China: Labor Struggles in the “Socialist Market Economy”

Defend the Chinese Deformed Workers State Against Imperialism, Capitalist Counterrevolution!

For Proletarian Political Revolution!

Part One

This past spring, China experienced a major strike wave involving young migrant workers employed mainly in factories owned by Japanese, other foreign and offshore Chinese capital. It was centered in the southern coastal province of Guangdong, the main region in the country producing light manufactures for export. Three dozen strikes took place in that province in the span of a month and a half. The upsurge of labor militancy extended to other industrial regions. For example, workers at a Taiwanese-owned rubber plant near Shanghai clashed with police; around 50 workers were injured. In most cases, the strikes were settled quickly with wage increases and other gains for the workers. Recognizing in its own way the significance of these developments, the Economist (31 July), a house organ for American and British finance capital, headlined an editorial: “The Rising Power of the Chinese Worker.”

The strike wave began in mid May at a Honda plant in Foshan that produces transmissions for the company’s four auto assembly plants in China. As a result of the work stoppage, which lasted nearly three weeks, production in all of these plants came to a halt. The strike, which ended with a wage increase averaging 30 percent, was viewed as an important victory for the workers.

Strikes are not uncommon in China. However, they are usually very short-lived, quickly settled and/or quickly suppressed. And they are almost never reported in the government-directed media for fear that doing so would encourage other workers to engage in similar actions. That is just what happened in the case of the Foshan Honda strike, as the conflict between Chinese workers and the Japanese auto giant became a focus of domestic as well as international attention. Subsequently, the authorities reverted to a policy of clamping down on news of labor unrest.

Organization and leadership of the strikes were provided by worker activists outside the bureaucratic structures of the All-China Federation of Trade Unions (ACFTU), the official union federation, tied to the ruling Communist Party (CCP). One strike leader, Li Xiaojuan, a 20-year-old woman worker at the Foshan Honda plant, wrote an open letter on behalf of the negotiating committee that declared:

“We must maintain a high degree of unity and not let the representatives of Capital divide us…. This factory’s profits are the fruits of our bitter toil…. This struggle is not just about the interests of our 1,800 workers. We also care about the rights and interests of all Chinese workers.”

— quoted in Financial Times (London), 10 June

The strike wave in the capitalist sector of its industrial economy underscores the fundamental social contradictions of China as a bureaucratically deformed workers state. As Trotskyists (revolutionary Marxists), we strongly supported the strikes and emphasized that the rights and interests of Chinese workers require a leadership with a comprehensive program of class struggle at the political as well as economic levels:

“Chinese workers need a class-struggle leadership to advance their struggle to wrest as much as possible from the capitalist companies that are exploiting them, fight the ravages of inflation and improve their working and living conditions. Workers in state-owned industry also need such a leadership to protect and advance their living standards and to fight against bureaucratic abuse.”

— “Militant Strike Wave in China,” WV No. 961, 2 July

The contradictions besetting the Chinese deformed workers state will ultimately be resolved either by a proletarian political revolution, opening the road to socialism, or capitalist counterrevolution and imperialist re-enslavement.

A Bureaucratically Deformed Workers State

The People’s Republic of China emerged from the 1949 Revolution—a social revolution of world-historic significance in which the peasant-based forces led by the Communist Party of Mao Zedong defeated the U.S.-backed puppet regime of Chiang Kai-shek’s Guomindang. Hundreds of millions of peasants rose up and seized the land on which their forebears had been exploited from time immemorial. The subsequent creation of a centrally planned, collectivized economy laid the basis for enormous social gains for both urban workers and rural toilers. The revolution enabled women to advance by magnitudes over their previous miserable status, which was rooted in the old Confucian order and marked by such practices as forced marriage and concubinage. A nation that had been ravaged and divided by foreign powers was unified and freed from imperialist domination.

However, the workers state that issued from the Revolution was deformed from its inception under the rule of Mao’s CCP regime, the political apparatus of a privileged bureaucratic caste resting atop the workers state. Unlike the Russian October Revolution of 1917, which was carried out by a class-conscious proletariat guided by the Bolshevik internationalism of Lenin and Trotsky, the Chinese Revolution was the result of peasant guerrilla war led by Stalinist-nationalist forces. Patterned after the Stalinist bureaucracy that usurped political power in the USSR beginning in 1923-24, Mao’s regime and those of his successors, including Hu Jintao today, have preached the profoundly anti-Marxist notion that socialism—a classless, egalitarian society based on material abundance—can be built in a single country. In practice, “socialism in one country” has meant accommodation to world imperialism and opposition to the perspective of international workers revolution that is essential for the advance to socialism.

After a brief interregnum following the death of Mao in 1976, his successor, Deng Xiaoping, scrapped centralized economic planning and began implementing a number of market-oriented policies and practices. In the late 1990s, the regime headed by Jiang Zemin and Zhu Rongji privatized a large number of small- and medium-sized state-owned enterprises (SOEs). Under “market socialism,” China has attracted large-scale investment, mainly in manufacturing, by Western and Japanese corporations and by the offshore Chinese bourgeoisie in Taiwan, Hong Kong and elsewhere, with the CCP regime acting as labor contractors. On the mainland, there has also emerged a sizable class of indigenous capitalist entrepreneurs, many with familial and financial ties to the CCP officialdom.

One consequence of these developments is the widespread belief in the Western world, extending across the political spectrum, that China, although still ruled by a party calling itself “Communist,” has become capitalist. In reality, China remains a bureaucratically deformed workers state. The core of the industrial economy—steel and non-ferrous metals, heavy electrical equipment, telecommunications, oil extraction and refining, petrochemicals—continues to be based on state-owned enterprises. Outside of the foreign and offshore Chinese capitalist sector, almost all productive investment is channeled through the government and state-controlled banks. The Economist (10 July) pointed out that although China’s large banks “make money and have the trappings of public companies, the state owns a majority stake and the Communist Party appoints the top brass.”

The non-capitalist character of China’s economy has been clearly demonstrated by the effectiveness of the government’s almost $600 billion stimulus program—mainly investment in infrastructure and expanding bank lending—introduced in the fall of 2008 as the First World capitalist economies were plummeting. The sudden collapse of its export markets in North America and West Europe was a heavy blow to China’s economy. The rate of growth of the gross domestic product fell from near 13 percent in 2007 to under 7 percent in the last quarter of 2008. Since then, however, while the capitalist world has remained mired in a deep downturn, economic growth in China has revived rapidly, reaching almost 12 percent in the first quarter of this year before edging down slightly in the second quarter. Noting one significant effect of the skyrocketing levels of investment by state-controlled companies, the New York Times (29 August) reported that “the proportion of industrial production by companies controlled by the Chinese state edged up last year, checking a slow but seemingly inevitable eclipse.”

However much the Beijing Stalinists try to accommodate world imperialism, the U.S. and other major capitalist powers are determined to reverse the 1949 Revolution, reimposing semicolonial subjugation on China and reducing its economy to a giant capitalist sweatshop. Toward that end, they are utilizing economic penetration, increased military pressure from without and political subversion internally, for example, by the reactionary Buddhist forces in Tibet. The U.S. continues to provide capitalist Taiwan with advanced weaponry while itself extending its military reach in Central Asia and other areas near China. As Trotskyists, we stand for the unconditional military defense of China against imperialism and internal counterrevolution.

In answer to the aspirations of the Chinese workers and rural toilers for democratic rights and a government that represents their needs and interests, we stand for proletarian political revolution to oust the Stalinist bureaucracy and replace it with a government elected by workers and peasants councils and committed to revolutionary internationalism. Such a government would fight against bureaucratic arbitrariness and corruption. It would expropriate the new class of domestic capitalist entrepreneurs and renegotiate the terms of foreign investment in the interests of the working people. It would create a centrally planned and managed economy under conditions of workers democracy—not the autarkic, bureaucratic commandism of the Mao era, when “egalitarianism” meant an equalization of poverty. While struggling to provide at least a basic level of economic security for the whole population, a genuine communist leadership would understand that achieving material prosperity for all hinges on the struggle for socialist revolution in the centers of world capitalism.

The Honda Strikes

Migrant workers in China’s capitalist-owned factories are often forced to work 60 to 70 hours a week at wages barely above subsistence levels. The brutal conditions they endure were graphically exposed last spring by the widely publicized suicides of workers at the huge Foxconn industrial complex, employing more than 300,000, in Guangdong. At least a dozen workers have killed themselves since the beginning of the year. Owned by a Taiwanese company, Foxconn is the world’s largest contract electronics manufacturer, making products for Apple, Dell and Hewlett-Packard. A Hong Kong-based businessman who toured the site described conditions on the factory floor as “almost militaristic and kind of scary” (Financial Times, 11 June). Popular outrage over the suicides at Foxconn doubtless contributed to widespread sympathy and support for the strikes at Honda and other capitalist-owned firms.

The strike at the Honda transmission plant in Foshan was initiated by a 24-year-old worker, Tan Zhiqing, from the interior province of Hunan, a major supplier of migrant labor. A spirit of rebelliousness is celebrated in the popular culture of Hunan, Mao Zedong’s birthplace. Seeing his real earnings shrinking because of inflation, Tan decided to quit Honda and seek higher pay elsewhere. He had earlier approached local ACFTU officials about pressuring management to increase wages but got no response from them. In late April, he and a friend and co-worker named Xiao Xiao submitted a standard one-month-in-advance notice of their intention to leave the company. Tan subsequently told a reporter from China News Weekly (2 June): “Since I was going to quit anyway, I thought I might as well do something for the benefit of my fellow-workers.”

Toward that end, he and Xiao organized secret meetings with a small number of co-workers to plan a work stoppage. On May 17, Tan pushed the emergency button, stopping the assembly line where he was working, and some 50 workers walked off the job. At first, most workers were hesitant to go on strike for fear of reprisals. Production resumed temporarily when management agreed to negotiate with workers’ representatives who were elected from the different departments. A turning point came on May 21-22 when the company offered a wage increase of less than 10 percent of what the workers were demanding and then fired Tan and Xiao. The strike now resumed in earnest, with much greater support and resolve. Strikers routinely sang the national anthem and also an official song of the Chinese military, “Unity Is Strength,” here referring to workers instead of soldiers.

Other management policies intended to weaken the strike also backfired. A large section of the workforce is comprised of teenage trainees from technical schools whose wages were much lower than those of regular workers. In late May, the company demanded that the trainees sign a “memorandum of undertaking” pledging “never to lead, organize, partake in go-slows, stop work or strike.” Not only did most refuse to sign but, as the China News Weekly (2 June) reported, the trainees “were the staunchest supporters of the strike.”

From the outset, the local ACFTU bureaucrats were sidelined during the strike. One of the workers’ demands was “a reorganization of the local trade union: re-elections should be held for union chairman and other representatives.” Union officials sat in on the negotiations, purportedly to “mediate” between the two sides. Some union functionaries were evidently rankled by their visible loss of authority. On May 31, a large squad of ACFTU goons assaulted striking workers. The next day, however, union officials issued a public apology while downplaying the incident and claiming it was a result of “mutual misunderstandings.” In mid June, the head of the Guangdong province ACFTU promised that the Foshan Honda plant would be a “pilot site” in “allowing members to genuinely elect a union chair.”

Within days after the Foshan strike ended, workers at two other Honda parts plants went out. One of these strikes was settled quickly. However, the strike at Honda Lock turned into a bitter conflict, the outcome of which was very different than that at Foshan. Using desktop computers, activists uploaded video of security guards beating workers. In this case, both the Honda management and CCP authorities, at least at the local level, took a harder line. The company recruited “replacement workers” (scabs) and threatened to fire those strikers who refused to accept the wage increase offered. Journalists seeking to report on the strike were taken away from the plant by local police.

CCP Regime’s Response to Strikes

The initial extensive coverage of the Foshan Honda strike in the domestic media was accompanied by an equally unusual candor about the country’s increasing social inequalities. Citing a leader of the ACFTU, the official English-language China Daily (13 May) reported that the share of the country’s gross domestic product going to workers’ wages fell from 57 percent in 1983 to 37 percent in 2005. An editorial in the Global Times (2 June), a People’s Daily spin-off, stated:

“Admittedly, in the three decades of opening-up, ordinary workers are among those who have received the smallest share of economic prosperity….

“The temporary stoppage of production lines in the four Honda factories, at a time of increasing market demand for the Japanese-brand cars, highlights the necessity of organized labor protection in Chinese factories.”

More recently, an ACFTU spokesman laid out an official policy of promoting “the direct election of grassroots trade union leaders” (People’s Daily online, 31 August).

Clearly, influential elements in the bureaucracy are concerned about the danger (to themselves) of growing labor unrest in the private sector. Even before the strike wave, a number of provincial and municipal governments had raised the legal minimum wage, in some cases as much as 20 percent.

Despite increasing economic inequality, one should recognize that workers in China, including migrants in the capitalist sector, have generally experienced a substantial improvement in living standards during the decades of the “reform” era. It is also true that the closing and privatizing of many state-owned enterprises over the years have produced severe economic uncertainty for workers who have seen their previously guaranteed social benefits cut and who lack the education and skills to find new work. But with the export sector booming, between 2004 and 2009 the average real monthly wage of migrant workers increased by more than 40 percent. That workers at Honda used cell phones and the Internet to coordinate strikes at different plants indicates that they have access to modern technology—a world away from the experience of their parents, not to speak of their grandparents on the rural communes of the Mao era.

Because the strikes were in capitalist enterprises, they did not constitute the kind of direct challenge to the ruling bureaucracy that strikes or other labor protests in strategic sectors of the statified economy, such as steel production, oil extraction and the railway system would pose. To a certain extent, the CCP regime could posture as a paternalistic defender of Chinese workers against unbridled exploitation by Japanese, Korean and offshore Chinese capitalists. In mid June, China’s premier Wen Jiabao intoned that “the government and all sectors of society should treat migrant workers as they would their own children.”

The fact that Honda is a Japanese company was likely an important factor in the authorities’ initial tolerance for the strike and the extensive domestic media coverage. The Beijing Stalinist leaders seek popular legitimacy by, above all, appealing to Chinese nationalism, evoking the historical memory of the country’s semicolonial subjugation prior to the 1949 Revolution. An important source of the CCP’s historical authority was its mobilization of the peasant masses in resisting the Japanese imperialists’ invasion and occupation of China in the 1930s-’40s. Even today Japan, rather than the United States, is the main target of both popular and officially sponsored Chinese nationalism.

On the other side of the Sea of Japan, the leading bourgeois newspaper Nikkei complained that “in the strike at the Honda-supplier, the authorities took a neutral stance from beginning to end.” In this respect, the strikes in China contrast sharply with the bloody state repression of labor struggles against Japanese companies in the semicolonial countries of Southeast Asia. For example, soldiers and police recently attacked workers at a Toshiba plant in Indonesia. In the Philippines, a union leader at the Japanese company Takata was murdered in early June in the course of a struggle for union recognition.

The strikes at the Chinese Honda and Toyota factories underscore the need for unity between the proletariats of China and Japan—a prospect that is completely outside the nationalist worldview of China’s Stalinist misrulers. Had the Japanese workers at these two auto giants expressed support for their Chinese class brothers, this would have strengthened their bargaining power and undercut the anti-Japanese nationalism promoted by the Beijing regime.

At the same time, the unity between different strata of workers—trainees from technical schools and full-time employees—displayed during the Foshan Honda strike could provide a positive and powerful example for the Japanese labor movement, with its hierarchical division between the permanent employees of the big corporations and the large number of temporary workers. This division poses directly the need for a political struggle against the lackeys of the bourgeoisie in the top leadership of the unions in Japan. For example, the most powerful unions in strategic industries such as auto and electronics allow only full-time employees to join.

The workers’ suicides at Foxconn and strikes at a number of other Taiwanese-owned enterprises point to the substantial presence of offshore Chinese capital in the mainland industrial economy. The island statelet of Taiwan, where the bulk of Chiang Kai-shek’s defeated forces fled in the late 1940s, is the base of the main body of the Chinese big bourgeoisie. Unlike mainland capitalist entrepreneurs, the bourgeoisie on Taiwan possesses its own counterrevolutionary political organizations. Moreover, the Taiwan-based bourgeoisie operates under the direct military protection of American imperialism.

The Beijing Stalinists have long promoted reunification with Taiwan under the formula, “one country, two systems,” the same formula used to incorporate the capitalist enclave of Hong Kong (a former British colony) in 1997. The incorporation of Taiwan into the People’s Republic under that formula is not on the immediate historical agenda. But should such a development take place, it would greatly strengthen the social forces of capitalist restoration, much more so than in the case of Hong Kong. Opposing the Stalinists’ efforts to accommodate the Taiwan-based Chinese bourgeoisie, we stand for revolutionary reunification: proletarian political revolution on the mainland and proletarian socialist revolution in Taiwan resulting in the expropriation of the bourgeoisie.

A Tight Labor Market and a New Proletarian Generation

The strike wave that began in the spring took place in the capitalist sector of China’s economy. However, favorable conditions for these workers’ struggles have been the result in good part of the workings of the core collectivized sector of the economy. When the world capitalist market tanked in the fall of 2008, an estimated 20 million workers were laid off from the export-producing factories in coastal China. Most returned to the rural villages.

One of the main effects of the government’s stimulus program has been a substantial expansion of employment opportunities in the country’s interior. As export production revived, beginning last summer, the inflow of migrants seeking work in coastal China was less than in the past. Glenn Maguire, Asia chief economist for the French bank Société Générale, observed that this development “suggests that the stimulus packages have been incredibly successful at creating jobs” (Reuters, 1 June). A survey by the ministry of labor estimated that in the Pearl River Delta manufacturing center in Guangdong, job vacancies exceeded applicants by 9 percent in the first quarter of the year. The tight labor market has increased the bargaining power of workers at the individual and the collective level. An executive at a Guangdong-based electronics company noted the changed situation: “When you fined workers nobody would dare to object because if you said anything you were out. But now every time a certain number of workers oppose some management move, my company will adjust it” (Financial Times, 4 June).

In addition to conjunctural factors, the long-term demographic trend is beginning to impact the labor market. For the past several decades, the CCP regime, seeking to curb population growth, has limited urban families to one child and rural families to two. As a consequence, the population between the ages of 15 and 24—the pool from which almost all migrant workers are drawn—has remained basically unchanged for the past five years and is projected to fall by almost 30 percent over the next ten years. Many bourgeois commentators foresee the beginning of the end of “cheap labor” in China.

But it is not only objective conjunctural and demographic factors that underlie the increased assertiveness and social power of China’s workers. The strike wave signals the entry of a new proletarian generation onto the social scene, one whose outlook and attitudes differ significantly from those of their parents.

The young peasant men and women who flooded into the cities in the 1980s and ’90s came from very poor, economically primitive conditions. Working in a factory or construction site, however harsh the conditions, was the only way they could improve their lives. For most of them, the goal was to save enough money so that they could return to their native villages and build new homes, buy equipment for their family farms or open small businesses.

The present generation of migrants has come of age in a society that is far more developed, even in the countryside, but also much more unequal. Their aspirations and expectations are correspondingly different. In response to a survey of 5,000 second-generation migrant workers conducted by the General Labor Union in the Guangdong city of Shenzhen, almost all said that they were unwilling to return to their home villages and become farmers. Cha Jinhua, described as a Guangdong-based labor activist, explained: “We’re different from our parents’ generation. Their wishes were simple—earn some money and return to their home towns. We want to stay in the cities and enjoy our lives here. But we demand respect” (Financial Times, 1 June).

However, the aspirations of young migrant workers to build good lives for themselves in the cities directly confront the legally based household registration or hukou system. Workers as well as members of the petty bourgeoisie who have an urban household registration have social benefits that are denied to those with a rural hukou. And the latter includes the grown children of migrants who, while born in the cities, are registered as members of a rural household. Holders of an urban hukou have priority for employment in state-owned enterprises, which generally provide much better social benefits, such as subsidized housing, and greater job security. In general, migrants pay more for inferior medical care and public schooling for their children. Furthermore, as we observed in “Women Workers and the Contradictions of China Today” (Spartacist [English-language edition] No. 61, Spring 2009):

“The migrant population is itself divided between those who have legal status and those who do not. Almost all migrant workers in factories and other major enterprises like Wal-Mart have temporary urban residency permits. However, there are millions of ‘undocumented’ migrants—no one knows exactly how many—who eke out an existence as casual laborers, housemaids and nannies, street vendors and the like.”

We have long called for the abolition of the hukou system and for migrants to have the same rights and access to jobs as legally registered urban residents. In championing the rights of migrant workers, a class-struggle labor leadership would help unite the struggles of workers in state-owned industries against bureaucratic mismanagement and cuts in benefits with those of workers exploited in capitalist enterprises.

Labor Struggles in Guangdong: Yesterday and Today

The parents and older brothers and sisters of the workers involved in the recent strike wave also fought for a better life in the capitalist-owned factories and construction sites of coastal China. And there are important elements of continuity as well as differences across the generational divide.

A few years ago, Ching Kwan Lee, an academic of leftist sympathies, published a book based on her fieldwork in two very different regions of China in the early 2000s: Against the Law: Labor Protests in China’s Rustbelt and Sunbelt (University of California Press [2007]). The “rustbelt” in the subtitle is the northeastern province of Liaoning, which suffered economic devastation and mass unemployment when many large SOEs were downsized and smaller ones were privatized or closed outright in the late 1990s. The “sunbelt” refers to Guangdong.

In regard to the latter region, Lee emphasized the importance of labor laws and their non-enforcement in conditioning workers’ struggles. Almost all strikes and other industrial actions were preceded by complaints to local officials that the employer had violated the law with respect to wages (unpaid or below the legal minimum), overtime, social benefits or safety. She cited a case where complaints to the Labor Bureau by a small number of workers’ representatives were repeatedly ignored. Only when all of the workers in the factory went on strike did the Bureau intervene to arrange mediation.

Lee concluded that “migrant workers, feeling deprived of the socialist social contract available to state-owned enterprise workers, see the Labor Law as the only institutional resource protecting their interests vis-à-vis powerful employers and local officials.” One woman worker told her: “Once we saw the terms of the Labor Law, we realized that what we thought of as bitterness and bad luck were actually violations of our legal rights and interests.” A construction worker made similar comments in explaining the struggle against an employer who had forged workers’ signatures on labor contracts and denied workers access to the contracts’ terms:

“For two weeks, we had only one meal each day and we read everything on the Labor Law and labor dispute arbitration in the bookstore. Before this, we had no idea what the law said about us migrant workers. For many years, we had only heard about the labor contract, but we did not press the company hard enough when they refused to give us a copy…. Since we started this struggle with the company, many workers have begun to read newspapers. Some even cut out labor dispute stories for circulation in the dormitory.”

The prevailing attitude among workers was that the labor laws, if enforced, would substantially improve their conditions of life. But they were not enforced by local officials, many of whom were corrupt and openly colluded with the employers. A lawyer specializing in getting compensation for workers injured on the job recounted that a judge once told him: “Lawyer Zhou, if the court adheres to all the laws and regulations of the provincial government, all these factories would move elsewhere and the local economy would collapse. Who would be responsible then? You?”

To what extent is Lee’s observation from the early 2000s, that knowledge of the labor laws encourages and shapes workers’ struggles, applicable to the recent strike wave? From afar one cannot give a definitive answer. However, in the judgment of most observers, an important contributing factor to the upsurge of labor militancy was the new labor law adopted in 2008, which strengthened workers’ formal rights vis-à-vis the employer. Obviously, the CCP leadership did not intend this legislation to be an incitement for workers to go on strike. Rather, it sought to pressure capitalist firms to ameliorate the conditions of exploitation so as to minimize labor unrest.

The relation between workers’ struggles and the labor laws is contradictory. Workers have been emboldened to undertake strikes and other actions in defense of their legally recognized rights. At the same time, a belief that the laws are good but local officials are bad can foster illusions in the benevolent nature of the central government/party leadership. China’s premier likes to be called “Uncle Wen,” as he cultivates an avuncular image. It serves political stability if the workers’ anger is directed at low-level functionaries who can easily be sacrificed to assuage popular sentiment.

[TO BE CONTINUED]