CHINA'S COLLEGE BUBBLE. Where there's an industrial reserve army, the value of credentials is greater.

After graduating in June from a university in Henan Province, Qiao Li had difficulty in finding work, in rural areas or in Beijing where she now lives. “I’m from the countryside,” she told the newspaper. “My parents have no wealthy social network of contacts to help me secure a job in my hometown. They tried to ask around to help me, but received no response. There are too many famous universities in Beijing. When we attend interviews, we often meet students from leading universities. Employers prefer to hire them.”

The Chinese government, according to the Socialist Equality Party, has created the equivalent of the proprietary diploma mills in the United States, without the high stock returns.

Until the 1990s, a college education all but guaranteed a job in one of the state-owned enterprises or the state bureaucracy, but this career path has since been destroyed for most new graduates. The civil service, traditionally a large employer of graduates, recruited just over half a million from 2006 to 2009.

In 1998, the ruling Chinese Communist Party (CCP) effectively introduced a “user pays” system for tertiary education, ordering a trebling of university student numbers without adequately increasing government funding. This ultimately led to a dramatic rise in student fees. This expansion of education was bound up with the transformation of China into a cheap labour workshop for global corporations.

Students are now being forced into fierce competition for jobs, with employers quick to capitalise on the resulting desperation.

That desperation is likely to get worse. Perhaps the United States government will not be able to talk the Chinese government into revaluing its currency. Financial markets, with or without The Masters of the Universe running hedge funds, are another matter.

Any downturn in China’s growth, as a result of the continuing global economic crisis, would result in social and political upheavals. That is the CCP regime’s biggest fear, as can be seen in Premier Wen Jiabao’s reply last week to US demands for a faster revaluation of the Chinese currency. Wen warned that a 20-40 percent revaluation would cause large-scale factory closures and “there will be major turbulence in the Chinese society”.

A college friend, also an economics major, used to react to news about countries that kept their currencies cheap to gun their export sector with "if they're willing to tear up their economies to provide me with cheap stuff, fine." The bill, however, is steep for the countries that engage in the tearing up.

The US-based Forbes magazine warned on September 9: “We certainly should be concerned about poor people from a humanitarian standpoint, but if China starts to suffer from real social instability, it will most likely come from a disenfranchised middle class unable to realise its dreams. From the French Revolution to the Chinese one, most revolutionary leaders have been university-educated, middle-class people who were marginalised by society and had their hopes thwarted.”

How often does one get to see the capitalist tool quoted approvingly by Leon Trotsky's intellectual heirs?