In recent weeks Hong Kong has been paralyzed by massive street protests against the introduction of an extradition law that would allow people seized in Hong Kong to be sent for trial in Mainland China. This popular uprising of protest has largely been fuelled by the activities conducted by the younger, largely academic, community in Hong Kong protesting the violation of the principle of Hong Kong’s legal exceptionalism but has also engaged the more senior members of the population as they reflect on the lessons learned in the thirtieth anniversary of the Tiananmen Square Massacre. On June 4, 1989, the People’s Liberation Army (‘PLA’) stormed into Tiananmen Square in Beijing. There they confronted tens of thousands of protestors demonstrating in the square calling on China’s ruling Communist Party to enact political reforms. Their hopes were dashed when the PLA tanks forced their way into the square and crushed the demonstration and the demonstrators under the treads of the tanks.
The Workers and Tiananmen Square
The consensus of most political analyses that this effort at promoting greater democracy and the speeding up of the political reforms in post-Mao China in 1989 was conducted by the young academics and democratic political activists who gathered in Tiananmen Square to demand the urgent reforms that China needed. To some degree their aspirations were granted by the ruling clique of the Communist Party of Chine (‘CCP’), as it sought to relax some social controls and make efforts towards allowing an economic response to the changing market forces in the country. However, the CCP refused to budge on human rights and democracy as these presented a challenge to the primacy of the CCP.
The campuses were full of activists promoting democracy and reform. Professional groups, like the committee of lawyers, joined with the students in their protests. These activists took over the square and built speaking podia for addressing the growing crowds and erected booths where information was shared.
What is missing from the general perception of the activism in the Tiananmen Square protest was the important work of the Chinese workers and their local organisations. These were ordinary workers from the industrial factories; construction and service industries; migrant workers who found themselves in Beijing; and peasants who moved to Beijing for the hope of a job which would allow them to send funds home to the countryside where their families lived in desperate poverty. These workers were appalled by the corruption of Chinese society and the growing economic gap between workers and their superiors; the low wages and lack of timely payment of the funds owed them; the terrible and unsupervised health and safety in Chinese industry; the non-enforcement of existing labour laws; the routine of being forced to work additional hours without additional compensation. These demands were not, per se, political but were a goad to the workers to participate in the struggle for reform in Tiananmen.
From the earliest stages of the movement for political reform there were workers and their representatives active in supporting and organising their part of the protest moment. The stage had been set for reform by the work of Hu Yaobang, a close colleague of Deng Xiaoping who had taken over the CCP after the death of Mao. Hu Yaobang, under the protection of Deng Xiaoping, had begun a series of political and economic reforms. These reforms were opposed by the Maoist and military leaders of China, and Hu was purged from his role as General Secretary of the CCP for his “bourgeois liberalisation”. He became a hero in the eyes of those who hoped for reform. His successor, Zhao Ziyang, became General Secretary and was also associated with reform. Zhao Ziyang showed his support for the students and others who protested at Tiananmen Square as was purged and jailed for 15.5 years for his sympathies.
The actual protest movement began on April 15, 1989, the day of Hu Yaobang’s death. A group of students gathered at a memorial for Hu Yaobang in the middle of Tiananmen Square where they were joined by the general public. They discussed the need for political and economic reforms and were joined by a delegation of workers from the Ministry of Textiles who brought a wreath to the memorial.[i]
As the continued to meet with the students they realised that the students were complaining about many of the same failings in the Chinese system. The workers were more concerned about their immediate economic concerns than the lofty reforms and ideals of the students and intellectuals but they found a commonality of purpose. The workers watched as the soldiers beat the demonstrators with belts and clubs and agreed that they would join forces with the students. They issued handbills on behalf of the workers demands for reforms and met to form their own autonomous organisation, outside the constraints of their national labour unions. They formed the Beijing Workers’ Autonomous Federation (the gongzilian).[ii]
During the protests which preceded the massacre the students consulted with the gongzilian but treated them as an adjunct to their broader movement; largely because they shunned workers in general and had pinned their faith on the reformist wing of the CCP The gongzilians knew better than to rely on the CCP, both reformers or not reformers, and wanted a clearer process for the reduction of corruption and improved wages and working conditions. They also knew that many of their academic allies would soon be drawn into a career path which would allow them to become part of the corrupt system. The workers, on the other hand, would remain workers.
Throughout the protest movement in Tiananmen Square the workers offered to engage in a general strike to paralyse commerce in Beijing but were rebuffed by the students who felt this would weaken the reform elements of the CCP by creating a crisis they couldn’t handle. It wasn’t until the last days of the protest that the students came to ask the gongzilian to go ahead with the general strike but, by then, with the army in the streets, it was too late to organise.
After the suppression by the PLA many of the most active student protestors found their way to Hong Kong; at least those who escaped imprisonment. The gongzilian cadres stayed behind and were the backbone of the new workers’ response to the constraints of the CCP system and formed new, independent, trades unions.
Background to Chinese Labour
Chinese workers were always exploited by the feudal practices of labour management which prevailed in the rural economies. These frequently led to the deaths of millions of Chinese peasants and workers 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 initially 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 these ports, transport hubs, construction and in 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.
Having won control of Canton Chiang Kai-Shek 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 unionists, 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, largely abandoned the representatives of the Chinese workers to their fate. Mao 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 an engagement with the urban working masses. This policy abandoned the unions in the cities to the less than tender mercies of the Kuomintang. During the civil war between the communists and the Kuomintang numerous workers' units joined Mao's Hunan army and participated in the Nanchang Uprising. The greatest 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 Second World 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 (‘ACFTU’, a national Chinese labour federation originally 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 transmission belt of CCP policy in the workplace. The ACFTU was a founding member of the World Federation of Trades Union (WFTU) and remained an important member in it after its split with the Western-leaning International Confederation of trades unions (ICFTU) split in 1949.[iii]
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. 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 were able to own 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 were able to destroy 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 was 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 which were allowed to thrive were, until recently, populated solely by state workers; not those 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.
The Unusual Configuration of Chinese Commercial Enterprises
Many key Chinese companies have been 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.
The influence of the Chinese military in the economic affairs of China has been extensive for the last three thousand years. They 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. 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, including the Central Plains War, involved nearly a million soldiers. The central government was weak and relied on the power and support of these fractious warlords. The central government provided a national civil service and a national administrative regime but was uniformly weak.
After the death of Mao, he was succeeded by Hua Guofeng who attempted to keep a tight control over the power structures of China, including the Central Military Committee which virtually controlled the CCP. 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 (CCP).
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 Hua 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. This was not controlled by one central PLA group but was under the control of the individual army for each region; some, like the 28th Army and the 39th Army were in economic hotspots and were able to thrive quickly. The Northern Army was quick to exploit its opportunities.
The opportunity arose in the wake of the civil disturbances of the Tiananmen Square uprising, when the CCP, 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. The PLA did its duty but the populace was 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, and Hu Yaobang.
After Mao's death in 1976, the new 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 (domestic and foreign) 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. The number of military-run business 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 civilian 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 goods produced in China before. In addition to their international arms sales, their production of consumer goods for the domestic market soared.
Attempting to shake up China's mammoth military establishment after Tiananmen, in 1989 President Jiang Zemin ordered the armed forces to pull out of the commercial ventures that had enriched them for years. Jiang told top military officials that the army and armed police forces must earnestly not engage in their operation. Weakened by the political fallout of the worldwide condemnation of the Tiananmen Square Massacre the PLA ignored the party and its directives. The PLA became a state within the state.
Many of the PLA companies became firmly enmeshed in the global economy. 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 emphasized 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. 999 recently announced its plan to list soon on the Hong Kong exchange. 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 Chinese People's Liberation Army (PLA) General Staff Department. The PLA General Logistics Department operates China Xinxing. The PLA General Political Department owns and operates China Carrie; the PLA Navy runs China Songhai.
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 Jianyi
As each region was dominated by one or two armies, power stayed with them rather that obeying any central control by the CCP. Orders to the regions came from the Central Military Council as they were passed through the armies in charge. That meant that the non-military CCP party cadres in the region were less able to deliver, or demand, anything from the populations under their control and an elaborate edifice of corruption settled over the rural and regional CCP bureaucracy. Other than agriculture, employment was largely controlled by the regional militaries and their companies.[iv]
When Jiang Zemin succeeded Deng as head of the CCP and the CMC he largely followed the economic policies introduced by Deng; adding the ”Three Represents” policy in 2004 which encouraged the Party to allow the formation of State-Owned-Enterprise (‘SOE’) as well as private corporations.
There are about 120 large SOEs in China, managed by the State-owned Assets Supervision and Administration Commission (SASAC) as well as several large banks and insurance companies not supervised by the SASAC. In recent years the CCP leadership has concentrated its financial might in supporting these SOEs with cheap credit and a policy of growth. This has a dramatic effect in spurring their growth. However, the direction of cheap credit to these SMEs and the promotion of major infrastructural projects has stifled the growth of small and medium-sized corporations through a shortage of capital and led to a lack of spurs for domestic savings. China has had to redirect these funds to reach the new middle-sized firms and allow the growth of a domestic savings pool.
To keep the wheels turning, local authorities and other government agencies were allowed to borrow. Recently the figures came to light of a $3 trillion debt of China’s regions without any clear idea of how that could be repaid.
The debts run up by China’s regions have exposed a deep and pervasive problem. The economic boom in the past decades has produced a widening wealth gap. According to a report from China’s Southwestern University of Finance and Economics, China’s level of inequality is comparable to that of the Philippines and Russia and much worse than that of Japan, the United States and many countries in newly liberalized Eastern Europe. Based on the study of Wang Xiaolu, an economist at the independent National Economic Research Institute in Beijing, analysts have estimated that the wealthiest 10 percent of Chinese earned 65 times that of poorest 10 percent. High inequality has increased the danger for China to tumble into the “middle-income trap” – getting stuck at a level of development that falls short of that of more advanced economies. Worse, the government’s failure to address this social crisis has put the underprivileged against an entitled minority. A series of city- wide protests at ‘land-grabs’ and the displacement of the rural poor has added to the industrial unrest in urban centres.
The existing socio-political crises in China are exacerbated by entrenched corruption. The market- oriented economic transition has created new opportunities and made corruption more pervasive than in previous decades. More than 10 years ago, two eminent Chinese scholars suggested that some 80 percent of the Chinese government officials were corrupt, and the situation has not improved. A conservative estimate by the Carnegie Endowment for International Peace put the cost of corruption in China at about 3 percent of GDP annually, or about $200 billion. China’s corruption has reached a level that touches almost every sector and every member of the society. According to a nationwide survey, about 82 percent of responders agreed that China has experienced a significant moral decline over the past decade, and more than half of respondents did not think that complying with ethical standards was a necessary condition for success.
The Xi government took up the struggle against corruption by making some important arrests of known malefactors (not counting Bo Xi Lai). These were arrests in the oil industry and the arrest of the Deputy Security chief. The recent detention of senior executives of the China National Petroleum Corp (CNPC) was a high-water mark in this process; the arrest of former CNPC president Jiang Jiemin in September emphasised the fact that no one was safe, despite his position. Jiang, who spent the bulk of his career in the oil industry, was the patron of four other CNPC executives detained in the summer, including deputy general managers Wang Yongchun and Li Hualin. The Chinese call this strategy of “strike the mountain to shock the tiger” and “kill the chicken to scare the monkey.” The first strategy is an internal approach designed to take down a few powerful leaders to scare the lesser ones. The second strategy is an external approach in which leaders go after lesser powers to diminish the role or prevent the involvement of a greater power.
In March 2016 the Central Military Commission (‘CMC’) announced that it was planning to gradually terminate all the military's commercial activities. Because Xi Jinping, himself a “princeling” of the military, had taken the Presidency as well as named himself head of the CMC he was in a position to enforce this decision. He started this by exposing and punishing the great levels of corruption in the Chinese real estate market by the military; especially the PLA Logistics Department. China's real estate market peaked about 10 years ago and land resources and real estate became a hotbed for military corruption. Many commercial dealings were either not approved, or exceeded the approved area or time frame, depending on the corruption the military sponsors. Among the nearly 50 "tigers" who were cracked down in China's fight against corruption in the military, many are from the general logistics department or in charge of the approval of real estate-related projects. The fall of Gu Junshan, the former Deputy Director of the PLA General Logistics Department from December 2009 to February 2012, and Xu Caihou, former Vice-Chairman of the Central Military Commission, are both related to real estate projects that they oversaw.[v]
In addition, Xi announced that five new private banks would be allowed to register to perform banking tasks for the small and medium enterprises. On the 5th of January 2014 the Chinese banking authorities announced the provisional licensing of five private banks. These opened up the financial sector and raised competition in the industry. This policy is the way the CCP is trying to gain control of the “shadow banks” which have grown into a parallel credit system. Over the past few years lending by non-banking companies to an emerging private sector has grown rapidly in China, fuelling a surge in unregulated debt levels. Chinese economists have pointed out that this shadow banking poses a major risk to China's economic growth by making the volumes and levels of credit less transparent Chinese policymakers have drawn up new regulations for the control of shadow banking and the tentative licensing of private banks is seen as a step in that direction. Allowing in foreign banks has been mooted but, as yet, had little support from the Chinese bureaucracy.
Xi’s policies were initially viewed as progressive step towards modernising and reforming China. His trade-off with the military in which he agreed to modernise and streamline the PLA has allowed the military to expand its reach, upgrade its technology and construct offshore military facilities in the South China Sea. That was their trade-off for reducing the PLA’s control of industry. However, it became clear that Xi is not a reformer of human rights or seeking an improvement in the deteriorating industrial relations in Chinese business. He has supressed the rule of law and has built giant prisons for the ethnic minorities in Tibet and Xinjiang. He has pushed for a unilateral change and erosion of the Special Administrative Region of Hong Kong; and he has professed his wish to take back the Republic of China in Taiwan.
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 demanded their unpaid salaries and pensions. The laid-off also 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 a 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. There are widespread strikes across China. The China Labour Bulletin monitors these. Their latest graphic of current strikes show the prevalence of these strikes and the work accident sites
The situation inside these factories is tempered by the fact that these protests are carried out largely 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 unable to make any changes although their reports and pronouncements indicate that they know what they should do. The workers are doing it for themselves. The rate of industrial accidents very high.
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. These 2008 reforms allowed ACFTU, which had previously been focused on state owned enterprises (SOEs), into the private sector. By law any company with more than 25 employees must allow the formation of an ACFTU-approved union. That is a mixed blessing.
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.”[vi]
The China Labour Bulletin summarises the state of Chinese labour in its annual summary. The report makes the following specific observations:
• With the continuing structural adjustment of the Chinese economy, traditional industries such as mining, iron and steel and manufacturing have declined while new service industries have expanded rapidly. There has been a concomitant decline in the proportion of collective actions by factory workers and a rise in the proportion of strikes and protests by workers in a broad range of new industries such as couriers, food delivery and other online service providers.
• Worker protests, previously concentrated in the factories of the Pearl and Yangtze River Deltas diversified and spread across the whole country. The inland province of Henan, for example, recorded the most protests of any region by construction, transport and retail workers during the three-year period of this report. Collective actions by workers are now not only widespread but increasingly normalized.
• The workers' movement entered a new phase of more organized and purposeful collective action in which workers utilized the latest internet and telecommunications technology to more effectively pursue their objectives. Whereas in the past, strikes and protests could easily dissipate, workers now have the will and ability to engage in sustained collective action and bring about positive results through bargaining.
• Civil society labour organizations demonstrated on numerous occasions that they were able to train workers to elect and protect bargaining representatives and initiate collective bargaining at the enterprise level. Although they lacked the organizational capacity of a trade union, these civil society organizations were still able to successfully resolve disputes and showed at a basic level how a trade union should operate. Indeed, they provided the ACFTU will a model of how to create a systematic bargaining mechanism and enhance the role of the union at the enterprise level.
• The CCP initiated a new phase of trade union reform in China characterised by both top-down coercion from the Party and bottom-up pressure from the workers' movement. The CCP understood that, if it was to maintain its own political legitimacy, it could no longer neglect the obscene wealth gap created by forty years of economic reform and a deliberate lack of government oversight. The desire of ordinary workers for a decent life and an end to social injustice made the task of transforming the trade union into a truly representative organization even more pressing.
• The ACFTU began a series of reforms to its organizational structure, management model and operating mechanisms. At the grassroots level, the ACFTU sought to create new unions, recruit new members and protect the rights and interests of its members. However, the union has not really changed its basic identity, and the reform measures introduced so far still betray a paternalistic attitude, seeing workers as victims in need of help rather than persons of value in need of representation. As a result, workers still do not identify with the union or have a sense of belonging or commitment to it.[vii]
In 2018, there was one labour dispute that stood out more than any other; the campaign by workers at Jasic Technology in Shenzhen to set up a factory trade union. workers complained of low pay, underpayment of social insurance and an abusive management regime. What made the case noteworthy however was that instead of just focusing on the short-term resolution of these specific economic grievances, the Jasic workers understood that the only way to ensure the long-term improvement in pay and working conditions at the factory was through strong trade union representation. And it was this crucial development that led to the broad support movement that united student groups and working people across China. The vast majority of collective labour disputes in China last year occurred at domestically-owned private enterprises with no trade union or a union that was beholden to management.
Of the 1,701 incidents recorded in 2018 3.3 percent) occurred in domestic private enterprises, 1,246 (73.3 percent) occurred in domestic private enterprises, 11.6 percent in state-owned enterprises, and just 2.9 percent in Hong Kong/Macau/Taiwan/foreign-funded enterprises and joint-ventures. 11.6 percent in state-owned enterprises, and just 2.9 percent in Hong Kong/Macau/Taiwan/foreign-funded enterprises and joint-ventures. Evidence enough that labour unrest in China is very much a domestic problem, and one that can only be addressed with a strong domestic trade union.[viii]
The labour movement of China is now pressing to have the right to form independent unions, outside the ACFTU and with the right to seek enforcement of the labour laws which are ignored by the corrupt politicians, businessmen and the Triads.
Why Are The Protests in Hong Kong So Important?
The situation of Chinese labour is in a state of flux. The trade wars between the U.S. and China have led to a slowdown in the expansion of investment in China. The skilling of Chinese labour has made workers more discerning in the jobs they will take and the pool of replacement labour has gradually diminished which has given more power to the Chinese labour organisations. The reform of the ACTU is mainly cosmetic. The CCP recognize this and has gradually been forced to come to the conclusion that collective bargaining and industrial unions cannot be stopped from forming, but it insists on the sole centre of power must remain the CCP.
The CCP is less concerned with the academic protestors in Hong Kong. Their demands are ethereal and involve hoping that external forces will assist them in their legitimate struggles. What they fear is the development of the General Strike which will bite and force change that they cannot control. This is what the gongzilian of the Beijing Workers Autonomous Federation realized in 1989 when they suggested a general strike in support of the demonstrators in Tiananmen Square. Carrie Lam withdrew her extradition bill when the head of the Hong Kong Federation of Trades Unions stepped to the mike and announce his plans for a general strike on the island. China is beginning to feel the pinch of tariffs, especially because of the efforts by the Chinese to rid themselves of the shadow banks and deal with skyrocketing regional debt. They fear that the momentum in the mainland labour movement towards independent unions; unions with muscle and solidarity; engaged in collective bargaining; would weaken the stranglehold on power by the CPC.
It is an interesting phenomenon that the actions taken by the workers and students in 1989 in their protest in Tiananmen Square helped spur on the revolt in East Germany where the student and labour protests were a precursor the German unification. The SED’s endorsement of the Chinese suppression and the East Germans’ fear of a “Chinese Solution” to looming domestic unrest aggravated the mass exodus in the summer and Fall of 1989. Leipzig avoided the harsh crackdown of Tiananmen but its occurrence spurred the East Germans not to delay their revolutionary protests.[ix]
This type of contagion is what is spooking Xi and the CPC.
[i] Andrew G. Walder and Gong Xiaoxia, The Austraian Journal of Chinese Affairs, No.29, January 1993
[iii] G.K. Busch, The Political Role of International Trades Unions, “The Development of Asian Union”, Macmillan 1983
[iv] G.K. Busch, “ChineseMilitary Complex”, Ocnus.net 2009
[vi] China Labour Bulletin, “How the All-China Federation of Trade Unions helps business screw Chinese workers”
[vii] China Labour Bulletin, “Workers Movement 2015-2017” August 2018
[ix] Quinna Shen, “Tienanmen Square, Leipzig, And the “China Solution”, German Studies Review 42.1, 2019