By CHRIS BUCKLEY and JAVIER C. HERNÁNDEZ
March 16, 2016
BEIJING — must avoid mass unemployment from failing mines and factories even as it cuts back on its vast production of unwanted coal and steel, Premier Li Keqiang said Wednesday.
His remarks, at the end of a legislative meeting that focused on revitalizing ’s economy, reflected the difficult — some say unsustainable — policy combination that Mr. Li and China’s top leader, President , . They want to drastically reduce the surplus industrial capacity that is sapping China’s growth, while avoiding economic disruption and widespread layoffs that could lead to unrest.
“We’ve already chosen steel and coal as the two sectors for achieving initial breakthroughs in reducing production capacity,” Mr. Li said at the end of the annual full meeting of the National People’s Congress, the Communist Party-controlled legislature.
“At the same time, we must avoid a wave of mass layoffs,” Mr. Li continued. Using a well-known Chinese metaphor for a secure livelihood, he said, “We must proceed with reducing industrial capacity, but the great numbers of employees cannot lose their rice bowls, and we must strive to find them new rice bowls.”
Even as the was underway in Beijing, at a vast, failing state-owned coal mine in northeastern China illustrated the resistance that industrial retrenchments could create.
The protests last week drove Lu Hao, the governor of Heilongjiang Province, where the mine is, to apologize for wrongly claiming that all the people working underground for the mine, run by the , had been paid on time.
Since the demonstrations, in the city of Shuangyashan, officials have scrambled to placate workers there whose wage payments have fallen months behind. Longmay said in September that it wanted to eliminate 100,000 jobs by the end of 2015 in Shuangyashan and at other mines that have taken on far too many workers. But Mr. Lu indicated last week that the company was well short of that goal.
Mr. Li did not mention the miners’ protests on Wednesday. But he suggested that the government had enough funds to avoid a return to the early 2000s, when layoffs of tens of millions of employees from state industry fueled widespread unrest, especially across the rust belt provinces of the northeast.
If new jobs cannot quickly be found for laid-off workers, “central and local finances have the capacity to make suitable arrangements,” Mr. Li said. The central government has set aside about $15 billion largely to help find work for displaced employees, and more could be allotted for the task, he said.
More broadly, Mr. Li said he would free up private businesses, cut red tape and overhead and create new opportunities for investment and employment. That recipe, he said, would not demand any hard trade-offs between growth and adjustment.
But a growing number of economists say they believe China will soon have to make contentious choices between propping up its economy and shaking up the whose debts and inefficiencies are dragging down growth.
Advocates of economic liberalization said that China’s leaders had done far too little to carry out to give market competition a “decisive role” in the economy and that the plans outlined at the congress did not include the bold steps needed to secure long-term prosperity.
“I don’t feel too optimistic — the measures that they’re proposing aren’t very vigorous,” said , the honorary president of the Unirule Institute of Economics, a group in Beijing that backs market liberalization.
“They’re saying the right words,” Mr. Mao said. “The problem is that they’re not willing to prescribe the right medicine to deal with the severe mismatch between supply and consumption and demand. There’s a lack of market allocation.”
This month, that the government could keep the economy growing at 6.5 percent annually until the end of 2020, even as it cut unwanted industry and corporate borrowing. That growth, he said, would help generate 50 million new urban jobs over that time. Last year, China’s economic growth rate , the lowest rate since 1990.
But the wealth of plans, statistics and projections that Mr. Li and ministers offered during the meeting did not include detailed estimates of the number of workers most likely to be laid off. That is a politically fraught issue for the Communist Party leadership, which fears any sign of economic upheaval that could undermine its rule.
Before the congress, a labor official said that in the coal and steel sectors alone. Other estimates of total industrial job losses go much higher.
Failure to enforce market overhauls could carry a different kind of risk. Days before the congress opened, Moody’s Investors Service, a credit-rating agency, lowered its rating for China, citing worries that the government would fail to put into place its promised changes to the economy.