By Tom Phillips at The Guardian
A billboard on the motorway into China’s steel capital evokes the golden era of the country’s blistering economic rise. “Gathering great wealth!” it boasts. “Business wins the future!”
But at the Fufeng steel plant on the outskirts of Tangshan, a once booming industrial hub about 200km south-east of Beijing, there is scant sign of those glory days.
Since Fufeng’s owners declared bankruptcy early last year – laying off about 2,000 workers and sparking protests in the process – weeds and rust have begun to consume the steel mill’s industrial ruins.
“There’s nobody here – just us,” said one of three security guards braving snow and sub-zero temperatures to watch over the dilapidated facility, which, like many others in the region, has been forced out of business by massive over-capacity and plummeting demand.
Tangshan, a city of about seven million inhabitants in Hebei, China’s steel-making heartlands, was levelled by a devastating 1976 earthquake that is said to have claimed 250,000 lives.
But it rose from the ashes to become a heavy-industry powerhouse, propping up a massive Chinese construction boom and churning out more steel in 2014 than the United States.
Those days now appear over, as concerns mount over the health of China’s economy and its possible impact on the rest of the world, and Beijing fights to reinvent the world’s second-largest economy and clear its smog-choked skies, in turn piling the pressure on heavily polluting steel plants.
Since China began ramping up efforts to slash steel over-capacity and transition to a more sustainable, consumption-led economic model, some corners of Tangshan’s once bustling industrial sprawl have taken on the appearance of ghost towns.
Near the Fufeng plant, homes vacated by laid-off workers have been sealed up with metal sheets, snowflakes fall on eerily deserted streets, and those steelworkers who still have jobs complain their salaries have been cut as steel prices fall, government support is withdrawn, and their employers struggle to stay afloat.
A few hundred metres beyond the shuttered Fufeng complex, the premises of another company, China Metallurgical Hengtong Cold Rolled Technology, also lies abandoned, electricity cables drooping on to a corrugated iron fence blocking its unused entrance.
“Things are bleak,” said one retired mill worker who lives in Kua Number One village, just beside Fufeng.
Another man, who works at the nearby Guofeng mill, which is still operating, but only just, claimed his monthly pay had been cut by 25%. “Life is really hard right now,” he complained.
“Everything here is about steel. If it shuts down, it’s over. If our mill closes, we will have no land, no money and no work,” said the 52-year-old father of one, who declined to give his name.
This week, China announced that its economy last year grew at its slowest rate in 25 years, contributing to fears of an accelerated slowdown that could affect financial markets across the world.
On Thursday, Fang Xinghai, a Stanford-educated top economic adviser to president Xi Jinping, attempted to reassure the world over his country’s ability to avoid a hard landing that would have severe consequences for the global economy.
“China is blessed with the strong and long-term focused leadership of President Xi Jinping, the best leader in the world,” Fang, the former deputy head of the Shanghai Stock Exchange, told the Wall Street Journal.
“With his leadership, we can deal with the inevitable risks and volatilities arising out of the transition.”
He added: “The transition speed is perhaps not fast enough for some people, but quite fast indeed for a country the size of China, and this process of transition will continue.”
But in the wake of last year’s stock market debacle and another recent bout of jitters, which experts blamed on the government’s confused policies, there is increasing scepticism over the ability of President Xi and prime minister Li Keqiang to handle the economic challenges ahead.
Patrick Chovanec, a China expert and chief strategist at New York’s Silvercrest Asset Management, said: “When you see things that make them look like their policy footing is uncertain, people who are betting on the government to determine the outcome get nervous [and think], ‘Well, if their policy footing is uncertain about the exchange rate, maybe it is uncertain about the stock market or about the property market or about other things.’ It makes you wonder.”
Chovanec said one major concern was the apparent sidelining of Li Keqiang, who was supposedly in charge of China’s economic re-balancing.
“The impression that a lot of people have is that Li isn’t really the decision maker, and hasn’t been for quite some time, and that everything has been centred on Xi,” he said. “All the reins have been held in one hand which – even if it was a very competent hand – would be potentially problematic given the full plate of challenges that they face and the full plate of reforms that they say they are interested in implementing.”
While China’s leaders struggle to control their country’s economic transition, Tangshan’s residents are left to reminisce about the golden era of double-digit growth.
Fan Jiangqiang, 47, a local entrepreneur, said the region’s halcyon days had come in 2008 and 2009 when China’s galloping economy saw steel consumption soar and the acrid smoke above his home signalled that business was booming.
“The supermarkets were always full of people. Many businesses opened up. People would go out to karaoke and for drinks. People consumed a lot,” Fan recalled.
“[But] right now, things just keep going down. More and more companies are going bankrupt,” he said.
Cui Jianjun, a 46-year-old chicken salesman who works in the shadow of the once bustling Fufeng plant, said: “When the mills were operating properly lots of migrants would come here to work. Now the mills have closed, they’ve gone home. My business has suffered.”
China’s flagging economy is already taking a punishing toll on the country’s workforce.
China Labour Bulletin (CLB), a Hong Kong-based campaigning group which monitors such unrest, recorded a dramatic escalation in strikes and worker protests towards the end of last year. Across China there were 2,774 incidents in 2015, double the previous year’s figure of 1,379 incidents.
“All sectors of the economy are clearly experiencing problems,” said CLB’s Geoff Crothall. “And the reason the workers are going out on strike and staging protests is simply that they have no other option.”
Crothall said that of the 51 “incidents” in Hebei province last year, 15 had been related to the depressed steel industry, with a very clear upsurge in the last quarter of 2015.
One of those protests took place outside the gates of the Fufeng steel mill, where disgruntled former workers gathered to demand unpaid wages.
Video footage posted on the internet shows police facing off with demonstrators, one of whom is dragged away from the scene.
As world leaders and the global business elite gathered at the World Economic Forum in Davos on Thursday, a group of steel workers huddled inside a small supermarket-cum-gambling den not far from Fufeng to smoke cigarettes and ponder their fates.
“It all depends on the government. If the government wants us to survive, we will live on,” said the 52-year-old worker. “If the government says no, we will close.”
Another man attempted to lighten the mood with a joke. There was one major upside to all the economic gloom, he pointed out, letting out a loud guffaw. “The air is much better these days.”