China’s new Labor Contracts Law and the fate of workers globally by Wayne Sonter

China’s 800 million workers constitute the world’s largest national workforce; its 90 million manufacturing workers comprise the global labour market’s largest contingent of industrial labour. 1.

How China’s workers come to shape their future is of great importance for the labour force throughout the world. Massive investment flows into China aim to maximize returns to a globally mobile capital and weakens labour’s bargaining position in ‘high cost’ labour markets. As U.S. union federation Change to Win argues: "Every major U.S. and foreign trans-national corporation has growing operations there, meaning Chinese workers are one of the main hammers global capital uses to drive down wages and conditions for workers in advanced capitalist countries like the United States." 2.

China’s opening to foreign investment3 has created a two decades long ‘boom’ that has transformed its economy, society and workforce*. However, most investment in China - almost 80 per cent - has come through restructuring state owned property.

4. Most of China’s industrialised workforce is now employed in the private sector, in foreign businesses and in ‘huge clusters of enterprises run by local government’, which, while nominally state owned are in most cases managed as private companies.5. In the course of of transformation China has become one of the most unequal societies in the world, a disparity aggravated by a lack of affordable health and education services 6.Lawlessness and unaccountability prevail in many

.At the grass-roots level, government has become "mafia-ised with gang involvement in some areas. Labour unrest has surged, with registered industrial disputes rising from 155,000 to 300,000 between 2001 and 2005. The authorities, fearing another Solidarity, often deem these strikes illegal, yet efforts to suppress them are ‘simply fanning the flames of what is emerging as a major threat to their own rule’ according to the International Confederation of Free Trade Unions. 8.

In campaigning for their human and economic rights China’s workers increasingly confront a set of corporate and governing interests common to what workers face everywhere. China’s entry into the World Trade Organisation can be seen as an attempt to stabilise growth through the discipline of the capitalist market. 9.

New labour law

In July this year the National People’s Congress passed a new Labour Contract Law. The new law establishes minimum rights and conditions through an improved contract system and expands workers’ power to organize and negotiate. It came about at least partly as a result of Chinese workers’ hard-fought struggles against exploitation and for recognition of their rights, as well as the government’s efforts to bring order and accountability to the workplace to bolster its eroding support amongst workers. China’s top trade union body, the All China Federation of Trade Unions (ACFTU) worked with China’s labour ministry to draft the law, in circumstances of ‘growing official concern about worker unrest and widening income equality.’ 10.

The European and United States’ Chambers of Commerce, whose members include the planet’s largest and most powerful corporations, actively lobbied against the draft law, calling for it to be drastically altered and threatening to disinvest if the Chinese government tried to enforce it. European unions shamed European big business into dropping their open opposition to Chinese workers getting rights European workers have had for up to 90 years. United States unions called on U.S. big business to ‘butt out’ and stop trying to determine China’s own labour laws. American and Chinese unions met for the first time since the Cold War to discuss the situation. 11.

The ACFTU claims it managed to safeguard workers’ rights and interests during the law making process and the new law will ‘provide more solid legal ground for trade unions to protect workers’ rights or settle labour disputes’. Under the law employers need to discuss provisions concerning pay, work allotment, hours, insurance, safety, holidays and training with employee organizations; and trade unions have the right to enter into collective agreements with employers. 12.

However, the Act was considerably diluted on its way to becoming law. Three quarters of the Act was amended due to the American Chamber of Commerce objections. For instance, while the law requires employers to just ‘consult’ or ‘discuss’ changes to workplace rules with employee representatives, the first draft required employee approval. Provisions concerning layoffs, severance pay and collective bargaining, which the U.S. Chamber claimed created ‘rigidity’ and raised business costs, are weaker in the enacted law than in the draft. 13.

Change, The New Law And The Unions

China’s new labour law is of interest to workers around the world, as the way it is enforced will not only determine Chinese workers’ conditions, but could also set bottom line standards for labour globally.

American labour organizations argue they need to work more closely with their Chinese counterparts to raise working standards in China and to ‘generate new thinking on how to tackle the challenges of globalization and the downward pressure on wages and living conditions in the U.S.’ They argue that:"… the ACFTU is, in many ways, like us, fighting for its life in the face of global capital … workers in China and in the U.S. are under the economic gun. The gap between rich and poor is growing in both countries – even as both experience economic expansion – and the social fabric in both countries is rife with conflict. … if cooperation with the ACFTU, or any other entity, is what is needed to hold global capital accountable to all workers – our unions will be there." 14.

One of the ACFTU’s objectives is to recreate itself as an organization more suited to recruiting and representing members, so that it can build its presence in non-state owned workplaces. Chinese law prohibits workers organizing independently of the ACFTU, yet the ACFTU had not, till recently, extended its coverage to the private sector to any extent, leaving workers un-unionised and totally vulnerable. The ACFTU is now pressing hard to cover the private sector, and is finding it must rely more heavily on the workplace rank and file and realises it requires more power to organize and negotiate. Enforceable laws back its efforts. 15.

The ACFTU , however, still has a major task ahead in overcoming the image of its officials being "obedient children of Party leaders and bosses" and refuting claims that although it is pursuing grassroots unionisation on work, these grassroots union organisations are losing their independence and being rapidly merged with Party and government organisations. 16.

China At The Cross-roads

The Peoples’ Republic of China, with its mighty growth of productive forces over the last twenty years, has reached a cross roads. The Communist Party of China has itself changed, in the course of implementing this current modernisation. Since the 1980s party members have been able to get into business in order to generate jobs, foreign investment and tax revenue. 17. By 2001 the percentage of private entrepreneurs in the CPC was 30 per cent. 18. Most entrepreneurs are ‘intimately linked by family ties to the bureaucracy, to the Chinese capitalists in émigré circles and to foreign investors’. 19. Most are, or have been party officials, or offspring of party officials. 20. Chinese investors are a growing presence in other developing countries, a presence not necessarily viewed favourably by workers in those countries. 21.

To the extent the prevailing trend is towards capitalist restoration and creation of a capitalist class from among the ranks of the CPC, contradictions within the CPC can expect to be exacerbated, as evidenced by a letter from a group of veteran CPC members, cadres, military personnel and intellectuals to the General Secretary in October 2004. The letter charged that the economic gains in China had been at enormous cost for the majority of workers and peasants, privatisation of state enterprises was a frequent method of exploitation, unemployment was huge and the CPC’s credibility had sunk to a ‘dangerous new low’. 22. Above all, CPC members who are also union officials, from the workshop floor up, experience on a daily basis the realities of workers’ lives and feel the pressure to respond to their demands. In the course of increasing union coverage throughout industry, even if – or especially if – it must take the form of workplace and industry organisations being affiliated to the ACFTU, these officials will find themselves the party members most directly accountable to workers, and be driven to transmit demands back to the party. If the CPC ignores the union officials it will drive a split in the party; if union officials fail to enact their members’ demands it will crystallise a desire by workers for more autonomous organisation and their own independent political voice.The Labour Contract Law could be a significant step towards what Lenin, leader of the 1917 Russian revolution, saw as absolutely vital for any Communist or workers’ government. Such a government, Lenin believed, once it had established the foundations of a society organized along socialist lines, would find it must introduce a ‘New Economic Policy’ to stimulate . Investment and growth .

Consequently, said Lenin: "… one of the main tasks to confront trade unions is... to protect in every way the class interests of the proletariat in the struggle against capital. This task must be openly put to the forefront and trade unions must be reorganized, changed or supplemented accordingly (conflict commissions, strike funds, mutual aid funds, etc should be formed, or rather, built up)". 23.. This is a condition against which the Communist Party of China can be tested. It will reveal if it is serious about ensuring its modernisation is a transition to a more modern socialism, or social democracy, (as the CPC and some on the left sometimes claim) - or whether the course of modernisation it is taking is also effectively restoring capitalism.

To empower unions – to give labour the ability to organise - raises the possibility that in the course of change China could blossom into a social democracy, building on existing, or remaining socialist property forms and sensibilities. This can happen though, only if workers can freely organize to improve their conditions at work and can come to assert a determining role in the way society is organised.

Otherwise a nascent comprador capitalist class, maturing into a national bourgeoisie, will, in conjunction with global capital, subjugate the workers, overturn remaining socialist property forms, and deliver China’s workers to imperialism. Either outcome will profoundly affect the global balance between labour and capital, thus humanity’s fate in general.

Labour organisations around the world need to support the All China Federation of Trade Unions in ensuring the new laws operate in favour of labour as strongly as possible, while acknowledging Chinese workers’ fight for justice. We need to particularly support those elements and trends within the CPC and Chinese society that enhance the possibility of China’s transition to a modern social democracy.

An empowered Chinese working class weakens global capital’s hold over labour and its grip on world political and economic power, so we should do our utmost to publicize the Chinese workers’ struggle, to explain its significance and lead calls for the building of worldwide solidarity.

This is a prerequisite if there is to be any hope of overturning the present global economic power structures and initiating a global redirection towards survival and sustainability.. The focus needs to be on creating a world based on cooperation rather than exploitation, placing people not profits at the centre of economic activity and encouraging the best in human nature.

*China is currently the world’s second largest recipient of foreign direct investment (FDI) after the United States and absorbs half the world’s FDI in developing countries.

Wayne Sonter of Sydney is an independent researcher

Footnotes:

1. National Bureau of Statistics of China: http://www.stats.gov.cn/tjsj/ndsj/2006/indexeh.htm

2. 'The question isn't why we went to China - it's why wouldn't we?'

www.changetowin.org/connect/2007/06/

UNCTAD World Investment Report 2006
http://www.unctad.org/en/docs/wir2006overview en.pdf

'China - the transition to capitalism' http://www.europe-

solidaire.org/spip.php?page=article impr&idarticle=5066

'China: grappling with the dragon of labour unrest'
http://ipsnews.net/news.asp?idnews=32806

'China suffers widening income gap' http://www.chinadaily.com.cn/china/2007-
01 /07/content 776436.htm

'The root of slave labour in China'

http://www.opendemocracy .net/democracyjower/china_jnside/slave_labour_criina

'China: grappling with the dragon of labour unrest' op cit.

'China - the transition to capitalism' op cit.

'China toils over new labor law' http://www.chinadaily.com.cn/china/2007-
05/07/content_867069.htm

Undue Influence: corporations Gain Ground in Battle over China's New Labor Law
http://laborstrategies.blogs.com/global labor strategies/files/undiie influence global lab
or_strategies.pdf

'Labor law: "No giving into pressure'" http://www.chinadaily.com.cn/china/2007-
06/12/content 891903 .htm

'China toils over new labor law' op cit.

'The question isn't why we went to China - it's why wouldn't we?' op cit.

see Chris White 'Unionising Wal-Mart: the Chinese Experience'
http://www.cpa.org.au/garchveQ7/131 lwalmart.html

Is the All China Federation of Trade Unions merely a front for the Communist Party and
enterprise management? http://www.china-
labour.org.hk/public/contents/article?revision%5fid=49073&item%5fid=49072

'Necessity of Gangster Capitalism: Primitive Accumulation in Russia and China'
http://monthlyreview.org/200holm.htm

China Speeding Towards Capitalism http://www.jcer.or.jp/eng/pdf/research-on-
China040415.pdf

'China- the transition to capitalism' op cit.

China's New Rich, UTS lecture by David Goodman, 26 September 2007.

see 'China's trade in Africa Carries a Price Tag

www.spiegel.de/international/0.1518,500998.00.html: and 'Chinese mine treating PNG workers like slaves'

http:/23 http