A Nov. 4 story from the Washington Post threw a heavyweight headline at readers: As China's Losses Mount, Confidence Turns to Fear: Officials Use Bailouts to Forestall Unrest. It struck me that writer Ariana Eunjung Cha and/or her editors appear to use "bailout" in an ambiguous way that misleads readers into believing the Chinese government's intervention is more or less the same as the bailouts we've seen in the United States of America.

I urge you to read through this lengthy story through the hotlink, because the facts in the very story illustrate how China's "bailout," if you will, is totally different than the American version. And, perhaps, set aside the sensational political bluff just for a second.

To make a long story short, what really is happening in China right now, is that tens of thousands of factories are closing down. Most of them were operated in the typical Chinese model of "foreign investment + cheap migrant workers = low value-added manufactured goods for export." Now the factories are down -- their owners oftentimes having actually fled -- and the migrant workers are demanding their over-due pay, which the owner had intentionally slipped up paying them for months. So the local governments, in fear of riots in their jurisdiction, have stepped in to pay off the workers, a lot of whom count on that money to return to their home villages.

So the differences between China's and the U.S.'s situation are that, first, the intervention so far has been limited to local and provincial governments, as opposed to the federal level injection of money in the U.S.; second, the rescue fund has filled the pockets of Chinese workers, instead of jumping into the black hole of unsustainable export businesses; and, last but not the least, the money is not touched by management and has no chance to be spent on a pricy, executive spa vacation in California.