Country Driving [215]
A few months later Master Luo left the bra ring factory. They had never paid him the promised salary, and they owed him nearly fifteen hundred dollars, an enormous sum in China—but at last he decided to cut his losses. He returned to the south, where he found another boss who wanted to get into the ring business. Master Luo helped the boss assemble two Machines, and sales were moving briskly when the global economic crisis struck. During the second half of 2008, the effects were felt in factory towns all across China. “Every day you heard about two or three companies going bankrupt,” Master Luo told me. His own factory laid off workers, which was common during that period. Back in Wenzhou, Boss Gao and Boss Wang reduced their workforce by half. In the end, their factory survived, but it was a tough year.
Others in the region weren’t so fortunate. In Lishui, real estate prices plummeted, and the Yintai real estate company, which had built the Riverside apartment complex that I visited, was suddenly in trouble. Much of their funding was private, but by the summer of 2008 they couldn’t pay interest on these loans, and a panic swept through the investors. They all wanted their money back, but the company couldn’t pay; one farmer became so distraught that he killed himself by drinking pesticide. The government investigated, and they uncovered what everybody had known for years—that Yintai had raised money illegally. All told, more than fifteen thousand people had made loans to the company, whose total debt exceeded 123 million dollars. Now that they couldn’t pay, the government clamped down, seizing assets and arresting Yintai officials. The founder was thrown in jail, along with his sons; in 2009 they were still awaiting trail. Ji Shengjun, the young vice chairman of the board who had met me in his nightclub—dressed in Prada, accompanied by his bodyguard, drinking Old Matisse Scotch and green tea—could expect to spend years in prison. During the investigation of the Ji family, the government seized forty luxury vehicles, including a Ferrari.
But such major collapses were rare in China, which seemed to have weathered the crisis better than other parts of the world. They didn’t have the same widespread problem with mortgages as the United States, because credit is much harder to come by for a Chinese individual. Even a worst-case scenario like Yintai didn’t paralyze the system, because the loans were private rather than state-backed. Banks didn’t fail: instead it was average people who lost their investments. And in China, where the nation’s rise had depended largely on the initiative of migrants and small entrepreneurs, these same individuals now provided a buffer against economic crisis. They were emotionally prepared for the stress of a downturn: everybody had seen instability and hard times; they knew that opportunities come and go. In 2008, when factory workers were laid off, they usually returned to their villages and waited until things improved. The Chinese had picked up many new skills during the Reform period; they had become quick and resourceful and tough-minded. But they could also be patient—that was an old quality, as old as the countryside itself.
The central government responded to the economic crisis with another major road-building campaign. In 2008, they announced a two-year stimulus plan that would spend 586 billion dollars, of which nearly half would go toward roads, railways, and airports. Some critics wondered why more of these resources weren’t directed toward Chinese schools; it could have been an opportunity to finally build an education system that better prepared people for innovative work. But the government preferred