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Quake recovery central to Chinese stimulus plan

By Simon Rabinovitch Reuters

ANXIAN, China: In 80 seconds of shaking, the devastating Chinese earthquake earlier this year cut a swath of death and destruction through remote hilly towns.

In a recovery that will take years, the prosperity of the whole country is at stake. Quake reconstruction is a central plank of the government's stimulus plan for the ailing Chinese economy. It is set to take one-quarter of a promised spending increase of 4 trillion yuan, or $586 billion, and to create millions of sorely needed jobs.

Already, the disaster zone has been transformed into a vast, manic construction site, with people made homeless hammering away to reverse their situations and entrepreneurs from far-flung corners of the country attracted by the whiff of profit in calamity.

"I've been doing this job for about 20 years and I've never seen things so busy," said Zhao Renjun, handling steel girders at a construction site in Anxian County, part of the huge area rocked by the May 12 earthquake, which killed more than 80,000 people in the southwest part of the country.

"I haven't had time to fix my own house," he said. "I've been so busy working for others."

A partial list of needs includes 4.5 million homes, 51,000 kilometers, or 31,700 miles, of roads and 5,500 kilometers of railways - enough to occupy at least some of the 20 million people who could lose jobs in once-humming export factories hit by the global slowdown.

The feverish activity inspires confidence about the financial muscle of the state and the vigor of the economy that it is trying to nurse back to health, but it also carries warning signs of the corruption, waste and unforeseen complications that are already dogging Chinese economic plans.

"Because everyone is building, prices for materials have shot up," said Liu Siyin, 34, taking a break from hauling buckets of cement at his quake-damaged home.

"We can't buy everything we need now and we might have to stop building for a while," he said. "We really wish the government could control prices."

Liu had just started laying bricks for the second-floor wall of his house up a treacherous mountain road. Only half joking, he said fast-inflating costs for materials would neutralize his interest-free loan of 50,000 yuan from the government for rebuilding. Bricks and cement from local vendors have tripled in price in just a few months.

Some local authorities, including the city government in Mianyang, have vowed to crack down on price gouging. However, a degree of price increases is exactly what the government wants. As with the stimulus package for the wider economy, Beijing is providing a huge pot of cash to kick off quake reconstruction, but the government expects to lure private businesses into the fold to have the investment momentum spread more widely.

A profit-chasing zeal has already been unleashed.

Piles of bricks, bundles of steel girders, wood boards and small concrete mixers - all for sale - line the narrow highways in the disaster zone, many in front of makeshift shops set up by entrepreneurs from Chongqing, a huge city 350 kilometers to the east.

Some have come from much further afield. Tang Qinghua, a young, energetic man with close-cropped hair, said his last job had been selling apartments in Shenzhen, the one-time boomtown across from Hong Kong where property prices have dropped nearly 20 percent over the past year.

He and two friends now ply rutted back roads in a small van to drum up customers for their selection of tiles - green, white and clay, glazed and unglazed, interior and exterior.

"People have no choice here. They have to rebuild. And we're making a contribution, helping them out," Tang said.

Glimpses of a darker side to the reconstruction effort have come through in official reports.

Any country that throws so much cash at disaster recovery, when urgency overwhelms usual budgetary checks and balances, must contend with mismanagement and outright theft.

China, which has long struggled to rein in corruption, is no exception. Small, isolated cases have been publicized so far.

A national audit found that a half-dozen villages had improperly spent subsidies meant for quake victims or demanded illegal reconstruction fees. An investigation in Chongqing concluded that a hospital had sold donated medicine for profit.

A little more than one month after the quake, the National Bureau of Corruption Prevention said it had already received more than 1,000 complaints from the public and punished 43 officials.

Economic crisis reverses flood of migrants in China

By Simon Rabinovitch Reuters
Published: December 30, 2008

CHENGDU, China: The biggest migration in human history has gone into reverse.

The Chinese ocean of blue-collar workers is streaming back to the country's farming hinterland, with thwarted aspirations and rising discontent in tow as their city jobs, their paths out of poverty, fall victim to the global economic crisis.

Train K192 is a daily conduit of the reverse flow.

Every afternoon it pulls into Chengdu, capital of Sichuan Province, after a 31-hour trip from Guangzhou, center of the once-thriving Chinese export heartland.

Hundreds of weary passengers, some of whom stand through the entire journey because seats are sold out, straggle into the gray light of the Chengdu winter and an uncertain future.

"Lots of factories have closed," said Wu Hao, 21, sporting a stylish striped sweater and a sleek metal suitcase. "Mine shut about three months ago. There was nothing to do, so I came home."

After a year spent making circuit boards in Guangzhou, he was heading back to his family's patch of farmland, a full month before the Chinese New Year, when he would usually visit home.

Officials estimate that more than 10 million migrant laborers have already returned to the countryside as thousands of companies have been dragged under by weak global demand for everything from clothes to cars.

The government, always concerned about social instability, is on high alert, fearful of the consequences of a huge mass of jobless, disappointed, rootless young men.

Beijing has urged companies to avoid cutting jobs despite falling profits, and many bosses have obliged by retaining workers but giving them unpaid leave.

"Sales were really bad and the boss just kept giving us holidays," said Tan Jun, who also clambered off Train K192 in Chengdu. "We had 15 days off last month. Next year I won't go back."

With an impish smile, Tan looked more like a student than the factory hand he had been at a drug company in Dongguan, an industrial city next to Guangzhou.

Over the past three decades, about 130 million people have left the Chinese countryside for the smokestacks, assembly lines and construction sites of cities.

That migration, described by the United Nations as the world's biggest ever, has underpinned the heady economic growth in China and given its poorest citizens a share of the spoils: Incomes for urban residents are much higher than those for farmers.

Known as the "floating population," laborers rarely settle permanently where they work - they are effectively prohibited from doing so - and they return in droves to their hometowns during the Lunar New Year holidays.

The state news media have put the best possible gloss on the in-bound tide of migrants: The workers are simply returning home early, the media say, one month before the Year of the Ox begins Jan. 26.

But China is heading into uncharted territory and the picture could deteriorate quickly. Many economists forecast economic growth next year of less than 7.5 percent, the lowest for China since 1990 and a level that would swell the ranks of the jobless.

"The redistribution of wealth through theft and robbery could dramatically increase and menaces to social stability will grow," Zhou Tianyong, a leading Communist Party scholar, wrote this month in a newspaper issued by a government research institute.

Workers and officials alike hope the migration reversal is only temporary, but the numbers are too vast to ignore.

The Chinese Social Security Ministry says 10 percent of all migrants have already gone back to the countryside.

China, in the short term at least, is pinning its hopes on a smooth absorption of those who return.

"We expect that there will be a big change early next year, probably in March or April," said Wang Min, a director at the Yuhui Labor Market in Chengdu. "A lot of people will stay here in Sichuan to look for work and not go to other provinces."

Unveiling its rural policy priorities for next year, the government said Sunday that it would encourage unemployed people who return home to start their own businesses. Officials in the Sichuan city of Chongqing and Henan Province, two big sources of migrants, have already pledged to lend seed money.

Reconstruction after the devastating earthquake centered in Sichuan this year has also created a huge need for labor that will sop up some of the floating population.