Unsafe Mines And China IPR

There was an article in the China Quarterly about mines, and the issue is a lot more complex than it may first appear. The mines are the only source of employment in some areas of China, and it seems to me very likely that throwing millions of miners out of work is something that Beijing does not want to do lightly.

The Chinese government is a huge bureaucracy with different people having different interests. If it was just a matter of financial loss for local officials, the problem would be easy since Beijing could just pay the officials what they lose from the mine closures. The problem is that there is a huge employment issue here.

One other interesting fact is that the death rate of miners per hour worked, isn't extraordinarily high. What is high is the death rate per tons mined, and that reflects the fact that Chinese mining is very labor intensive. The death rate isn't going to get cut dramatically until the mines get much more mechanized, but mechanizing the mines means throwing people out of work.

(The same issue also holds for IPR. Beijing is not going to crack down hard on IPR unless someone comes up with a plan to employ the tens of millions of people that are employed by the bootleg CD industry.)

I agree with Joseph that the problem is more then just central and local governments. If the problem is simply the local governments, Beijing can easily replace the local officials not supporting the policy. The problem goes deeper then that.

Two years ago, I was at a dinner with CEO of one of the largest coal mining corp in south China and the official who oversee the mining industrial. The dinner topic turned to the mining accident. The CEO told a story about their recent mining accident. Most of the miners are from out of province and their relative came to identify the body and collect compensation. The compensation for the dead is RMB 15,000. The CEO told me that the relatives was holding his hands thanking him for the compensation in tear and left without the body.

The CEO arranged funeral for those. He wished he could do more for the mine safety but by the time they could finish installing the safety system in place, Beijing's deadline for closure would be reached. He couldn't close the mine as there would be dangerous consequence dealing with the out of jobs miners. Consider the worth of their lives and the dependence of their relatives on their mining income and multiply this by 17,000, that's a seed for a revolution from inner China.

The local official overseeing the mining was himself sent to coal mine during the cultural revolution and worked in the mine for 5 years. He had been actively fighting for the benefit for the miners.

Most of the small mines are low yield low quality coal mine. Joseph is right, the per hour death rate is normal but the per ton death rate is high. It's not Chinese mine isn't safe, it's the extra amount of works needed to mine the same amount of coal. The low quality mine produces more pollution as well.

I think the article is a PR spin for Beijing trying to paint local officials as corrupted and cite that as the reason for the delay. Citing unable to solve the problem of the common people would be dangerous for Beijing as Chinese authority derives its legitimacy from the mandate of common people, at least the perception of the mandate.

There's actually a balance between too much control and too little, and the fact that the central government doesn't get everything it wants from local governments is sometimes a good thing.

The problem with political evolution is that there is only a limited degree to which it can be planned. Whether the PRC ends up looking like Taiwan, Singapore, and Hong Kong in 2075 depends on a lot of political accidents and coincidences, none of which can be planned. Personally, I think that the best results happen if you fix the immediate problems, and then over the long run let the situation evolve.

it's not the only tragic thing in china. chinese people have paid much for the consequence everytime when local government don't implement central government's macro policy. unsafe mine is, and the real estate(house) is too. from my point of view, I didn't see central government made big mistakes in economic policy in recent years. but many local government did! and i think local government should get more control from local citizen primarily, not from central government.

I think the angle about the central government being unable to control local officials reaches a much deeper issue - China will not and cannot follow the "Asian Tiger" model of economic development because it is far larger than Singapore, Hong Kong, Taiwan or South Kora. Even among these four, Taiwan and South Korea have had significantly higher speed bumps to development than Hong Kong and Singapore due to their larger size.

Neither can China follow the Japanese model of development. The Japanese were able to act with the cohesion of a much smaller nation because it had (and has) a cultural genius for social cooperation. One look at the chaos of China's road traffic will tell you that voluntary social cooperation is China's weakness, not its strength. China will have to blaze its own trail, and there's no telling how it will all turn out.

I disagree with David's assessment about local governments' failure to the central governments to be a disadvantage of China's growth. In fact, I'd argue central government (and Deng's policy) was more of legalizing what had already going on in the coastal provinces, e.g. Fujian and Guangdong.

As early as the 70s, the costal cities such as Fuqing, Xiamen and others have already start private trading with outside, especially Taiwan. Bags of plastic electronic watches for fish. Taiwan's fishing boats went back to the ports with boxes of fishes nicely wrapped. I met one owner of large suit company in Fujian got his starting capital selling watches to Beijing in late 70s.

The lack of central planning was exactly how China gets its growth. Unlike Japan's focus on growing electronics and auto, no planning officials in Beijing weaving the flags stating "Let China take over the global bra/underwear market!" (Well, I would like to see an central government officials say that. ;) But these are the most competitive sectors of China and the true growth engine.

Anything depending on Beijing's blessing grows to dependent on Beijing to keep them on life support. My area is in the software and this is probably the most obvious sector. How many time have we heard Beijing talking about software innovation? Where is the Chinese software industry?

I think the framework to consider the relationship between the central government and local governments in China can be trace to the Manchurian bureaucracy which is the true rulers of China for the past two thousands. Dynasty change really just happened in the central government level and most of the officials are rehired in the new dynasty.

Local governments really only execute Beijing's policy when the policy serves local interest; however, we won't see local officials publicly disobey Beijing even tho they would ignore Beijing's.

Beijing couldn't even force some of its biggest enterprise to execute its direct orders. In 1997, Beijing officially issue order banning PHS. Both China Telecom and China Netcom ignored the direct order and aggressively developed PHS in rural areas and secondary cities. Last year, they drove PHS into the top 10 cities with Beijing's dismay and Beijing had to grandfathered in new law to legalize PHS when PHS went on market in Beijing and Shanghai. The story of PHS offers a good insight into Beijing's relationship with the large SOEs and local governments.

China's development model is really a networked emergence model from bottom up. John Seely Brown has a interesting paper looking at the motorcycle business in Chongqing and how they defeat Honda. (http://www.johnseelybrown.com/davos.pdf ). I believe the same patterns to be uncovered to those leading industries in China.

I don't favor more central government control so much as less local protectionism, less corrupt self-dealing, and more voluntary cooperation at a private level. Many Chinese would lynch me for saying this, but the Japanese understand that when people work together without being forced to, everybody can win; in China the attitude seems to be "every man for himself". Yet Chinese can be very unselfish to friends and foreign 'guests'. The contrast between how Chinese act in private and how they act in public continues to astonish me after all these years. Although to be fair it's not all that different on the LA freeways...