China adjusts to a new economic normal
GONGYI ZHUANGCUN, CHINA — The Globe and Mail
No one at the California River Town golf course saw the axe coming. Ever since 2007, when its sprawling fairways began to take over rural fields that once grew beans and pears, California River Town had been a thriving staple of the local economy. It picked up awards, employed more than 500 and welcomed more than 300 golfers a day. Local celebrities and comedians walked its greens.
Golf was sweeping across China, with hundreds of courses being opened to a rising upper-middle class with money to spend – and the benefits spread widely.
More than 60 of the employees at California River Town came from the nearby village of Gongyi Zhuangcun, whose residents were put to work cleaning bathrooms and cutting grass.
It made for good work.
“I was quite happy there. There are so many flowers and green grass,” said Ms. Liu, a woman who worked at the course for seven years and declined to provide her full name for fear of reprisals.
Then on June 10, her boss came to tell her not to come back the following day. Instead of an advance dismissal notice, she was given a week’s pay and asked to sign papers saying her departure was voluntary. It was not. The golf course suggested the 51-year-old woman retire (in China, female factory workers can stop work at 50; public sector workers can retire at 55).
Five days later, another cohort was let go. She figures at least a third of the employees are now gone.
“They said business was bad,” Ms. Liu said. She was shocked. For most of the past four decades, China has known nothing but growth, a world where wages gained 10 per cent a year, employment was plentiful and tomorrow was practically guaranteed to be more prosperous than today.
“Now the economy is suddenly falling,” Ms. Liu said. She can’t understand it. “Golf used to be very popular. Why has it suddenly gone bad?” she asked.
It’s an increasingly common question across China, which is grappling with an economic slowdown that has shocked exporters, property developers and stock investors, and is now hitting something perhaps more important: public confidence. Economic weakness is suddenly taking centre stage, as the toll of shrinking gross domestic product figures – China is on track to post its slowest growth in 25 years, and economists increasingly question the official numbers – begins to grow apparent.
“Companies are suffering acutely from shrinking revenues and profits. This is a first, arguably since reform began,” said Peter Fuhrman, chairman of China First Capital, a boutique mainland China-based investment bank.
The collapse of the stock market may have simply been air rushing out of a giant bubble. But to many in China, it was a signal that things have changed, that there is now “a whole new world within China,” Mr. Fuhrman said.
“From what we understand, from companies out selling stuff in China, pretty much everybody has just has been sitting on their wallets since July. It’s been the sharpest drop that anyone has not only seen, but could imagine, in such a short period of time.”
It’s apparent not just in golf courses, but in hotels, restaurants and delivery services, along with factories and construction sites.