Time Running Out on China's Boom

But let's face it: Dunlap, who fired 10,000 at Scott Paper and 3,000 at Sunbeam in the 1990s, is a piker compared with the Chinese government. In the years immediately after the Asian financial crisis that began in 1997, the ostensibly communist government in Beijing laid off 25 million workers at state-owned companies. By 2003, the total was somewhere between 40 million and 60 million.

But the Chinese government didn't just downsize state-owned companies. It also smashed the "iron rice bowl" that once provided guaranteed work, housing, schooling, health care and retirement benefits for workers in the state sector.

What's more, the central government has tolerated an internal migrant worker system that assures Chinese industry of an even larger army of even lower-cost workers.

An Onerous System

It works like this. Peasants looking for a better life can move to a city or an industrial zone and get a job. But they can't get a "hukou," the certificate of residence required to access public services such as schools, health care and unemployment benefits. These migrant workers live crammed in company dormitories, usually earning far below the official minimum wage and sometimes as little as $1 for a 12-hour day, doing the dirtiest and most dangerous work that no worker with a certificate of residence wants.

And quite often, the company refuses to pay the migrant worker even those wages. Official Chinese government figures say that more than 70% of the country's migrant workers were owed pay by their employers last December.