/ 7 February 2008

China enters a year that defines its future

When Sun Jun ignited a cacophony of fireworks on Wednesday night, he was letting off steam as much as ushering in the Year of the Rat in the Chinese lunar calendar. For the Beijing taxi driver, two days’ holiday during the Spring Festival is a rare break in a work schedule that otherwise has him on the road almost every day of the year. It is, he said, the only way he can make ends meet at a time of flat wages and rising prices.

More than 2 000 kiosks have sprung up in the city in the past week to sell firecrackers and other pyrotechnics, but Sun complained he is not getting as much bang for his buck. ”I will spend 300 yuan [about R310] like last year, but the fireworks are about 30% more expensive now so I won’t be able to afford as many.”

It is a similar story for millions of lower-income families struggling with inflation.

The Spring Festival is traditionally the time for this otherwise industrious nation to put up its feet and relax. That has rarely been more necessary. With food prices rising, Olympic expectations growing and much of the country snarled up in snow and ice, China enters the Year of the Rat under more pressure than at any time in more than a decade.

The Year of the Pig, which finished on Wednesday, was a golden period even by the standards of China’s 25-year winning streak. In 2007, the economy grew by 11,3%, the fastest rate in 13 years; stock prices on the main Shanghai bourse hit a record high of 6 000, having risen sixfold in two years; foreign-exchange reserves surged over $1,4-trillion thanks to booming exports; and PetroChina became the planet’s most valuable company — one of five Chinese firms in the world top 10.

Less certainty

By contrast, the Year of the Rat starts with a bigger weight of expectations and far less certainty about the government’s ability to meet them. There is even talk that the economy’s high-growth phase may have peaked.

Inflation is at a 10-year-high, share prices have fallen 25% from their peak last year, export growth is under pressure from a rising currency and the coldest winter for half a century has paralysed large swathes of southern and central China. Instead of relaxing over New Year, millions of migrants have been stranded at railway stations, hundreds of thousands of coal miners have been told to work through the holiday to alleviate power shortages, and hundreds of army regiments have been dispatched to clear the snow.

In the past, such problems would have had little impact on the outside world, but Beijing faces more external pressure than ever to prove itself a major power. The Olympics in August will focus attention on China as never before. With the United States facing an alarming downturn, policymakers are looking to China to step forward and prevent the world from slipping into recession. But it is just as likely to be dragged back. This week, the World Bank cut its growth forecast for China to 9,6%, the first slip into single digits for six years.

By the standards of any other country, it is still enviably fast. But China has become used to supercharged growth. Last month, Prime Minister Wen Jiabao spelled out the challenge facing the country in grim terms. ”We fear that 2008 will be the most difficult year for the economy,” he said. ”There are uncertainties in international circumstances and the economic environment, and there are new difficulties and contradictions in the domestic economy.”

Price crunch

On the streets of Beijing, shoppers were happily oblivious to their responsibility to rescue the world economy. The week before the Spring Festival is a peak of consumption as people splurge on New Year gifts, food for family banquets and red seasonal decorations bearing rat symbols and wishes for good fortune.

For many, prices have risen faster than incomes. According to the China Cuisine Association, the cost of a Spring Festival Eve dinner has jumped by about 20% since last year.

Wandering around a market, Li Baoshang — one of the city’s laobaixing (common people) — said his family felt the pressure. He had to pay more than he did 12 months ago for the mandarin oranges, prawns and red lanterns bought for the celebration. He believes the Games in August will only drive up prices further. ”The Olympics will be good for the government, but not for the people,” said Li, who copes on a pension of 1 250 yuan a month. ”When we had the Asian Games, prices rose. After we have the Olympics, the cost of goods will go up too.”

At Beijing railway station, a nation was on the move. More than two billion journeys will be made during the Spring Festival — a greater movement than the hajj. For many, the celebratory mood is mixed with exhaustion.

Ma Yingwei was a man in need of a holiday. Laden down with bags, jostling in a chaotic queue, then rushing down a platform, he and his family boarded a packed carriage for the seven-hour ride that would take them home for the first time in two years.

Ma expects he will have to work harder just to stand still next year. His monthly salary has been stuck at 2 000 yuan since the last Spring Festival. But he had to pay more for the fireworks he set off at midnight on Wednesday night and the food for their celebration dinner. ”Compared with last year, prices have risen dramatically. I’m not depressed, though; there’s just more pressure to earn more money,” he said.

Consumer culture

As in other countries, globalised consumer culture is changing traditional celebrations. Local newspapers bemoan the fact that many young people are more concerned about Valentine’s Day on February 14 than the Lantern Festival on February 21, which marks the end of the Spring Festival period.

With more choice and more competition, relaxation is not what it was. Spring Festival was once a time only for lolling around at home with the family, eating dumplings and watching the live song and dance extravaganza on the main state broadcaster, CCTV. But in recent years, more people are travelling overseas, downloading pirated films and eating out at hotels. Among those who will be working this week are three million restaurant staff.

Shop manager Xing Jin could only look forward to a half-holiday. She opened 14 new outlets last year and doubled sales of foreign-designed accessories. It was great for business, but she often has to work until 3am or 4am several days in a row to keep up. ”I just want a rest. This is one of the only times I can take a break, but I can’t completely relax. During the holiday, I must prepare for the launch of new products straight after Spring Festival.”

For New Year’s Eve, she was planning a dinner of dumplings and niangao New Year cake first with her family, then immediately after with her husband’s family. ”It’s tradition. I always get fat at this time of the year.”

She expects to double revenues again in the Year of the Rat, but fears a more strained relationship with her 40 staff as the result of a new labour law that starts this year, which will make it harder to hire and fire staff. ”I don’t think the government’s new employment policy is fair. It puts a lot of pressure on us and might cause some unrest in our shops.”

Rodent rising

In astrology, rat years are associated with wealth, but also death. The animals’ attributes include cunning, aggression, leadership, hard work and strong will. According to a popular myth, the rat is the first animal in the 12-year cycle because it sneakily rode on the back of the ox (the second year) and jumped off near the finishing line.

Xiang Wen, a pest-control engineer, said he is in a growth market. ”I feel that in Beijing in 2008, the Olympic year, there is a particular stress on the extermination of rats,” he said. ”When we were holding the Asian Games, the electric cables were ruined by mice, and the transportation of signals stopped for a few minutes. So the eradication of rats is being taken very seriously.”

Britain is playing its part. In his last job before the Spring Festival, Xiang used a rare United Kingdom export to China: Talon rat poison.

In the Year of the Rat, Xiang said his biggest worry is seeing a mouse at one of the Olympic venues for which he is responsible. — guardian.co.uk Â