For months, the Communist Party had been able to deflect anger about factory closings toward the companies themselves. The party managed to come off as the benevolent savior by handing out cash to make up for unpaid salaries. The strategy stopped working at the Jianrong Suitcase Factory in late December.
When offered 60 percent of their wages to disband their protest and go home, the workers pushed back at riot police sent to keep them locked in their factory compound in the southern Chinese city of Dongguan. According to several witnesses, more than 100 irate workers broke through the cordon, some shouting, "There are no human rights here!"
As a global recession takes hold and China's economy continues to slow, growing legions of unemployed workers are becoming increasingly bold in expressing their unhappiness -- expanding a debate over how to protect the Chinese economy into long-fought disputes over other issues such as freedom of expression and equality before the law.
During most of the past two decades, concerns about China's human rights record have been overshadowed by the speed of its economic development and growing political influence in the world.
Challenges to the state's power
But as the economic crisis has grown, so, too, have challenges -- both small and large -- to the state's power.
In late November, two men whose village was involved in a dispute over a land deal took ink-filled eggs and desecrated Communist Party and national flags in Chongqing, the largest of China's four provincial-level municipalities, in a protest that copied the infamous defacing of Mao Zedong's portrait in the capital in 1989.
In December, 300 academics and other intellectuals signed a declaration of human rights known as Charter '08 that circulated on the Internet, sending Chinese authorities on a nationwide manhunt for its author.
Labor rights activist Li Qiang said China's economic problems have put the spotlight on social issues that have long existed -- such as the growing gap between the urban rich and the rural poor and the fight for worker rights -- but were played down by the government during the recent boom.
"The crisis in the West is purely economic. But in China it's a huge political problem," said Li, director of the New York-based China Labor Watch.
The ripple effects of the sharp economic downturn are growing: Crime is rising, as are labor strikes by taxi drivers, teachers, factory workers and even investors unhappy that their stock market holdings are now 70 percent off their peak.
Although Chinese authorities have been able to quickly disband the recent protests, there is concern that a single national-level event, if mishandled by authorities, could lead to a serious political crisis.
"Without doubt, we are 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 all levels of the party and government," Huang Huo, a reporter for the state-run New China News Agency, warned this month in a magazine published by the news service.
The greatest threat may come from the newly unemployed.
Unemployment is now estimated to be at its highest levels since the Communist Party took over in 1949. Job creation and preservation has become a top priority of China's leaders, who are acutely aware of the role a deteriorating economy played in the 1989 Tiananmen Square protests.
Economists say that if the growth of China's gross domestic product dips below 8 percent -- a healthy rate in most countries -- it would be a disaster here. The reason is that the demand for jobs would far outpace China's ability to create them.
Estimates by government research agencies for urban jobless top 18 million, or 9 percent of the workforce -- a rate unimaginably high to those who remember the guaranteed cradle-to-grave employment during Mao's time. This figure doesn't include the growing number of jobless among the 160 million migrant workers who are mostly employed in factories. The rural unemployment rate could be as high as 20 percent. In addition, 1 million college graduates are not expected to be able to find jobs this year.
China's social security minister, Yin Weimin, has said that the employment situation in China is "critical," with people fighting for jobs that don't exist. This year as many as 24 million people will be competing for as few as 8 million newly created jobs.
To combat unemployment, the Chinese government in recent weeks has reinstituted controls that in some ways turn back the clock to the "iron rice bowl" era that China has tried so hard to leave behind during 30 years of economic reforms.
Among the most radical measures is an order by some provinces and cities that prohibits companies from laying off workers without the explicit permission of the government. Other local governments are offering a subsidy of about $1,500 for every worker hired who had not already had a job elsewhere, and seed money for start-ups that will employ a certain number of people. The central government for its part has purchased millions of tons of cotton, soybeans, sugar and other products to prevent companies from experiencing financial problems that would lead to a reduction in their workforces.
Major public works projects
And as part of its massive $586 billion stimulus plan -- roughly 15 percent of its GDP -- China has embarked on several dubious public works projects.
A $3 billion metro rail system linking the southern manufacturing cities of Guangzhou, Dongguan and Shenzhen, for instance, has been criticized as a waste of money because there are already four railway lines linking the cities and the trains often run empty. Ditto a $4.5 billion highway connecting the Sichuan province cities of Chengdu, Zigong and Luzhou, because there are already highways from Chengdu to Zigong and from Zigong to Luzhou.
A bridge running from just outside Shanghai to a textile manufacturing center on the other side of a bay was also resurrected to create construction jobs. For years, its designers had been unable to get the $2 billion they needed to build it because its route would mostly duplicate that of another massive bridge that was already under construction.
That changed in November when at least six of the biggest employers at the other end of the bridge, in Shaoxing, went out of business. Even though there is less need because of the closures, blueprints for the second bridge were dusted off and, almost overnight, workers broke ground. The project is expected to employ about 250,000 people and indirectly provide jobs for 300,000 more.
Liu Bo, a 20-year-old salesman, said he hasn't seen any benefits from the government's efforts in his job search yet.
Technically speaking, Liu wasn't laid off but told by his employer, which provides sales help to companies during exhibitions, to take an unpaid "break" because there was no work. He has been sending out his résumé to company after company, but so far nothing. In previous years, Liu said, "I used to receive two or three interview invitation calls every day whenever I sent out my CV, but now there is really nobody who calls me." He is not hopeful about the government efforts: "I never want to depend on the government."
Liu is not the only one to discover the limits of China's deep pockets.
For all the help it is giving workers at factories in the export-heavy region of Guangdong province on the country's southern border, the government simply can't afford to pay every worker every yuan they are owed.
Now dealing with the third month of protests and sit-ins, the government has been gradually reducing its cash payouts to laid-off workers.
The workers at the Jianrong Suitcase Factory, who make an average of about $220 a month, finally accepted the government's money and went home after their bosses couldn't be located. But it was not without a fight that left workers with scrapes and bruises and, more important, resentment over their fate.
Still, the Jianrong workers are among the lucky ones. Tong Hengxin, a headhunter in Guangzhou, said some laid-off factory workers are getting back much less from the government, only a third of what they rightfully earned. With job prospects bleak, that money can't last long. As a result, Tong said, the mood is desperate: "Workers are always threatening to jump from the buildings and commit suicide."
Researchers Liu Liu, Liu Songjie, and Zhang Jie in Beijing contributed to this report.