang is 700 yuan. For workers with families to support, the subsidy isn’t enough to live on even in the short term. As a result, some have started to seek work in the private sector or tried to set up their own small businesses if they’ve managed to accumulate any capital. Others, in their thousands, have opted for a more ambitious project: migrating abroad, seeking work in South Korea and Europe, including the UK.
Among the unemployed I met in Shenyang there were also migrant workers who had lost their land in their home villages. Some of these migrants had left the countryside as a result of local government land seizures. Nationally, these official seizures of land for commercial or industrial use have driven an estimated 70 million peasants from their farms and have been a major cause of peasant pauperization.11 In Liaoning province alone, millions of peasants are estimated to have been affected. Land grabs in Liaoning are related to government debt. Eighty-five percent of local government borrowers in Liaoning could not afford their interest payments.12 Banks were willing to loan to them in the first place because there is a huge amount of land that the local authorities can grab. It is modestly estimated that 23 percent of the total loans to local governments in China depend on sales of appropriated land for repayment.13
Although farmland was decollectivized through the 1980 Household Registration Act, and peasants given rights to till and manage allocated parcels of land under contract with the village production team, all of that land remains state-owned, and can be transferred only through expropriation by the state. Since the early 1990s, local governments have been seizing peasants’ allocated land and converting it to industrial and commercial use to fuel economic growth. This has increased steadily as a direct result of the uncontrolled growth of property development and the anarchy of the market since the reform and opening up. And although local authorities are required by the Land Administration Law to compensate peasants for expropriated cultivated land, in practice peasants’ petitions against the loss of their homes and farmland are almost always ignored.
When peasants protest, they are often attacked by armed thugs sent in by the local authorities. In March 2011, police officers and hired thugs attacked a group of 300 peasant protesters in Fuzhou. Ten of them were beaten up and injured; in 2004, peasants were protesting against land seizure in Sanchawan village in Shanxi province and many were seriously injured by rubber bullets; in June 2005, six villagers of Shengyou in Hebei province were killed by hired thugs; in May 2009, Yingde villagers near Guangdong province were attacked by armed police; one villager suffered brain damage and was left paralyzed.
Hence the migration into cities like Shenyang, where they scramble for the few jobs they can find. Many migrants to Shenyang arrived during the worst of the recession in 2009, when manufacturing and service industries in the city were seeing large layoffs of migrant workers – an estimated 0.4 million lost their livelihood then. Even so, Shenyang tempts migrants with a manual labour wage that averages 1,200–1,500 yuan per month, higher than other cities in the region.
Li Long, twenty-nine but older looking, weathered from years of farm work, stood out among the job seekers I saw for his energetic manner, his keenness as he talked to other migrants, while he walked up and down the streets of Lu Garden with his shirt rolled half up to relieve the heat. He’d come from Yuelai, a village in Heilongjiang province with 600 households – a fair size. But most of the villagers had nothing but small, fragmented plots of land to work on, and in recent years many had left for surrounding towns in search of work, though many of those soon returned after being laid off. He himself had been a farmer, with less than an acre of arable land, and what he could earn in a year – 1,500–2,000 yuan – was such a pittance that he’d moved to Shenyang, where he’d worked as a loader and general labourer for two to three years. But now he had been jobless for several months. He lived with two other job seekers from Heilongjiang, and they often came to the labour market together. He would wait around Lu Garden for the whole day, if no work came up. When he got tired, he would walk to the bridge and sit on it, watching the crowd. ‘I’m always ready to put up with hardship,’ he said. ‘Poor Mom and Dad, they are still tilling the land, at their age… I feel so incompetent. It’s so hard to survive in Shenyang.’ Even when he was employed and sent his income home, it had not been enough to support them.
Two months after I left Peng in Shenyang, I was staying in a guesthouse in Beijing. I’d just come back from a short trip to visit Ying, a Chinese who had returned to his hometown, Handan, from London. The train journey had exhausted me. At five minutes to midnight, the phone rang. It was Peng.
‘Did I wake you up, sister?’ he asked.
‘Not at all!’ I replied. I’d been kept awake by the calls from the local saunas anyway – the reception kept putting
