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February 11th, 2008:

End Of The Pearl River Delta Industrial Miracle

End of the Pearl River industrial “miracle” – 02/11/2008

This part of Guangdong was the true engine of the Chinese economic miracle. But now there is a shortage of labour, which is being lured away by better salaries in other regions, and production costs are rising. The region is seeking to encourage development of cutting edge services and industries.

Beijing (AsiaNews/Agencies) – The factories of the Pearl River Delta (Guangdong) are closing. For decades, they were the true engine of Chinese industrial production, and the main source of the entire country’s economic boom. The rise in the cost of labour and raw materials, greater pollution controls, the appreciation of the yuan, the rise in taxes, and the slowdown in the United States (the largest market for Chinese goods) are narrowing profit margins, and factories are increasingly locating their production toward the centre of the country, where manual labour is still cheap.

There has been a shortage of manual labour for some time, because workers have been migrating to other regions for better pay, or in order to be closer to home. It is feared that many of them will not return after the new year holiday, in part because of the great hardships that they suffered at the train station of Guangzhou, because of the snow, before they were able to depart. Labour costs have risen with the law in effect as of January 1, which provides for “basic” rights neglected until now, like medical insurance and holidays.

Eddie Lam Kwong-tak, director of Onlen Fairyland, which has 22 shoe factories and employs 40,000 workers, tells the South China Morning Post that the new law means that each pair of shoes will cost 10 yuan more to make. He says the effect of the law “will be like a tsunami”. It is a serious challenge to Chinese industry, which is accustomed to invading markets thanks to the low price of its products, and the artificially low exchange rate of the yuan .

Now Guangdong hopes to transform itself from an industrial region, based on tens of millions of poorly paid migrants, to an economy based on cutting edge, non-polluting services and industries. The new policy, in fact, punishes in the first place the industries that produce the most pollution and require a great deal of manual labor, like textiles, shoes, leather goods, and clothing. Many manufacturers are “migrating” to Hunan, Guizhou, and Jiangxi. This situation has been worsened by the recent snow emergency, which, blocking transportation and supplies and reducing the availability of electricity, forced the closure of factories that require a lot of raw materials and electricity, like cement and metal producers. The snow emergency will now delay these “transfers”, as some cities, like Chenzhou in Hunan, have remained for weeks with the roads blocked and with no electricity, and with the restoration of the electricity grids still weeks away.

Simon Shi Kai-biu, president of the Hong Kong Small and Medium Business Association, says that “About 30 [companies] have sold properties recently to Hong Kong developers and hundreds are in talks to sell. They need cash to move their operations elsewhere, or they wish to cash in on the bricks-and-mortar value before going out of business entirely”. “I won’t be surprised”, he adds, “to see 10,000 factories in Guangdong fold around the lunar new year”.

Many others will have to use petrol-powered generators as long as the electricity shortage continues, which will also raise costs.

Will Air Pollution Bills Be Top Priority?

Lawmakers Face Daunting Burden Of Bills To Pass 

Backlog worries committee chief

Jimmy Cheung – Feb 11, 2008

The Legislative Council has passed only five bills since October, leaving a huge backlog to clear when lawmakers resume work after the Lunar New Year break.

The slow progress has raised concerns that legislative proposals yet to be submitted may have to be postponed. Legco’s four-year term ends in July. Unfinished bills will lapse and have to go through the legislative process again when the new term begins in September.

In July 2004, lawmakers rushed through 14 outstanding bills, completing the work in seven working days during the last two weeks of sittings. Ten other bills could not be finished and had to be dropped eventually.

The chairwoman of the Legco House Committee, Miriam Lau Kin-yee, acknowledged that the slow progress in scrutinising bills had been causing concern since October.

“We can only try our best to finish as many as we can. For bills that are not facing a deadline, we just can’t help it [if they are omitted],” she said.

The five bills that lawmakers have enacted since October were all inherited from the previous session, according to Legco records.

The government scheduled 15 new bills for the existing session. So far, only eight have been tabled and none have been completed.

Legislators are also grappling with a further eight bills that were held over from before.

The government plans to table five more bills this month, including the legislative framework for the West Kowloon Cultural District Authority. But since the house rules allow a maximum of only 15 bills committees to operate at the same time, the rest may have to wait for a time slot to get scrutiny by lawmakers.

In one high-profile example, it is still uncertain whether the controversial move to legislate a central slaughtering operation for poultry will be tabled before July, as planned.

Ms Lau said she had repeatedly raised concerns about the progress of bills with Chief Secretary Henry Tang Ying-yen during their weekly meetings.

“Actually, there have been concerns since last October, and we have been chasing the government to submit bills as early as possible,” she said.

“I have already told the government we won’t be able to finish if the bill is very complicated. We can only say we will try our best and see how it goes. I cannot guarantee whether or not we will make it.”

When asked if lawmakers were to blame for the slow progress, she replied: “I don’t think it’s the responsibility of [House Committee] members. It’s the duty of lawmakers to carefully scrutinise the bills tabled to us. So all I can say is they should table the bills to us as soon as possible.”

She said it was difficult to predict if any bills would be postponed to the next Legco term.

An administration spokesman would not say if any bills risked being postponed. He said lawmakers accepted the goal of trying to pass all pending bills this session.

“We appreciate the efforts in scrutinising the bills already introduced,” he said. “The administration will continue to work closely with the bills committees and provide necessary assistance [in] their scrutiny.

“We hope the bills now before the bills committees and the bills to be introduced will all be passed this session. We believe that Legco members also share this target. We will work closely with them.”

Legislative logjam

Bills to be introduced this month

  1. Road Traffic Legislation (Amendment) Bill 2008
  2. Fixed Penalty (Smoking Offences) Bill
  3. Air Pollution Control (Amendment) Bill 2008
  4. West Kowloon Cultural District Authority Bill
  5. Statute Law (Miscellaneous Provisions) Bill 2008

Bills in current legislative programme yet to be introduced

  1. Nuclear Material (Liability for Carriage) (Amendment) Bill
  2. Public Health and Municipal Services (Amendment) Bill –

Bills tabled since October and not yet finished

  1. Buildings (Amendment) Bill 2007
  2. Legislative Council (Amendment) Bill 2007
  3. Prevention and Control of Disease Bill
  4. Trade Descriptions (Amendment) Bill 2007
  5. Product Eco-responsibility Bill
  6. Mandatory Provident Fund Schemes (Amendment) No 2 Bill 2007
  7. Munsang College and Heep Yunn School (Change of Corporate Names and General Amendments) Bill 2008
  8. Pneumoconiosis (Compensation) (Amendment) Bill 2008

Bills brought from previous sessions and not yet finished

  1. Race Discrimination Bill
  2. Mainland Judgments (Reciprocal Enforcement) Bill
  3. Energy Efficiency (Labelling of Products) Bill
  4. Statute Law (Miscellaneous Provisions) Bill 2007
  5. The English Schools Foundation (Amendment) Bill 2007
  6. Domestic Violence (Amendment) Bill 2007
  7. Prevention of Bribery (Amendment) Bill 2007
  8. Independent Police Complaints Council Bill

Bills passed since October

  1. Attachment of Income Order (Application to the Government and Miscellaneous Amendments) Bill 2007
  2. Patents (Amendment) Bill 2007
  3. Mandatory Provident Fund Schemes (Amendment) Bill 2007
  4. Civil Justice (Miscellaneous Amendments) Bill 2007
  5. The Chinese University of Hong Kong (Declaration of C. W. Chu College, Wu Yee Sun College and Lee Woo Sing College as constituent colleges) Bill

Bills to be enacted this month

  1. Domicile Bill

Source: Administration Wing, Chief Secretary for Administration’s Office & Legislative Council website