Over the past decade, the industrial relations system in China has made the country an attractive destination for global corporations due to its low wage rates, restrictive labour laws and the non-recognition of independent trade unions and the right to strike. This has been the result of a unique industrial legacy of a praetorian political system coupled with the astigmatic ideology of a highly centralised political system dominated by a single party.� This is all changing and changing quickly. This will have an important effect on the future stability and cohesion of the Chinese state and its industrial future as well as in Chinese economic structures outside of China.

A great deal of the constraints which have deterred the development of modern industrial relations in the Chinese workplace derives from China�s unique history, system of governance and the resulting treatment of China�s working population as without power, value or legitimacy in national politics. Throughout Chinese political and economic development the Chinese working class has been seen as an exploitable and irrelevant consideration by the Chinese political leadership in economic policy formation � a group for whom the term �coolie� sufficed as descriptor. Chinese labour has had its periods of improvement but these have almost always been followed by bitter disappointment at the actions of those who sought to harness the energies of workers and their organisations for their own particular agendas.

A Brief Overview of Chinese History

For centuries the peasant farmers of the vast expanse of the territory now known as China toiled as essentially feudal labourers; serfs tied to the land by a feudal system and by deep poverty. The harshness and grinding poverty of their existence became public knowledge in the West as the result of the 1938 Nobel Prize for Literature being awarded to the American author, Pearl Sydenstricker Buck (also known by her Chinese name Sai Zhenzhu) for her novel The Good Earth (1831). Pearl Buck left her home in West Virginia to travel with her missionary parents to China where she grew up and lived until 1934. Her graphic depiction of the harshness and despair of Chinese village life had a profound effect on the world�s perception of China; especially the position of women and the effects of the constant civil strife by competing internal and external military-political forces on the peasantry After centuries of fighting among feudal Emperors (the Qin and the Han Dynasties) imperial rule in China was overtaken by the Mongol invasion. In 1271 the Mongols conquered China and imposed their own, Yuan Dynasty, which lasted until 1368. In 1368 the Ming Dynasty drove out the Mongols and began the modernisation of China. Peasants were involved in the restructuring of the agricultural system and a stronger central government was fortified with a centralised bureaucracy based on competence and exams. This lasted until 1644 when the Manchu Qing Dynasty drove out the Ming.

Initially the rationalisations of the political system were maintained and expanded by the Qing but, by the beginning of the 19^th century the imperial hold on China was weakened by the discovery of China�s wealth by the European colonial powers and the Japanese. They soon began making demands on the ruling emperors and were allowed to impose "unequal treaties" that created foreign concessions in China's ports.� The weakness of the central government structure allowed the rise of regional warlords whose armies fought with each other for territory and plunder and were funded in this by foreign powers. The Qing tried to respond by instituting a number of reforms but the foreign powers refused to allow this.

After a period of ever-increasing presence of foreign traders, Christian missionaries, foreign troops and British-supplied opium a violent surge of protest occurred among the Chinese. This included many of the warlords, the landowners and the newly urbanised poor. Their rebellion against foreign rule and in support of the Qing reforms led to their capturing Beijing and attacking the foreign legations - the "Boxer Rebellion". Initially they were successful but the imperial powers formed an Eight Nation Alliance (UK, Russia, Japan, France, U.S., Germany, Italy and Austro-Hungary) against the Chinese. They assembled 50,255 foreign troops (expeditionary forces) plus 100,000 Russian troops to occupy Manchuria. In addition a portion of the Imperial Forces led by Yuan Shikai's Division fought with the foreigners against the Imperial troops. The Imperial troops were defeated, Beijing seized and these eight foreign powers extracted further concessions from the weakened Qing government.

On 7 September 1901, the Qing Empress signed the �Boxer Protocol�. In addition to a fine imposed on China of 450,000 taels of silver it also ordered the execution of ten high-ranking officials linked to the outbreak and other officials who were found guilty for the slaughter of foreigners in China. �They imposed Chinese customs duties, income and salt taxes to guarantee the reparation payments. With interest, the Chinese paid 668,661,220 taels of silver from 1901 to 1939. The current day value of this sum is around US$61 billion.

By 1911-12 the Chinese military instigated a series of revolts by reform-minded officers. This led to the Proclamation of Republic of China under Sun Yat-sen and abdication of last Qing emperor. Although the Emperor was removed, this change did not lead to democracy in China as no army was so strong as to affect change in more than its area. Sun Yat-sen attempted to build national institutions but was unable to stand up to the growth of warlordism and the rise of the Communist Party in China after the Russian Revolution of 1917.

Background to Chinese Labour

Chinese workers were first exploited by the survival of feudal practices in the rural economies which frequently led to the deaths of millions of Chinese through starvation and ill health; by the rise of� weak imperial dynasty states in which military warlords took over real power; by the invasions and demands for concessions and reparations by foreign powers; by the concomitant rise of an urban proletariat in China�s cities which fell under the influence of parasitical organised criminal Triads; by the brutal occupation of the country by the Japanese military; by a brutal civil war which pitted the Kuomintang against the Communist Party; and by the consistent betrayal of �a long history of peasant revolts which were finally subsumed by the rise of the Chinese Communist Party.

The Communist Party of China drew its strength from the urban working class in such large cities as Shanghai and Canton. In these cities there was an urban proletariat which had settled permanently and worked in the ports, transport hubs, construction and an increasing number of administrative jobs. Sun Yat-sen and his troops played an instrumental role in the overthrow of the Qing Dynasty After the success of the Double Ten Revolution he became the first president of the Provisional Republic of China, in 1912 and then founded the Kuomintang, serving as its first leader. He was succeeded by Chiang Kai-Shek, who led the Kuomintang into a close relationship with the Bolsheviks.

It was a little ironic that the first trade union bodies to fall under the almost complete control of the political forces were the urban unions of China, especially in Shanghai. In China, after the republican revolution of 191l, trades unions began to form among the urban masses of China's large cities. With the formation of the Comintern, numerous unionists were sent to China to help strengthen the nascent Chinese communist unions and parties. Mikhail Borodin's famous mission was only one of a large number of Comintern missions. Nonetheless, power still remained firmly in the hands of the local warlords whose min t'uan (private armies) controlled much of the rural areas. By far the most important development emerged in 1923 when the workers, students and peasants began to form national parties. Among the first was the Kuomintang, or Nationalist Party. The other major party was the Kung Ch 'antang, the Communist Party. Interestingly the Kuomintang found a close ally in the communist party of the Soviet Union which sent down instructors and advisers to shape the Kuomintang into a disciplined Bolshevik party. No sooner had the party formed and become organised when the Soviets demanded that the Kung Ch 'antang merge itself into the Kuomintang.

In the meantime, the Kuomintang became a model in miniature of the Bolshevik party. The Soviets sent advisers to instil communism in the military forces and set up the Whampoa Military Academy. The Russians shipped in arms and instructors to bolster the Kuomintang forces. The Kung Ch 'antang remained a left faction within Kuomintang and worked to strengthen the Kuomintang on Moscow's orders. The Chinese communists were successful in recruiting the urban workers of Canton and Shanghai and were able to set up communist-led peasant organisations in Hunan. They built strong unions among the railroad workers and miners in Hunan and, through their control over the Independent Division of the Fourth Army in Hunan, were able to control the industrialised areas east of Changsha. The leadership of the Kuomintang devolved on the director of the Whampoa Military Academy and the hero of the northern campaign, Chiang Kai-shek.

Having won control of Canton he began a march on Shanghai. In support of the Kuomintang the workers in the communist unions of Shanghai began a series of major strikes. At the height of this demonstration more than half a million workers went out on strike in Shanghai, backed by an armed workers' militia of more than five thousand.

On 26 March 1927 Chiang Kai-shek marched into Shanghai, welcomed by the striking workers as their liberator. Chiang had barely been in the city for a few days when he contacted the leaders of the compradors and the notorious Green Gang to make a deal with them. Allied with these forces, Chiang began a purge of all the communists, especially the unionists. On 12 April 1927 he and the local gangs turned their forces on the communists in the unions. More than five thousand communists lost their lives. When the strikes ended in May, communist control had been wrenched from the unions by the Kuomintang.

A brief attempt at an urban uprising based on the unions in the 1930s was ruthlessly put down by the Kuomintang. The Soviets had succeeded in creating a Kuomintang which had devoured the local communist party. It was Trotsky, in fact, who had warned of the dangers involved in making the communists join the Kuomintang. He wrote that 'the policy of a shackled Communist Party serving as a recruiting agent to bring the workers into the Kuomintang is preparation for the successful establishment of a Fascist dictatorship in China' He was not wrong. The Kuomintang set about obliterating the communists, driving them from the cities to their stronghold in Hunan. The Chinese communists, led by the son of a wealthy Hunanese peasant, Mao Tse-tung, adopted these lessons to the communist struggle in China. He decreed that the peasantry (not the workers) should form the basis of the revolution. Only after the peasant revolution would there be a need for control of the urban masses.

In addition to making a virtue of necessity, this line abandoned the unions in the cities to the less than tender mercies of the Kuomintang. During the civil war with the Kuomintang numerous workers' units joined Mao's Hunan army and participated in the Nanchang Uprising. The largest union support came from the iron miners of Hanyehping in Wuhan. In fact, the First Red Army was largely composed of workers. When these troops were destroyed in battle with the forces of the Kuomintang the first generation of trade unionists in China was virtually eliminated. The 1937 start to the war with the Japanese finished off most of the others; even though the Kuomintang and the Communists co-operated with each other to battle the Japanese...

When, after the end of the war, there was a brief interlude of relative calm in China, the US and the OSS forces active in China sent in a large number of American unionists and labour specialists to China in an effort to rebuild a strong Chinese trade union movement. Dick Deverall of the Free Trade Union Committee attempted to set up labour programmes in China. John Shulter and his colleagues in the US Labour Department tried to foster free unionism in Peking, Shanghai and Canton.

But, with the gradual ascendance to post-war power of the Chinese communists under Mao, the forces of the Kuomintang were driven from mainland China and the US labour missions were terminated. The All-China Federation of Trades Unions (a national Chinese labour federation formed in 1925) was recreated under tight Communist party control and became similar in function to the AUCCTU of the Soviet Union (the Soviet central trade union federation). The ACFTU was a founding member of the WFTU and remained an important member in it after the ICFTU split in 1949.

The ACFTU is the only workers� federation allowed to operate in China, representing 135 million workers in 31 provincial, autonomous regional and municipal federations and 10 national industrial trade unions. Any union established must be registered under the ACFTU. It is a part of the Chinese governmental structure. Any union established must be registered under the ACFTU.
No independent trade unions are allowed to operate outside government control. The government considers the ACFTU to be a quasi-governmental body, indeed, an arm of the government and a subsidiary organ of the Chinese Communist Party, designed to facilitate and support government policies within enterprises and to ensure the continued control of the working population. It has been a conservative force in industrial relations and is used more to control than to protect and advance workers� rights. There was a modest change in the early 1990s through the introduction of the comprehensive �three-systems� reforms in state-owned enterprises in terms of labour contracts, rewards systems and social insurance. It has had little beneficial effect in the non-state industrial organisations.

It did nothing to assist the aims of working people during the two major calamities created by the Chinese Communist party. Rather than bring social justice and the rise of workers� rights, the Chinese Communist Party brought in �The Great Leap Forward� which introduced a mandatory system of rural agricultural collectivisation and oppression of the rural poor. Private farming was outlawed and those who opposed the program were jailed, robbed of any civil rights and �re-educated�.

The Great Leap Forward was a catastrophe on a monumental scale. Estimates of the death toll of the program range from twenty to forty-five million Chinese deaths; most of whom died of starvation. After the Second World War and the rise of the Chinese Communist Party to power the Chinese peasantry formed into villages in which peasants owned their small-holdings. The Communists imposed a �hukou� system of internal passports in 1956 which restricted movements within the country. Then they ordered that these agricultural properties be collectivised. Not only did agricultural productivity decline but strange schemes, like backyard steel mills, were enforced and encouraged which further diverted rural labour from farming. Those who opposed were labelled �rightists� and punished. It was an unqualified disaster. Although the harvest of 1958 was very productive the diversion of labour to the alternative projects like steel-making meant that a great deal of the harvest was never gathered from the fields. Then a giant storm of locusts attacked the food stock and grain stores. The Great Sparrow Campaign of the Communists had destroyed the birds which were the predators of the locusts so the locusts destroyed the crops without control. This was followed soon after by the Cultural Revolution where young activists purged the dangerous intellectuals and dissidents from the cities and sent them to �re-education camps� in the provinces. A new system was introduced for the use of Chinese labour, the Lao Gai which means "reform through labour". This is the system of large prison camps where non-criminals were sent to be re-educated through hard labour. It is estimated that in the last fifty years, more than fifty million people have been sent to lao gai camps.

An important point to be noted is that these labour initiatives and systems were, until recently, populated by state workers, not employed by private industry. The Chinese system has made use of a system called danwei. This became an extended Chinese welfare state whose benefits were heavily concentrated within the state workforce and delivered through the workplace. In China the collectivization of industry and agriculture in the 1950s brought with them a set of seemingly new institutional arrangements through which the average citizen interacted with the state. Among these was the �work unit� or danwei, to which virtually all urban residents belonged by the 1950s.

Within China's industrial sector, employment in state enterprises by the early 1960s had the following general characteristics:

This system prevails although there has been an increasing shift of workers out of purely state employment into the private sector. Danwei is not universal anymore and many of the social, housing, wage and job security issues which were formerly the preserve of the state have become the responsibility of private companies. As a result of the 1994 Labour Law the ACFTU has been given limited autonomy, collective bargaining status and limited participation in state corporation decision-making. As part of the policy of opening the Chinese market to a limited form of private capital there are many workers who are no longer in the danwei system and reliant on the companies which employ them. However, these companies are far different forms of enterprise than those normally confronted by workers in the private sector.

There seems to be a great misunderstanding of the nature of Chinese capitalism; the great engine of modernisation which is hailed as leading to the restructuring of the Chinese State and towards its eventual democratisation. The misunderstanding arises because there is only a dim perception in the international community that the large bulk of these Chinese companies are owned and operated by the Chinese military. They are corporations created in a similar structure to what might be called �zaibatsu� in Japan or �chaebol� in Korea. These �zaibatsu� were large centrally-controlled vertical monopolies consisting of a holding company on top with a wholly-owned banking subsidiary providing finance, and several industrial and trading subsidiaries dominating specific sectors of a market, either solely, or through a number of sub-subsidiary companies. These are now international in scale.

The influence of the Chinese military in the economic affairs of China has been extensive for the last three thousand years. Despite the fact that China has been primarily a poor, fragmented subsistence agricultural economy it was still under military rule. The military have always dominated the agricultural sector and, after the death of Mao Tse-tung, they have been the dominant force in Chinese industry and politics as well...

There has been a long tradition of warlords in China especially from 1916 to the late-1930s, when the country was divided among military cliques, a division that continued until the fall of the Nationalist government in the mainland China regions of Sichuan, Shanxi, Qinghai, Ningxia, Guangdong, Guangxi, Gansu, Yunnan, and Xinjiang. In this period a warlord maintained his own troops loyal to him, dominated and controlled the agriculture and mining in his area or region; and acted as the de facto political power in that region. To maintain themselves they often fought with their neighbouring warlords and against any attempt by the Emperor or central government to control them. Some of the most notable warlord wars, post�1928, included the Central Plains War, which involved nearly a million soldiers. The central government was weak and relied on the power and support of these fractious warlords to remain in power. The central government did, however, provide a national civil service and a national administrative regime but these, too, were uniformly weak.

The defeat of the Kuomintang leadership of the ex-warlord Chiang Kai-shek in the wake of the Second World War left the ravaged China in the hands of the Chinese Communist Party led by Mao Tse-tung. Mao was both the Chairman of the Chinese Communist Party as well as the Chairman of the Central Military Committee. His rule was personal, direct and disastrous. The Great Leap Forward and the Cultural Revolution led to the virtual self-destruction of China. Millions starved to death; many more were exiled or driven away from the cities. He was succeeded by Hue Guofeng who attempted to keep a tight control over the power structures of China, including the Central Military Committee. However, his power waned and control was transferred to the reformer Deng Xiaoping, who revolutionised the economy of China. Deng never held office as the head of state or the head of government, but served as the de facto leader of the People's Republic of China from 1978 to the early 1990s as the leader of the Communist Party of China (CPC).

Deng represented the second generation Chinese leadership and was instrumental in introducing�� Chinese economic reform, also known as the socialist market economy and partially opened China to the global market. He is generally credited with pushing China into becoming one of the fastest growing economies in the world and by raising the standard of living.� Deng Xiaoping's ouster of Hue Guofeng was the moment when the market policies of economic reform began. This reform was carried on primarily by the military companies created in the various regions by the armies which controlled them.

It is not difficult to see why. The People�s Liberation Army (�PLA�) controlled the security situation in its region. That meant it issued permits to enter or leave the region; it controlled the communications network in the region; it had the trucks and other transport under its control; and it was charged with maintaining order. It was, in fact, in charge of almost everything but the civil administration... This was not controlled by one central PLA group but was under the control of the individual armies for each region. There are seven military regions in China, each with its complement of armies which control the security, transportation and industrial resources within their regions, although the Sate and Communist Party supply the civil administration

Regular Army Order of Battle

Some, like the 27^th Army and the 38^th Army were in economic hotspots and were able to thrive quickly. The Northern Army was quick to exploit its opportunities.

The Military-Industrial Complex:

The military opportunity for expanding its power arose in the wake of the civil disturbances of the Tiananmen Square uprising, when the Chinese Communist Party, under Li Peng, cracked down on China's democracy movement, ordering in the troops to battle the students. The PLA was ambivalent about this and seven retired senior military officers openly criticized the martial law order imposed by the Beijing government and called for the ouster of Premier Li Peng. In the march towards the capital at a village five miles southwest of Beijing, soldiers and peasants engaged in a brick- and rock-throwing brawl that injured as many as forty people. The general in charge of the 38^th Army refused to attack the demonstrators in Tienamen Square. Others were less squeamish and the PLA did its duty. The populace were outraged and the authority of the Communist Party waned. The PLA realised it was free from the controlling hand of the Party and became agents of change; primarily corporate change, encouraged by Deng Xiaoping (retired but active).

They already had numerous companies under PLA control, manufacturing goods for the defence sector. During Mao Tse-tung�s rule and the era of Sino-Soviet tensions, the military moved many of its factories inland in case of a possible attack on China. Manufacturing purely military products, such as arms, ammunition, as well as electronics, plastics and metals for military applications, these so-called "third-line" factories were built in remote mountain regions, far away from transportation routes and power sources. The factories bought supplies at subsidized costs from other factories, manufactured the weaponry and related products -- generally low-tech and low-quality -- and then sold them to the military at subsidized prices.

After Mao's death in 1976, the new Party leadership encouraged the military plants to begin exploring civilian uses for their products and to engage in the broader liberalizing economy. The most nimble managers were free to exploit new markets for their goods. During the early 1980s, the PLA's share of the national budget declined, spurring it to look to other sources for cash, especially hard currency. The higher organizational levels of the PLA created trading companies like China Xinxing, China Poly and China Songhai to take advantage of the opening of China's economy to the international market.

They formed banks, holding companies and international trading companies like Everbright to market these goods worldwide. Now the PLA runs farms, factories, mines, hotels, brothels, paging and telephone companies, banks, stock brokers and airlines, as well as major trading companies.

The number of military-run businesses exploded during the boom of the late 1980s. The "third line" factories opened branches in the coastal areas, earning increasingly high profits from the manufacture of consumer goods. Even the lowest levels of the PLA set up production units. In fact the PLA had a largely captive audience of Chinese who had never really had the chance to acquire personal consumer goods produced in China before. In addition to their international arms sales, their production of consumer goods for the domestic market soared.

The government first attempted to regulate PLA business activities in 1989 with a series of decrees; among them a prohibition on active military personnel concurrently holding positions at commercial enterprises. The reforms were intended to keep management of PLA enterprises under the control of senior military leaders and prevent lower-ranking officers from becoming involved in the daily functioning of the military companies. In the wake of the rejection of the Party in 1989 these government strictures fell away. The government tried again the early 1990s, when the central leadership of the military took steps to coordinate the production of the vast number of military factories by tying the plants together under "group companies." The groups, acting like conglomerates, have been fairly successful in centralizing management and production, running the trading companies and expanding the groups' business operations. The PLA now acts as a state within a state, with its power growing substantially in the latest wave of Chinese economic growth. In fact China is a praetorian state where the army is the true power and the Communist Party desperately seeking to exert its control.

Chinese International Companies:

Many of the PLA companies are now industrial giants with investments all over the world; especially in Africa. Many of the companies have listed themselves on capital markets in Hong Kong and elsewhere, opened representative offices in overseas markets, solicited foreign companies for joint ventures and partnerships in China and concentrated on exports. The so-called �red chips�, companies listed on the Hong Kong exchange but which are in fact mainland Chinese firms, are the hottest stocks on the market. Hong Kong is the PLA's favoured stock exchange because of its loose disclosure guidelines. China Poly Group has two listed companies: Continental Mariner Company Ltd. and Poly Investments Holdings Ltd. Both Continental Mariner and Poly Investments have a large number of subsidiary companies in mainland China, Hong Kong and tax havens like Liberia, the British Virgin Islands and Panama. China Carrie's listed company in Hong Kong is Hongkong Macau Holdings Ltd. China Carrie also owns HMH China Investments Ltd. on the Toronto Stock Exchange and HMH Gold Mining on the Australian Stock Exchange. 999 Enterprise Group, another company controlled by the PLA General Logistics Department, operates Sanjiu Pharmaceuticals Group, the largest pharmaceuticals manufacturer in China. Smaller military enterprises, like the Songliao Automobile Company owned by the PLA Shenyang Military Region, have also listed in the domestic Chinese markets.

China Poly Group is a commercial arm of the PLA General Staff Department. The PLA General Logistics Department operates China Xinxing. The PLA General Political Department owns and operates China Carrie; and the PLA Navy runs China Songhai.

These are not small operations. As early as 1994, with $382 million worth of import-export trade, China Poly Group was the fifty-ninth largest import-export company in China, according to China State Statistical Bureau. China Xinxing ranked 170th with $159 million, China Carrie ranked 203rd with $137 million, and China Songhai ranked 395th with $71 million.

Foreign companies looking for a foothold in China like partnering with the PLA because of the stability it can offer to any long-term project. Companies with military partners get the added security of knowing that the top "management" of many of the PLA companies are from the ranks of the "princelings," the children and relatives of senior Chinese Communist Party officials. These influential princelings assure that the business operations of the PLA will have the government connections that are so important in China's corrupt system. In the case of China Poly, chair Wang Jun and president He Ping act as brokers between the government and the military. Wang Jun is the eldest son of the late Vice-President Wang Zhen. He Ping is the son-in-law of the late Deng Xiaoping. Wang Jun's brother, Wang Bing, is the chair of the PLA Navy Helicopter Company. China Carrie's president is Ye Xuanning, the second son of late PLA Marshal Ye Jianying.

These international Chinese military companies are very rich and powerful. Some have entered into very controversial projects. A good example is the Hutchison-Whampoa, Hutchison Port Holding (HPH). HPH is a huge, multibillion-dollar company which has set up operations in ports all around the world. From Panama to the Philippines, an arm of Hutchison-Whampoa, Hutchison Port Holding (HPH), has become the world�s largest seaport operator, embedding itself in strategic seaports all across the globe. In fact now Hutchison holds the exclusive contract to operate the Panama Canal.

These companies are not only involved in commercial expansion. Because of their ties to the PLA they are deeply involved in the business of cyber espionage. In October 2-12 the U.S. House of Representatives published a report �U.S. National Security Issues Posed by the Chinese Telecommunications Companies Huawei and ZTE�. The report stated that Huawei did not disclose its close relationship with the PLA and the Chinese Government and posed a cyber-security risk to the U.S. Huawei maintains close ties to the Third Department of the General Staff Headquarters. This department is responsible for monitoring the telecommunications of foreign armies and producing finished intelligence based on the military information collected.

With offices in Cuba, Iran, and Burma, Huawei has been a major supplier of dual-use telecom equipment. In 2001, its Indian subsidiary was accused of tailoring a commercial order for the Taliban regime in Afghanistan. Also in 2001, Huawei supplied Iraq with fibre optics to link its radar and anti-aircraft systems, triggering U.S. and U.K. bombings. Private defence firms often also enjoy the shielding of powerful patrons. Huawei was founded by a former PLA officer, and benefitted from early sales to the PLA. But it also receives state support in the form of tax privileges and state-sponsored credit because it has been designated a �national champion� of new technology. Its supporters have included top general Yang Shangkun and head of the China International Trade and Investment Corporation, Wang Jun (also president of Poly).

The Canadians highlighted their experiences with these corporations in their Commentary No. 84: �Weapons Proliferation and the Military-Industrial Complex of the PRC� produced by the Canadian Security Intelligence Service in 2003. They concentrated on NORINCO, the corporation formed out of the former ordinance ministry (Fifth Ministry of Machine Building). On 23 May 2003, the U.S. State Department issued a two-year ban on imports of products from NORINCO and subsidiaries to the United States, charging that the entity had sold rocket fuel and missile components to the Shahid Hemmat Industrial Group, the Iranian government agency in charge of developing and producing ballistic missiles. The ban covered at least US$200 million in goods, and, according to CIA estimates, as much as five times that figure if U.S. customs can identify all of NORINCO subsidiaries, which export everything from toys and shoes (Wal-Mart is a major purchaser) to auto parts and aluminium heat sinks for computers. Other firms in this category, such as China Precision Machinery Import-Export Corporation, and China Great Wall Industrial Corporation, are among those currently sanctioned by the U.S. for illegal transfers of weapons, dual-use material and technology to Iran.

The important point to be made about these major military-industrial combines and trading companies is that they are some of the major employers of labour in China, either directly or as suppliers of parts and components to these companies. It is not possible to discuss industrial relations in China as if these companies were ordinary capitalist private employers who compete for labour in a pool of possible workers. They have immense political power, regional power and, even when they act as suppliers to Western corporate investors in China, they are not governed by the usual constraints on employers elsewhere in the world.

The Third Force In Chinese Corporations: The Triads

One aspect of the development of Chinese enterprise is its close interaction with organised crime. These Chinese criminals aren�t just private sector entrepreneurs seeking to earn a quick, if dishonest, buck. They are part of ancient and well organised criminal groups with a fierce internal discipline. There are two distinct types of Chinese organised criminal gangs. The most ancient and well-established are the Triads. Their origins stretch back to the fight against the Qing Dynasty in the 1760s when the Han Chinese fought against the reigning Manchus. They developed a set of rituals and practices to preserve their anonymity and to bind each member to the society; a lot like the Freemasons. They set up a triangle of power which reflected the Heavens, the Earth and Man. Things were explained as variations on the triangular theme. However, power was vertical as in a pyramid; �the Shan Chu (Mountain Master) was the overall leader responsible for making the final decision on all matters. The Fu Shan Chu (Deputy Mountain Master), when appointed, was the deputy leader and directly assisted the leader. The Heung Chu (Incense Master) was responsible for all ceremonies of initiation and promotion. The Sin Fung (Vanguard) was responsible for recruitment, and organising and assisting in ceremonies. The Hung Kwan (Red Pole) was the �fighter� rank of the society. The Pak Tsz Sin (White Paper Fan) was responsible for the general administration of the society. The Cho Hai (Straw Sandal) was the liaison officer for the society. The �49 Chai� was the ordinary member usually recruited to follow a particular office-bearer.�[ii]

Triads also use numeric codes to distinguish between ranks and positions within the gang. For example, "426" refers to "fighter" while "49" denotes a rank-and-file member. "489" refers to the "mountain master" while 438 is used for the "deputy mountain master", 415 for "white paper fan" and 432 for the "straw sandal". "25" refers to an undercover law enforcement agent or spy from another triad, and has become popularly used in Hong Kong as a slang for "traitor".[iii]

These triads (as well as local city-wide gangs) flourished across China. However, they were not immune from the conflicts and struggles which changed China�s political structure. The triads functioned well under Chiang Kai-shek and the Kuomintang (KMT) and supported Chiang in his battle with the Chinese communists after 1945. Indeed, it was Chiang�s alliance with Shanghai�s notorious Green Gang which helped finance the KMT. The Green Gang controlled organised crime in Shanghai and, under Du Yuesheng, specialised in opium (which was supported by local warlords), gambling, and prostitution. Shanghai was the vice capital of the world at that time. �The Green Gang was often hired to break up union meetings and labour strikes, and was also involved in the Chinese Civil War. Carrying the name of the Society for Common Progress, it was responsible for the White Terror massacre of approximately 5,000 pro-Communist strikers in the City of Shanghai in April 1927, which was ordered by Nationalist leader General Chiang Kai-Shek, who granted Du Yuesheng the rank of General in the Nationalist army as a reward for conducting the massacre.�[iv]

When the KMT was driven south by the communists, many fled to Taiwan. Others were trapped in South China. Among them was the 997th Brigade of the KMT which settled in northern Burma. There they promoted the production of opium and began its export to the rest of the world, including the use of US aircraft sent in to deliver supplies to the 997th and with nothing to take back. This became a thriving business. Throughout the 1960s, 1970s and into the 1980s, notable warlords with fuzzy motivations arose in the Shan State.� It was often unclear whether they were ethno-nationalists or communists, drug lords, cronies of Rangoon, or a combination of these.� The most predominant such leaders were: General Li of the KMT (commanding groups in Burma from Thailand), Li Hsing Ho of the Rangoon-supported �home guard,� also known as the Ka Kwe Ye (KKY), Kyi Myint (Zhang Zhiming) of the CBP, and the infamous Khun Sa of the Shan United Army (SUA).[v] The refining of this morphine base was undertaken by the Union Corse (the Corsican Mafia) operating in French Indo-China as �anti-communist� allies of the French Colonial Government up until Dien Bien Phu. When the French and the Corsicans were driven out of Indo-China the drug business reverted to the triads and gangs who had stayed loyal to the KMT and who had taken up residence in Taiwan, along with local nationalist Burmese and Vietnamese. For a long time the drug business was dominated by the Taiwanese gangs (United Bamboo, Four Seas, Hung Mun , Hip Shing,� Hop Shing,� On Leong, Three Mountains, Tsung Tsin, Ying Ong,� Suey Sing). However, by 1954 power had passed from Taiwan to the relocated Triads on Hong Kong (including the KMT drug trade). This was largely because the KMT Government in Taipei was becoming increasingly concerned with the rise of Communist China and its attempts to impose a �One China� policy, especially in the UN.

In the mid-1950s the triads established themselves permanently in Hong Kong. There were several smaller triad organisations but they were overshadowed by the big four groups:� the Chiu-Chow/Hoklo Group (including subgroups Sun Yee On, Fuk Yee Hing, King Yee, Yee Kwan and� Tai Ho Choi); the 14-K Group (including subgroups� Hau, Tak, Ngai, Yee, 14K Tai, Huen, Baai Lo Wo and� Lee Kwan); the House of Wo (including subgroups Wo Shing Wo, Wo Hop To, Wo On Lok, Wo Shing Tong, Wo Yee Tong, Wo Shing Yee; and the Luen Group (including subgroups� Luen Ying Sh'e,� Luen Lok Tong, Luen Fei Ying, Luen To Ying).[vi]

These four groups, and two of the larger Tongs from Taiwan, spread across the globe. They became involved in illegal immigration in North America and Europe; drugs and prostitution in Europe and Africa; and shylocking and extortion from overseas Chinese everywhere. Most importantly, as Communist China began to expand its influence and operations around the globe, the Chinese triads were ready, willing and able to assist. They had ways of bringing people in to work on Chinese installations like railroads or ports. They could access cheap gold and cheap resources. That made them very attractive to the Chinese military companies spreading their wings across the globe. Dealing with the Triads as well as the military-industrial conglomerates has made the task of creating a strong independent labour movement quite complicated.

The Current State of Chinese Labour

In recent years there has been an increased level of frustration among Chinese workers; especially among those employed in State-Owned Enterprises (SOE). Their principal complaints derive from three major problems. The first, and perhaps the most irritating, is that the workers have often not been paid for months at a time. In the late 1990s the ACFTU estimated that almost twenty per cent of the workforce had not been paid for over five or six months. This is compounded by the large numbers of workers which have been laid off from their jobs as part of the �optimisation of work� (yohua zue) reforms started in 1987. In 1995 the system of permanent employment was removed and by 1998 over ten million state workers had lost their jobs. In a recent study, researchers found that sixty-seven per cent of these laid-off workers lived in debt (largely to the local money-lenders) and thirty-one per cent were totally destitute.

This has led to waves of strikes and demonstrations across China as workers demand their unpaid salaries and pensions. The laid-off demand their unpaid social benefits.

The second complaint is that the management of these state enterprises are corrupt and inefficient. In another study conducted by the ACFTU researcher found that the workers feel that over eighty-five per cent of the value of entering the market system has been for the benefit of and the pocket books of state enterprise managers and the Communist local and regional officials. The workers say that the autonomous power granted by the management reforms (zizhuquan) has become �self-enriching power� (zifuquan). These managers steal from their enterprises; hive off parts of the enterprise to their own personal private companies; and use the unpaid or delayed wages of the employees as their private piggybanks.

The third complaint has been that the cost-shaving of these managers has led them to flout the laws on worker safety and mines, mills and factories have become death traps for the workers. Hundreds of miners have died in explosions or cave-ins in Chinese mines. Buildings under construction have collapsed as a result of shoddy materials being supplied and safety precautions ignored. Unpaid or extra work shifts have left the workers exhausted and despondent. Suicides of workers are not uncommon.[vii] There are regularly strikes across China. The China Labour Bulletin (http://www.clb.org.hk/en/) monitors these. Their latest graphic of current strikes show the prevalence of these strikes.

The situation inside these factories is tempered by the fact that these protests are carried out without the structure of an organised labour union which can stand up for workers� rights, safety and working conditions. The ACFTU is part of the government and has been able to make any changes although their reports and pronouncements indicate that they know what they should do... The workers are doing it for themselves.

Following a series of scandals surrounding unfair dismissal (particularly by foreign-owned firms such as Walmart), and the negative publicity which these attracted, in January 2008 the Chinese government passed The Labour Contract Law of the People�s Republic of China, �one of the most far-reaching labour laws in the world� according to The Economist. The 2008 reforms allowed ACFTU, which had previously been focused on state owned enterprises (SOEs), into the private sector. The union has said that it intends to unionise over 90 per cent of workers in China, and by law any company with more than 25 employees must allow the formation of an ACFTU-approved union.

The Hong Kong-based charity Human Rights in China says of the ACFTU:���When workers organize work stoppages, strikes or demonstrations, the ACFTU is at best an observer and at worst a co-instrument in putting down labour unrest. In some cases, the ACFTU is known to have directly restrained or detained workers representatives.� As well as helping the state punish workers who engage in strikes (of which the right to do so was removed from the Constitution in 1982), ACFTU also collaborates with business owners, allowing firms to influence who their union chairperson will be and helping them head off unrest or worker dissatisfaction before it affects their bottom line. Indeed, the Trade Union Law, which governs ACFTU, states:�� [When] a work stoppage or go slow occurs in an enterprise or institution, the trade union shall assist the enterprise or institution in its work so as to enable the normal production process to be resumed as quickly as possible.�

Chinese workers are all too aware of the uselessness of their official trade union. While in the past workers largely sought to greater democratise ACFTU, increasingly they are looking outside the organisation. In most workplace disputes, particularly strikes, workers forgo ACFTU procedures and elect their own representatives for the duration. These informal and illegal strikes have proved successful: in 2010 workers in Foshan were able to attain a wage increase from management despite having no support from ACFTU - government approved union representatives even allegedly attacked striking workers who tried to talk to reporters. Foxconn, the Taiwanese firm which has become the unwilling face of workers� rights in China, approved numerous pay increases and other improvements after a spate of suicides at its plants in Guangdong. [viii]

The latest problem for Chinese industry and the best opportunity for trade unions is the shortage of skilled labour willing to work for the low wages offered by the companies. The workers are using job fairs to take bids from employers looking to hire labour and the scarcity of skilled labour is both driving up wages, forcing an improved work environment and changing the power balance in the employment relationship. Now, with the push against petty corruption in the regions, cities and plants there is movement towards institutionalising the interchange into a trade union movement. The Chinese Communist Party, essentially a praetorian guard in charge of a country, is not sympathetic to such a development but recognises that Chinese prosperity increasingly depends on the co-operation of the working classes.

After all, the preamble to the Constitution of the People�s Republic of China states that:
�The people's democratic dictatorship [is] led by the working class and based on the alliance of workers and peasants.�. Perhaps the leadership will read that again.

What is also important is that Chinese companies across the globe, but especially in Africa, have always demonstrated the same unwillingness of Chinese managers to deal fairly and correctly with their labour forces. Africa is scarred by explosions, fires, collapses of buildings and poor health and safety practice conducted by the Chinese in their enterprises. They treat Africans as badly as they treat the Chinese. However, Africans have the means to resist and often the support of their governments in requiring the Chinese businesses to behave properly. Perhaps as the Chinese learn to respect labour and working people in Africa they will be able to conduct their industrial relationships in China a bit better.