Q+A-Chinese steel executive killed by protestors

Mon Jul 27, 2009 5:46am EDT

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BEIJING, July 27 (Reuters) - Last week, an executive at a private Chinese conglomerate named to manage the takeover of state-owned Tonghua Steel was beaten, kicked and finally thrown down some stairs to his death. [ID:nHKG104877].

Here are some questions and answers about the incident, and what it says about the business climate in the world's third largest economy.

WHAT HAPPENED?

Chen Guojun, the newly named general manager of Tonghua, was beaten to death by workers who had previously shut down Tonghua Steel, in the northeastern province of Jilin, to prevent its take-over by Beijing-based Jianlong Steel Holding Company.

Up to 30,000 workers kept riot police at bay for nearly a day with bricks. About 100 people were injured, the Hong Kong-based Information Centre for Human Rights and Democracy said.

Workers were angry that Chen was paid about three million yuan ($440,000) last year, while Tonghua's retired workers received as little as 200 yuan a month, the group said.

State media said they feared the workforce would be trimmed to 5,000 people.

HOW WILL OFFICIALS HANDLE THE INCIDENT?

The government has announced the privatisation deal is now off. It will probably try to find funds to pay off the workers to ensure there is no repetition of the violence.

No arrests have been announced by state media. Police would not comment.

Normally after incidents like this, the government floods the area with riot police and tightly restricts reporting to ensure nobody else is likewise encouraged to take to the streets.

WHAT WERE THE UNDERLYING CAUSES?

Recently, discontent over inequality and unemployment amid the economic downturn has exacerbated existing social frustration in China, with many cases of riots by angry citizens.

China's three northeastern provinces of Jilin, Heilongjiang and Liaoning are often referred to as the "rustbelt" -- once a hub of heavy industry with massive state-run firms, but which have been left behind by the country's economic boom.

Some of these companies were so large and bloated they employed either directly or indirectly entire towns or parts of cities. They ran their own schools, hospitals and newspapers and provided cradle-to-grave care for workers and their families.

Now millions of people have been laid off from these behemoths, with little hope of finding new jobs and having to live off meagre or non-existent pensions or social security.

HOW USUAL ARE PROTESTS ON THIS SCALE?

Not unheard of, but hardly regular occurences. China's public security forces normally nip protests in the bud, and come down hard on those seen as organising unrest or even independent unions.

But thousands of smaller scale "mass incidents" -- what the government terms protests -- erupt every year, over everything from pollution to land grabs.

The numerous incidents of workers kidnapping managers over business disputes, however, rarely result in death or serious injury.

WHAT IS THE STATE OF CHINA'S STEEL INDUSTRY?

China is the world's top producer and consumer of steel. the official policy is to force the mammoth steel sector to slim down and consolidate.

But many top-down mergers have met with resistance from local bosses wanting to keep their fiefdoms and local governments anxious to preserve their tax revenue and avoid dealing with thousands of layoffs. (Reporting by Ben Blanchard and Lucy Hornby; Editing by Bill Tarrnant)





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