The devolution of China is only beginning, and it's looking pretty dangerous

Caught On Tape: "Enormous Crowds" Of Unemployed Chinese Miners Take To The Streets, Clash With Riot Police

"'While so far most Chinese worker strikes had been largely peaceful, two weeks ago we said it was only a matter of time before these turned violent after Reuters reported that "China aims to lay off 5-6 million state workers over the next two to three years as part of efforts to curb industrial overcapacity and pollution.'

All this changed overnight when as AFP reports, thousands of miners in China's coal-rich (or poor depending on one's perspective) north have gone on strike over months of unpaid wages and fears that government calls to restructure their state-owned employer will lead to mass layoffs."

These are not people laid off, they are only owed back wages, and threatened with layoffs. Just wait till the layoffs begin.

"Citing the video shown below, AFP reported that thousands of protesters were marching through the streets of Shuangyashan city in Heilongjiang province, venting their frustration at Longmay Mining Holding Group, the biggest coal firm in northeast China. Pictures showed enormous crowds filling the streets.

And here is why we said this is the biggest threat facing China:

"I'm on my knees, my family can't eat," an elderly woman pleaded with a man who appeared to be a government official. "Tell me, how can we live?" she shouted, before collapsing and being rushed away by fellow protesters.

In the video footage from Heilongjiang, dozens of police cars, lights flashing, lined the streets, and protesters complained of violence by authorities as tensions mounted. 'Traffic in the centre of Shuangyashan city was halted," a witness told AFP, adding "some people were hurt.'"

The crowds are truly impressive. But this is just a local problem, right? Wrong!

"AFP adds what we have been warning about for months: "the situation in Heilongjiang exemplifies the dilemma faced by Chinese authorities, who say they want to reform the world's second-largest economy and at the same time seek to avoid unrest."

China's state-owned enterprises (SOEs) are plagued by overcapacity and many are unviable, but the government has been loathe to kill off such "zombie" companies, fearing unemployment could lead to instability.

Instability such as the one described above, and shown in the video below.

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This is just the beginning: China plans to lay off about 1.8 million workers in the steel and coal industries, a human resources and social security ministry official said last month, and millions more across all state-owned "zombie firms." 

Earlier this month Premier Li Keqiang again pledged to encourage "structural adjustments" in his opening speech to the annual session of China's Communist-controlled parliament. Judging by the predicted confirmation violence, the only adjustments China has in place is a massive police force trained to break up precisely such protests, something we further showed back in May 2014 when we demonstrated how 'Chinese riot police train for a "working class insurrection.'"

What's with China and zombies? There are zombie cities, zombie companies, zombie firms, zombie everything. The problem will not stop at these state owned firms, there are many other businesses which are being forced to close. China faces much unrest, and it is not clear how this will be handled. The people of China will not likely suffer tanks rolling through their streets, and citizens murdered just to keep order. On the other hand, the CCP knows little else. This could be an epic high noon showdown, if the CCP cannot find a way to defuse this situation. No matter what, it does not appear that the heady days of the early 2000s will return for China, not in the immediate future anyway. 

While I am hoping for a positive outcome, with the CCP agreeing to relinquish some power, assist these destitute families, and a turn to a more reasonable growth model in China, I am not holding my breath.