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DONGGUAN - They surged into the grimy streets around the factory: first scores, then hundreds, then more than a thousand, as word spread and tension loaded the stale, grey air.
The boldest overturned a police van and smashed up motorcycles, then tore through the building destroying computers and equipment. The mood was exhilarated, angry and frightened.
"It happened so quickly ... There were maybe 500 involved and another 1000 watching. People were yelling: 'It's good to smash'," said a witness.
But the riot late last year at the Kai Da factory in Dongguan, amid the grim industrial sprawl of the Pearl River Delta, was not an isolated incident. It was one of tens of thousands of protests, many erupting from the same mixture of economic grievances, resentment of police and swirling rumour.
The numbers have been climbing steadily for years. But as the Chinese New Year is celebrated and the global economic crisis deepens, the Government fears mass unrest could challenge its control of the country, threatening a communist regime that has embraced capitalism with spectacular results.
This year is the Year of the Ox in the Chinese zodiac; a symbol of hard work and tenacity. But no one feels bullish as exports plummet and factories shut their doors. Hundreds of millions who have travelled home for their annual family reunion have little to celebrate.
State-run magazine Outlook issued a remarkably stark warning of the dangers posed by rising unemployment.
"Without doubt, now we're entering a peak period for mass incidents.
"In 2009, Chinese society may face even more conflicts and clashes that will test even more the governing abilities of the party and Government at all levels," said a senior Xinhua agency reporter, Huang Huo.
"The key is going to be what happens in a week or two. How many people are going to come back? And are there going to be jobs for them?" asked Geoffrey Crothall of China Labour Bulletin, a Hong Kong-based organisation defending mainland workers' rights.
The unrest at Kai Da began as a dispute over redundancy pay, when the company refused to renew the contracts of several workers. It led to a scuffle in which workers claim that the laid-off staff were beaten.
"How could the workers not fight back? What else could they do to defend themselves?" asked an employee. That spirit has pervaded a spate of recent disturbances in Dongguan: protests outside government offices by unpaid workers; clashes with police as plants and factories shut.
"Mass incidents", as officials describe them, have been on the rise for years. According to the Ministry of Public Security, there were 10,000 across China in 1994. By 2005, that had risen to 87,000. Experts believe the numbers have increased again, not least because the Government has stopped publicising them.
Even in the boom years, China felt growing pains. Its frenetic development has created pollution, social dislocation, corruption and rocketing inequality. But it is the sharp decline in industry that is really hurting now. Pressures in the export-led Pearl Delta began to build in late 2007, as the appreciating yuan and growing production costs took their toll. Recession in the West was the final blow: exports actually fell in November for the first time in seven years.
According to officials, more than 15,500 businesses in Guangdong province shut in the first 10 months of 2008. More than half of those went under in October. Many more are teetering. Thousands packed workers home without pay months ahead of the holiday.
Officially, the urban unemployment rate has hit 4.2 per cent. But that does not include migrant workers, who are not registered in the cities. The Chinese Academy of Social Sciences puts the real level at 9.4 per cent, and expects it to rise.
"The impact of the downturn has been huge," said Wu Qinfei, who sells rich red-and-gold New Year decorations in Dongguan, around the corner from the Kai Da factory. The banners bear wishes for wealth and happiness, but few expect the next 12 months to bring prosperity. "I've got maybe 60 per cent of the business I had."
Trade was even worse at Old Chan's stall, where workers buy showily packaged oranges as gifts. "Before, we could sell 70 boxes a day - now it's 20," he said. "We could charge them 27 yuan, but that's gone down to 15 or 16."
Chan's fortunes mimic those of Guangdong. When he first arrived two decades ago, the Kai Da plant was still under construction. "It was on the other side of a stream, and on this bank, there were no buildings, just banana trees," he recalled. "In the 1990s, things became better as the factory brought more people. But this year's business is really the worst."
An hour's drive away, in the provincial capital, Guangzhou, Mrs Cui's eyes filled with tears as she contemplated the new year. She and her husband were queuing for a train home to Shandong.
"The family didn't have any money, so we came here to earn some selling flowers. We borrowed money from the bank and have lost about 30,000 yuan ($8,537)," she said.
Down the queue, Wei Xian is 40 years her junior; his punkish hairstyle and the two spikes through his left ear hinted at his newfound urban tastes. But he, too, was not coming back in the new year.
"I hope I can have a life in a big city like Guangzhou, but being a migrant worker is too hard right now," he said. "We were dealing in scrap and the prices plummeted, so they cut my salary by a fifth. My family has a farm and maybe I can run a small business there."
The Government is happy to see them go. Liu Shanying, an analyst at the Institute of Political Science in the Chinese Academy of Social Sciences (Cass), says the unemployed are less likely to revolt at home. "People tend to behave themselves in such environments. When they work in other cities, where most other people are strangers, they may not care about what others think so much," he said.
Rural officials are trying to create work, investing in construction projects and running training courses in skills such as rabbit farming. But the villages do not look too appealing to most of those who left.
The urban-rural income gap is at a record high, with city residents earning more than three times as much as those in the countryside. Without the money sent home by migrant workers, the discrepancy would be far starker.
However, many analysts are optimistic. Guangdong has been badly hit, but some laid-off workers have found jobs elsewhere. A recovery is predicted in China in the second half of this year. And, if consumer confidence holds up, the rot may not spread.
"Large-scale unrest that threatens general social stability and overall investor confidence is unlikely," UBS economist Wang Tao said recently.
She pointed to the effects of the Asian financial crisis and the restructuring of state-owned industries in the late 1990s. Some 35 million urban workers were laid off between 1997 and 2002, yet no major unrest resulted.
This time, the Government has more resources and has made it clear it will spend them. At one end of the scale is its 4 trillion yuan ($1.13 trillion) stimulus package; at the other, cash payments for laid-off workers.
But Victor Shih, assistant professor of political science at Northwestern University in Chicago, sees the potential for "explosive" change. He argues that unemployment could easily reach 50 million; that migrant workers are younger and more volatile than those laid off in the 1990s; and that news spreads faster thanks to mobile phones and the internet.
The expansion in higher education has also led to millions of unemployed graduates - the most dangerous ingredient, in official eyes, given the student protests of 1989.
At the least he expects a spike in localised riots resulting in the mobilisation of armed police all over the country. And "if a systematic trigger occurs and instability spreads to a sizeable city, we will see the large-scale mobilisation of both paramilitary armed police and army units, and possibly substantial bloodshed", he added.
Yet he, too, concludes that a change in regime remains highly unlikely. China's leaders know better than anyone that their claim to authority rests on their ability to provide a good living. They are also particularly aware of this year's sensitive anniversaries, including the 20th of the Tiananmen protests and the 60th of the People's Republic itself.
But so far there is little sign of workers blaming the Government for their woes. Most cite the global downturn; many have gripes with employers or local officials. Few seem to connect it to Beijing.
Nor are there signs of unhappiness and dissent becoming organised. Last November, a taxi strike in Chongqing prompted stoppages by drivers across the country. But it was copycat, not co-ordinated, action.
The authorities have also become far more sophisticated in tackling unrest. Recently, the minister of public security warned officials that their chief task was to prevent mass incidents from getting out of control.
"Absolutely avoid inappropriate use of police, poor definition of their role and mishandling that exacerbates conflict, and absolutely avoid incidents of bloodshed, injury and death," Meng Jian urged them.
Optimists hope the downturn may prompt the country's leaders to address its underlying problems: restructuring industry, improving the social safety net, tackling inequality and protecting migrant workers.
That sounds naive to some, given the challenges facing the country. But Dr Liu of Cass said the outlook for 2009 was better than it appeared.
"According to traditional culture, people tend to see the extreme of adversity as the beginning of prosperity," he said. "Chinese people are stronger and more optimistic when we fight against disasters or misfortune."
OFF THE BOIL
6.8 per cent
China's growth in the last quarter of 2008, after five years of double-digit expansion.
8 per cent
Growth needed to absorb new labour force entrants.
50 million
Jobless forecast.
- OBSERVER
