Matt Schiavenza

One of Andrew Sullivan’s correspondents today, an English teacher in Shenzhen, wrote the following about how the recession is playing out in China:

…it’s surprising how well China’s Maoist legacy acts as a safety net inside a capitalist economy. Shenzhen and cities like it, effectively, have half of their population living not as citizens, but as long-term temporary workers. Most of these workers who are getting downsized now will be returning to homes and farms in the countryside because they mostly were not allowed to sell. Most never made permanent residence because the archaic “hukou” household registration system ties delivery of government goods and services to those hometowns. If it works out well, they’ll be going back to a rent-free home with decent savings and severance to start their own projects, where their children have free education and increasingly subsidized health-care. As terrible as these policies looked during the boomtimes, they’re looking increasingly wise today.

Is this overly optimistic? My instinct says yes. Changing government policies have made the western provinces, where these “long-term temporary workers” come from, more attractive venues for launching a business. But opportunities are still far fewer there than in Guangdong, even with the steep drop in exports.

Any thoughts?