China Warns Officials: Allow Social Unrest, Lose Your Job

Submitted by Tyler Durden: To be sure, there are always going to be financial and geopolitical landmines and every once in awhile we - and by “we” we’re referring to the market, or the country, or humanity, or whatever collective you want to choose - are going to step on one on the way to ushering in a black swan event.
 

But when we look out across markets and across the political landscape it’s difficult to escape the feeling that there are more black swans waiting in the wings - so to speak - than usual. There’s the threat of a dirty bomb being detonated in a crowded Western European urban center for instance. Or the chance that Turkey ends up “accidentally” killing a Russian or Iranian soldier while shelling the Azaz corridor. And how about the possibility that China tries to save its economy by chancing a 30% devaluation of the yuan and inadvertently plunges the world into a crisis far worse than 2008?

The interesting thing to note about the third crisis event listed above is that an economic implosion in China may spawn a black swan far larger than that which would emanate from a crisis in the country’s banking sector and/or a deeper devaluation of the RMB.

As we’ve discussed on multiple occasions of late, China desperately needs to purge its economy of excess capacity. The industrial sector is weighed down by too much debt and too little demand, but an acute overcapacity problem prevents the market from getting anywhere close to clearing. Either Beijing moves quickly to ameliorate this, or else a wave of defaults will ripple through the industrial complex on the way to crippling the country’s banking sector, where NPLs are probably at least five times greater than the official numbers suggest.

The big question is this: how will China manage to restructure or otherwise wind down insolvent SOEs without triggering a wave of layoffs that will leave millions of Chinese jobless, destitute, and, most importantly, furious? In other words, the biggest black swan of them all - with the possible exception of terrorists detonating an actual nuclear weapon - may be a coup in China stemming from the sweeping layoffs the country must implement to restore the industrial sector to some semblance of solvency.

Indeed we’re already hearing the rumblings of social unrest. Thousands of miners in China's coal-rich (or poor depending on one's perspective) north have gone on strike over months of unpaid wages and fears that government calls to restructure their state-owned employer will lead to mass layoffs. Earlier this month, protesters marched through the streets of Shuangyashan city in Heilongjiang province, venting their frustration at Longmay Mining Holding Group, the biggest coal firm in northeast China.
Subsequently, in the country's southwest, eight construction workers tied to a protest held in Langzhong last August were subjected to a 1950's-style public sentencing. Their crime: protesting unpaid wages. Their charge: obstructing official business. The verdict: guilty.

"Don’t take the public for fools,” one citizen wrote on Chinese social media. “You think the people don’t understand your purpose in using public sentencing?"

Just to be clear the “purpose” is this: discouraging protests which the politburo rightly views as the precursor to social unrest.

Just this week, “the Communist Party’s Central Committee and the State Council, China’s cabinet, warned party and state officials that they will lose their jobs if they fail to control public unrest,” WSJ writes. And while “that’s not altogether surprising [as it is] on one level,  just a restatement of longstanding practice, [it] marks the first time authorities have come up with a definitive public statement explicitly warning party and state officials 'at all levels' that their jobs are on the line.'”

The warning from the politburo is likely tied directly to the abovementioned protests in what The Journal describes as the “gritty” streets of Shuangyashan. “Government officials are likely worried that the Shuangyashan incident and others could inflict a political cost on the leadership by highlighting issues such as the deficit of labor rights in China,” WSJ continues, before delivering the following summary of everything outlined above:

Party chiefs face a difficult task. Over the next five years, they need to shut down millions of tons of industrial capacity that’s making China’s economy inefficient. This means downsizing scores of steel, coal and other large industries that currently employ hundreds of thousands of workers. They have promised to do this without large-scale layoffs. Those displaced, Mr. Li said, would be given new jobs or government assistance.

These promises now hang in the balance.

Yes they do, and as we outlined a week ago, reassigning steelworkers and miners to lower paying jobs in sanitation, logging, and other industries may keep the official unemployment rate subdued, but it will do very little to appease workers who are forced to take a 60% pay cut. Strikes, The Journal goes on to note citing China Labour Bulletin, have risen by 200% from July 2015 to January of this year. Click the image below for an interactive map.

Needless to say, we're highly skeptical that Beijing will be able to avert widespread protests. The question is whether those protests coalesce into an organized, political movement or whether the frustration simply manifests itself in disparate, ad hoc demonstrations against specific SOEs and/or local governments. 
Of course manifestos like that which appeared on March 4 on Wujie News may help to galvanize public opinion and focus frustrations on the central government. On that note we'll close with what we said earlier this month: "The Party had better figure something out quick. Because while you can make an example out of a handful of construction workers, and while you can "disappear" dissident journalists, the only thing you can do when millions of furious Chinese descend on Zhongnanhai is start shooting."
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Full statement from CPC Central Committee and State Council
Xinhua News Agency, Beijing, March 23 - Recently, the CPC Central Committee and State Council issued the "implementation of a sound social security comprehensive management leadership responsibility rule", and issued a notice requiring all localities and departments follow.
"Improve the implementation of the comprehensive management of social security provisions of the leadership responsibility," reads as follows.
General Provisions
The first is to further promote the social security comprehensive management, and improve the implementation of the leadership responsibility, and comprehensively promote the construction of China Ping An, to ensure that people live in peace, social stability and order, stability of the state, enactment of this provision.
These rules shall apply to all levels of the Party organs, the NPC organs, administrative organs, the CPPCC organs, judicial, procuratorial organs and leading bodies and leading cadres.
People's organizations, institutions, state-owned enterprises and their leadership, cadres, leaders referring to the implementation of this provision.
Article sound implementation of social security comprehensive management leadership responsibility, should adhere to Deng Xiaoping Theory, the important thought of "Three Represents", the scientific concept of development as guidance, thoroughly implement the General Secretary Xi Jinping series of important speech, focus on building a moderately prosperous social, comprehensively deepen reforms and comprehensive rule of law, comprehensive strategic layout party strictly adhere problem-oriented, rule of law thinking, reform and innovation, seize the "critical few", served to strengthen the sense of responsibility for the implementation of leadership, the use of scientific assessment, supervision, evaluation, motivation, discipline and other measures, the formation of the correct orientation, at every level, layers of implementation, so that all levels of leadership and leading cadres effectively assume the party to maintain stability and ensure the peace of the great political responsibility to ensure that the party Central Committee, State Council on the implementation of social security comprehensive management decisions and plans.
Chapter II Liability content
Article strict implementation of territorial management and who is in charge who is responsible for the principle of building the party leadership, government-led, comprehensive management coordination and concerted efforts of various departments, social security comprehensive management work pattern of the social forces to actively participate.
Article party committees and governments at all levels should strengthen the leadership of the social security comprehensive management, and included in the agenda, into the overall economic and social development planning, work conscientiously study and solve important problems and ensure social security comprehensive in terms of human and material resources the smooth conduct of governance.
Around the main party responsible comrades is the first responsible person's social security comprehensive management, responsible comrades in charge of the comprehensive management of social security is directly responsible, other members of the leadership team in charge of responsibility within the scope of the comprehensive management of social security.
Article VI of the various departments and units should be responsible for their own, fully perform their functions, and actively participate in social security comprehensive management, good initiative to take responsibility to prevent and reduce crimes, maintaining public order and social stability, a good grasp of the departments and units the comprehensive management, and operations with planning, with the deployment, with the check, the same implementation.
Article committees for comprehensive management of social security at all levels and their offices should be under the unified leadership of party committees and governments to seriously organize the relevant units to participate in social security comprehensive management, strengthen supervision and inspection and investigation, and timely information, analysis of social law and order situation, coordinate and solve prominent problems encountered in the work of popularizing typical experiences, promote co-ordination of social security comprehensive management work.
Chapter supervision and inspection
Article VIII of the regional units and departments should establish and improve the social security comprehensive management of target management responsibility system, the social security comprehensive management tasks broken down into a number of specific goals, develop easy to implement measures to check and establish a strict supervision and inspection system, quantitative appraisal system, evaluation of rewards and penalties, from top to bottom layers of the signing of the comprehensive management of social security responsibility.
Party committees at all levels should Article IX of the Standing Committee on the implementation of social security comprehensive management leadership responsibility as a party to the same level plenary of the Committee Report of the work of important content.
Party and government leading bodies and leading cadres should be fulfilled as an important part of the annual work report of the social security comprehensive management responsibility for the situation.
Article X social security comprehensive management committee member units shall deploy units of the system and to carry out the comprehensive management of social security, and promote peace-building situation is summarized annually, making arrangements for next year's work and report to the same level of social security comprehensive management Commission.
Under a social security comprehensive management committee should be up an annual social security comprehensive management committee reporting.
Party committees and governments at all levels shall be included in the social security comprehensive management work supervision and inspection range, timely organization to carry out special supervision and inspection.
Levels of social security comprehensive management committee members and their offices should mobilize and organize the masses to participate in order to promote the comprehensive management of social security policy decisions into effect.
Article XII of Party committees and governments at all levels should establish a sound social security comprehensive management evaluation system of mechanisms, improve the examination system of evaluation criteria and indicators, a clear assessment of the contents of the evaluation, methods, procedures.
Article XIII Party committees and governments should strengthen social security comprehensive management appraisal results of use of the social security comprehensive management work performance as an important part of leading bodies and leading cadres comprehensive appraisal of the performance evaluation, job promotion, reward punishment and other hook.Comprehensive management of social security at all levels should promote the establishment of the Office of the Committee and its sound social security comprehensive management work performance files.
Organization and personnel departments at all levels in the study of party and government leading cadres and leaders in charge of social security comprehensive management Cadres, were promoted the use and Jin Zhi promotion, should understand and grasp the situation related to the leadership cadres arrested social security comprehensive management work.
Article XIV above the county level social security comprehensive management committee and central office should be in accordance with the relevant provisions to strengthen with the same level discipline inspection organs, organization and personnel departments coordination, synergy incentive to do a good job.
Chapter IV recognition awards
Article XV for solid work, social security comprehensive management of outstanding achievements of local party and government leading cadres in charge of departments and units and cadres, should be given recognition and awards in accordance with relevant regulations. Was honored for leading cadres, should the relevant materials stored in personal files.
Article XVI Central Committee for Comprehensive Management of Social Security, the Central Organization Department, Human Resources and Social Security Ministry carried out every four years, a national social security comprehensive management of advanced collectives and advanced workers named in recognition of the work.
Article XVII commended national social security comprehensive management of advanced collective party and government leading cadres and leaders in charge of cadres should be rewarded. Commended for national social security comprehensive management of advanced workers, we should implement the provincial model workers and advanced workers treatment.
Article XVIII of more than three consecutive commended national social security comprehensive management of advanced collective, by the Central Committee for Comprehensive Management of Social Security in an appropriate form to be commended.
Article XIX local social security comprehensive management committee and the organization and personnel departments at all levels should cooperate with the national social security comprehensive management of advanced collectives and advanced workers named in recognition of such work.
Chapter V Supervision responsibility and accountability
Article XX party and government leading bodies and leading cadres in violation of the provisions of or failure to perform duties correctly covered by this provision, one of the following circumstances, it shall be the responsibility of supervision and accountability:
(A) does not attach importance to social security comprehensive management and peace building, poor implementation of measures related to work, in the region of the grassroots work of the unit system is weak, serious disruption of law and order;
(Ii) in the region of the system units in a relatively short period of time in a row major criminal cases, group events, public safety incidents;
(Iii) in the region of the present system of the unit causing especially serious criminal cases, group events, public safety incidents;
(Iv) in the region of the social security comprehensive management unit (peace building) Evaluation unqualified, non-compliance;
(V) the masses have strong social security and highlight key areas of public safety, law and order issues, or did not take effective measures to rebound;
(Vi) Party and the Committee for Comprehensive Management of Social Security and government at all levels need to consider other matters of inquiries.
Twenty-one pairs of party and government leading bodies and leading cadres of accountability and responsibility for supervision methods include: communications, interviews, supervise the handling, the implementation of one-vote veto system, resign, ordered to resign, removal and so on. Shall be liable for disciplinary violations, the party and government discipline; constitutes a crime, be held criminally responsible.
Article 22 Article XX circumstances listed in this region has a predetermined unit, above the county level by the respective social security comprehensive management committee office informed in writing briefing by the social security comprehensive management committee, if necessary, the deadline rectification.
Article 23 After being informed still on schedule to complete the rectification goals, or having the present circumstances as prescribed in Article XX listed and serious harm or affect major regional units from the corresponding higher level of social security comprehensive management committee Office Director of the party and government to conduct interviews of its leading cadres, social security comprehensive management in charge of leading cadres and other leaders responsible team members, if necessary, by the social security comprehensive management committee director, deputy director of the interview, to help analyze the causes and urge deadline for correction.
Article 24 After being interviewed still on schedule to complete the rectification goals, or have these provisions and circumstances set forth in Article XX particularly serious harm or particularly significant influence but not serious enough to implement one-vote veto system areas, units, supervise the handling by the office of integrated governance Committee on an appropriate social order, the deadline for rectification. If necessary, the Working Group stationed in the region to supervise the handling unit inspection supervision.
The Central Committee for Comprehensive Management of Social Security Office annually from public security, law and order problems relative prominence of the city (prefecture, league), it is determined as supervise the handling of a number of focus on remediation units, strengthen supervision and management.
Supervise the handling by the regional unit, within six months to cancel the area selection unit integrated honorary title and qualifications in the area, the unit leading cadres in charge of leading cadres, leading cadres in charge of the first assessment alumni, Jin Zhi promotion eligibility.
Article 25 has not yet been completed on schedule and supervise the handling after the rectification goals, or have the case listed in Article XX of this provision and particularly serious harm or particularly significant impact on the region, units from the corresponding on a comprehensive social security governance Committee in accordance with the relevant provisions of the central and commercial departments jointly decided to implement one-vote veto system.
Article 26 being one-vote veto system processing area, unit, within a year, the abolition of the area, the unit Eligibility comprehensive honorary title by the organization and personnel departments in accordance with relevant authority and procedures; cancel the region unit of leading cadres in charge of leading cadres, leading cadres in charge of the first assessment alumni, Jin Zhi eligible for promotion by the organization and personnel departments handled in accordance with the cadre management authority and procedures, and in conjunction with the office of the Committee for comprehensive management of Social security, in accordance with the provisions of the relevant central to the higher level department report, for the record. The area needs to be investigated, the unit responsible party and government cadres, discipline inspection organs transferred according to discipline according to law.
Article 27 The central unit in place need to implement one-vote veto system by the provincial public security comprehensive management Committee written recommendations to its competent authority and the Central Committee for Comprehensive Management of Social Security.
Article 28 The party and government leaders have the circumstances specified in Article XX, in accordance with the "Interim Provisions on the implementation of party and government leaders accountable" should be taken to resign, ordered to resign, removal and other means of accountability by discipline inspection organs, organization and personnel departments handled in accordance with administrative privileges.
Article 29 Party and government leading bodies and leading cadres have the circumstances specified in Article XX, and one of the following circumstances shall be given a heavier responsibility for supervision and accountability:
(A) interfere with, impede the investigation of and accountability;
(Ii) fraud, to conceal the truth, cheat significant underreporting of cases;
(Iii) prosecutors, complainants and other retaliatory strike;
(Iv) other aggravating circumstances the party regulations and state laws and regulations.
Article 30 Party and government leading bodies and leading cadres of the provisions set forth in Article XX has a case and having one of the following circumstances, may be given responsibility for supervision and accountability:
(A) take the initiative to take measures to avoid losses, to restore the impact;
(B) actively cooperate with the investigation, and take the initiative to assume responsibility;
(Iii) other mitigating circumstances within the party regulations and national laws and regulations.
Chapter VI Supplementary Provisions
Article 31 provinces, autonomous regions and municipalities and Xinjiang Production and Construction Corps, various departments of the central and state organs may formulate implementation measures in accordance with these provisions.
The provisions of Article 32 by the Central Committee for Comprehensive Management of Social Security is responsible for interpretation.

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