Economic Expansion in China: Whose Miracle?

Source: New Internationalist

In 2009 Time magazine named the young migrant workers of China as a kind of collective runner-up ‘Person of the Year’ (behind Ben Bernanke, Chair of the US Federal Reserve) for helping achieve an eight per cent Chinese growth rate and ‘an economic stimulus for everyone else’. The credit belonged to ‘the tens of millions of workers who have left their homes, and often their families, to find work in the factories of China’s booming coastal cities’.

There is a certain schizophrenia about this migration. The migrants are simultaneously desired and rejected. Their labour is welcome but, as people, they are often not. They are frequently considered noisy, smelly, troublesome, even criminal – in short ‘foreign’ – even if they share the same citizenship and ethnic origins. They often exist in a quasi-legal state with few enforceable rights in a world where the wealthy and powerful are eager to take advantage of their vulnerabilities.

China is currently experiencing the largest movement of migration in human history as tens of millions of young people leave the relative stability of rural life and stream into the free trade zones and manufacturing enclaves that mostly dot the Pacific coastline of Eastern China. The country’s traditional older working class has been devastated by privatization and bankruptcy, leaving first- and now second- generation migrant workers as the main source of labour for the burgeoning export sector. Employers prefer such young workers to those accustomed to the security and slower pace associated with old public sector industries.

It is impossible to say just how many rural peasants have made this move in the past decade but estimates run from between 200 and 300 million people. This latter would be a population greater than that of the entire US. Even by official acknowledgement 20 million a year are leaving the land. It is commonplace to see these young migrants, with their worldly goods about them, crowded into train stations trying to catch a night’s sleep between bus and train connections that will carry them to the ‘promised land’ of Shanghai or the Special Economic Zone of Guangdong (adjacent to Hong Kong).

Beijing-based singer/songwriter Jiang Guoliang’s bittersweet song ‘Embrace Life’ captures well the ambiguities and alienation of the migrant experience:

We walk along the outskirts of the city
Leaving footprints of world change
Many wishes have become wisps of smoke
Too much sweat has fallen
Our life is in a grey space.

Hemmed in

The miracle that these workers have wrought has shaken the global economy. China has become the manufacturing workshop of the world with all the major indicators (GDP growth, trade surpluses, domination of credit markets) showing a shift in economic power from the US and Europe to a Chinese-led Asia. Yet these workers have seldom been beneficiaries (certainly never the main beneficiaries) of this process. Indeed, the welcome they receive in China’s cities is half-hearted at best.

China, despite its embrace of corporate capitalism and private investors at the top, remains for many at the bottom highly autocratic and arbitrary. Nothing is more indicative of this than the Maoist-era hukouzhidu laws on family registration that (despite various reforms) still dictate who has the right to live where. This has left millions of China’s new proletariat in a situation of chronic insecurity, preyed upon by their bosses and often corrupt municipal authorities and police.

Corporate managements often hold the identity papers and passes of workers to prevent them from leaving or becoming too aggressive in their demands at the workplace. Parents are split from their children who must pay extra for often inferior education in ‘illegal’ schools if they accompany them to the cities. It is cheaper to leave young children with grandparents or other family members so they can attend free village schools. Married couples working in different parts of the country are often separated for months on end.

Vulnerable workers in this legal ‘grey space’ are subject to various forms of abuse – lax health and safety, speed-up on the job, withholding of wages (sometimes for months on end), fear of police raids on migrant communities, administrative detention without legal recourse, being forcefully returned to their villages.

The payment of bribes is chronic. Some of the incidents are gradually seeping into the Chinese press as journalists push the limits of the permissible. They include stories of outright slave labour, such as the case of people kidnapped from the countryside to work in the Shanxi brick kilns. The stories provoked an official investigation that found 53,035 people illegally employed. According to Li Datong, who used to write for the China Youth Daily; ‘The investigation uncovered cases of people being kidnapped, of restriction of personal freedom, of forced labour, of child labour, and abuse and even murder of workers.’

‘To get rich is glorious’

China’s astounding economic performance over the last two decades resulted from a shift in policy identified with Deng Xiaoping, who replaced Mao as China’s leader and announced in 1992 that ‘to get rich is glorious’, opening up the floodgates of economic expansion (GDP quadrupled between 1989 and 2004) but also exploitation, inequality and corruption. The opening to the world market meant an abandonment of old Maoist notions of self-reliance in favour of foreign investment (much from the Chinese Diaspora, notably Hong Kong and Taiwan) to take advantage of the almost endless supply of cheap labour.

What the changes did not bring was a political opening and an expansion of democratic rights (including the rights of workers to form independent unions) that many had hoped for.

This was made clear on the fateful night of 4 June 1989 when the party elders around Deng organized a military invasion of Beijing to suppress activist students who were occupying Tiananmen Square to try to force democratic change. Over a thousand people (most of them ordinary citizens of Beijing who supported the students) were either shot or crushed to death under the wheels of army vehicles. Thousands more were injured or imprisoned. Political figures like party leader Zhao Ziyang, associated with political liberalization, were frozen out of public life. Since that time no criticism of the system as a whole (as opposed to individual abuses) has been tolerated.

On that terrible night the Communist Party lost much of its prestige and popularity. Deng’s bet was that the desire for reform could be bought off with economic prosperity. This has been partially successful, at least with the millions of fashion-conscious (but apolitical) consumers that now make up the urban middle-classes of Shanghai and Canton. But for the migrant workers who are the fuel of China’s economic miracle the trade-off is not so clear. As the authoritarianism that so rigorously defends the system at the top filters down, it turns into a heavy-handed approach in local provincial administrations and a despotic management regime in most workplaces. This cascade of arbitrary and often corrupt behaviour is the cause of embarrassment at the centre, where there is a dawning realization that the systemic mistreatment of workers destabilizes the system as a whole.

Partners in crime

Time magazine should indeed be appreciative, as the model of the Chinese economy is based on workers putting in a 12-hour day for just 2.7 per cent of what their US counterparts would make to produce the low-cost goods on sale at the local Walmart or high-end computer store. Such goods are not only essential for maintaining the credit-soaked US way of life but the profits are then recycled back into US Treasury Bills by Chinese banks, helping maintain the otherwise unsustainable Superpower.

In a provocative formulation the Chinese sociologist Ho-fung Hung characterized China’s role in the world as being that of America’s Head Servant. By this view there is a coalition of interests between the export capitalists and their political allies in the Chinese Communist Party and the giants that dominate the US (and global) retail consumer market. In the process Chinese policy has hitched itself to the power of the US Empire financially, underwriting the bloated US military budget and with it the stability of the global world order. Hung’s ‘partners in crime’ perspective flies in the face of the more conventional view of a rising China as a threat to US dominance. The elusive Chinese market remains just that, as production remains mainly geared to providing goods for export.

The costs of this strategy are born by most of the workers and farmers of China in a crisis of ‘underconsumption’. This precarious existence is shared by those who stay behind in the countryside, migrant workers who have traded rural poverty for more lucrative but still marginal lives producing goods they cannot themselves afford for the global export market, and older workers laid off from the downsizing of China’s inefficient public sector industries. This latter group numbered some 45 to 60 million workers in the 1990s alone. Their jobs were the last to be protected by the ‘iron rice bowl’ which allowed modest wages to be balanced by generous welfare and pension provisions. It was a situation ripe for privatization in Deng’s market-friendly reforms. These companies were often pushed into bankruptcy and then asset-stripped by their own managements.

Resistance stirs

It was from this group of laid-off workers that the first stirrings of labour resistance started to shake China. It happened largely in the rust belt region of China’s Northeast, in places like the heavy industry base of Liaoyang and the Daquing oil field. Local grievances over destruction of stable employment quickly spilled over into mass protests against corrupt local party administrations. During the get-rich-quick 1990s official figures show an increase in labour disputes from 8,150 in 1992 to more than 120,000 by 1999. Tens of thousands of workers were involved. Tactics included blocking highways and rail lines and at times included violent clashes between strikers and armed militias.

Today labour activism has shifted to the Pearl River Delta of Southern China and other export enclaves where migrant workers have found their voice. Issues, too, have shifted from the defence of the old-style communist lifelong employment to resistance to the draconian work conditions and low and often late wages imposed by the privately owned export industries. Strikes were made illegal in China back in the early 1980s. But that has not stopped the workers. The world’s financial press took great alarm back in 2004 when the first wave of walkouts hit the Pearl River. They haven’t stopped since. Tactics vary from straightforward strikes, to worker sabotage in the car industry, to a spate of frustrated worker suicides currently scarring the reputation of the electronic components giant Foxconn.

The latest outbreak of worker resistance in the summer of 2010 was sparked off by the walkout of over a thousand workers at the Honda plant in Foshan. These workers found themselves fighting against not just management but, as is frequently the case in China, their own union. The union even organized a physical assault against the strikers. But the workers held firm for over two weeks. Their victory was spectacular – not only a 24 to 33 per cent wage increase but also democratic reform in their union. The younger generation of migrant workers are showing themselves to be much more combative than their parents, using social media to co-ordinate protest activities.

The Central Government in Beijing is starting to realize the social costs and resulting turmoil of the Economic Miracle and is showing signs of re-balancing its market enthusiasms. Perhaps the two biggest shifts are attempts to alleviate the desperate position of poor peasants through the ‘socialist countryside policy’ and a new Labour Contract Law which guarantees (at least in theory) minimal worker rights such as getting paid on time. Many Western corporate stakeholders try to maintain that they are simply buyers of Chinese products or investors in Chinese companies and thus not responsible for draconian labour conditions. Yet the Labour Contract Law was watered down after intervention from European and US business lobbies. Even weak reforms have proved easily undermined at the local level and do not come with the democratic powers to make them effective.

What tactics should Chinese workers employ? Han Dongfang, a veteran activist and founder of the Hong Kong-based China Labour Bulletin believes that China’s history is one of many violent ruptures and revolts. While he never opposes worker direct action, he encourages the building of a culture of legal negotiation to create enforceable rights. It seems likely the new workers’ movement will need both strength and guile to move out of the ‘grey space’ and take their fair share of what is, after all, their Economic Miracle.

Richard Swift is a former New Internationalist co-editor and author of The No-Nonsense Guide to Democracy.

Photo by Robert Scoble under a CC Licence