With unemployment threatening to rise, and GDP growth softening, will the government intervene to protect employment as they have done in the past?  Two months ago Black and White Cat wrote about an assignment in Liaoning at the beginning of the decade.  One passage stood out:

"One conference room after another. In one of them, in another city, the factory boss told us he would have loved to show us round the workshops, but unfortunately he couldn’t because it was too hot. The law required that if the temperature rose above a certain level, the workers had to be given the day off. It had passed that level, so the factory was temporarily closed. Very enlightened. Perhaps.

"He said the Southeast Asian economic crisis had definitely affected the factory in terms of exports, but business was still good and this was certainly not the reason for the temporary closure. Since we didn’t meet any of the workers and we would soon be driven off to somewhere else, there was no way we could find out if this was true."

The same was true not just of Liaoning, though heavy industry SOEs are in higher concentration there.  While headline statistics suggested China was affected less than much of Southeast Asia, it was affected, and lots of rules and law that were previously unenforced became enforced, new laws were enacted, with the effect dampening the effects of the Asian Financial Crisis and cushioning local economies from vacuums left by the break-up of loss-generating state industry.

All Roads linked to Shanghai Daily articles: Chinese SOEs see double-digit decline in profits in 1st 11 months and More than 200 enterprises promise no job or salary cuts in Shanghai.

When sales fall, and don't look to rise for a while, required input in a business or manufacturing process usually falls too - but not jobs or salaries?  SOEs may remain under official policy direction, but this time it's a little different.  The state is less of an employer than it once was.  Yet the desire to maintain jobs and social stability remains the same.  How much intervention, and in what manner?  Unemployed garment manufacturers are unlikely to make good bridge builders.  It will certainly be tempting for local governments to ensure the new employment law will be upheld, and perhaps throw in a few by-laws.