The human price of growth

Fri, 28 May Pre-Open

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China and India are chalk and cheese in more ways than one. The two fast growing Asian giants have taken different routes to economic growth. China has become the manufacturing hub of the world. India has emerged the world's IT services backend.

But, have you spoken to anyone who has travelled to China recently? If you have, you must have heard stories about how dazzling their infrastructure is now. And its not just naive tourists who say this. Seasoned businessmen and experienced analysts, who probably have seen the most advanced western economies, talk of 'shock and awe'. The Chinese are so efficient, it is unbelievable. And of course we know how bad India looks in comparison. It is hot, dirty, chaotic. The infrastructure barely works. So on and so forth.

But how does China manage all this? Yes, they have very focused leadership. But they also have a vast army of labour that works their massive factories and construction sites. A labour force that can be forced to move back to the country side once their job is done. One that can be made to work long hours for measly salaries. One that can be ordered not to speak while at work.

The Financial Times carries the story of a 19 year old worker in one of China's factory towns, Shenzhen, who leaped to his death. He worked at Foxconn electronics. 11 employees in this company have tried to end their lives this year. 9 have succeeded. This little known company employs 300,000 people and manufactures products for Apple, Sony, Dell and Nokia. Here, employees can be rejected for being too short, too ugly or too old. Most of them work 12-hour shifts. Doing repetitive tasks, they soon become machine-like.

Most of these migrant workers harbor the dream of a better life. Much like the migrant workers in India rushing to the larger cities do. And given the strong growth stories of both China and India, many migrants eventually do earn more than they would in the country side. But for all the praise China gets for its rapid progress, we must remember the price its citizens pay.

India's urban poverty catches the eye of everyone - from filmmakers, to tennis stars to well-heeled investors. Fair enough. It should. In comparison, China's problems are tucked away in its massive factories. But do problems only exist only when the meet the eye? There are now some voices of concern whether China can sustain its tag of the world's factory. A distressed workforce is a bad fundamental. And in our view, bad fundamentals eventually show up.