China: new legislation not to the liking of western corporations

Pol de Vos questioned Peter Franssen, a China specialist.

What is this proposed legislation essentially about?

PF: The legislation requires employers and unions to negotiate collective agreements on an equal footing. When a new worker is taken on, his probation period can be no longer than one month, after which he must be given a permanent contract. There can be no mass redundancies without the agreement of the union. Moreover, the legislation will subject the enforcement of existing labour laws to strict control, such as that which limits the working week to 44 hours, and the working week to five days, as well as provisions for minimum wages, the payment of overtime, etc. Any employer who is found breaking the law risks a heavy prison sentence.

How have the employers reacted?

PF: As far as the American and western European employers who have invested in China are concerned, this legislation ‘endangers traditional corporate values’, by which what they actually mean is that employers will lose a large part of their decision-making power. They are also trying blackmail. Keyong Wu from the British Chamber of Commerce has said: “We came to China because of its low wages and flexibility of labour. If these disappear, we’ll go to India, Pakistan or Bangladesh.”

What is the response of the Chinese to this blackmail?

PF: They’re quite calm about it. They might make some minor amendments to the legislation but in essence it will remain unchanged.

At the end of the 1970s, at the time China was first embarking on its policy of reforms, it was in a very weak position. It desperately needed American, Japanese and European investment, as well as their capital, technology and management techniques, if it was to make significant progress. Nowadays their position is more equal.

In October, the French group Alstom signed a contract with a state enterprise for the manufacture of 500 ultra-modern state-of-the-art locomotives. However, Alstom’s management is afraid the Chinese will soon be going ahead without them, and that China will start exporting rather than importing these ultra-modern trains. But, say the management, “We had no choice. If we had not accepted technology transfer, we wouldn’t have got the Chinese contract.”

Last month [October 2006], China launched the mass production of computers “made in China”, and these computers are in no way inferior to the latest processors from Japan or America. These computers will sell for 100 euros – an eighth of what we are paying in our country. The Chinese have acquired technology by watching the way foreign investors developed theirs.

For the moment, China is still purchasing its Airbus aeroplanes from Europe and its Boeings from the US, but in 2008 it will be producing its own passenger aircraft.

The Chinese can nowadays impose conditions on foreign investors. Even if they can’t impose all the conditions they would like, their position is getting ever stronger. The Russian revolutionary, Lenin, once said that “Foreign capitalists will do anything for money. They even try to sell us the rope with which we will hang them.” That is rather like what has been happening in China over the last few years.

Does this new legislation not demonstrate that the existing law is unsatisfactory?

PF: Current legislation is much less far-reaching and is difficult to enforce. But the Chinese are well aware of the mistakes they have made. In the 1980s and 1990s they were sometimes unilateral. At that time their only concerns were economic growth and raising the standard of living. They didn’t worry enough about working conditions, particularly those of internal migrants, ie, the peasants who left their villages to go to work in industry. There are 150 million of them – a fifth of the labour force. Over half of them are forced to work overtime, at low rates of pay, or even without extra payment. Over half of them are working six days a week. Their income is lower than that of other workers. “If the new labour legislation becomes law and is actually enforced, the wages of these migrants will rise by at least a half,” explained Anita Chan, who is a specialist in industrial relations at the National University of Australia.

In order to correct past errors, the government has appealed to the workers themselves. The proposed new legislation was put before the people with a view to obtaining their advice. The government received 190,000 e-mails and letters with suggestions, and parliament is currently examining all these. It’s a form of mobilisation. The government wants to give workers new legal rights and to encourage them to take advantage of these.

Without the union, this will never work …

PG: This year, the union has already enrolled six million new members, mainly internal migrants. Some months ago the union managed to set up sections in the 62 Wal-Mart outlets in China. This has been a body blow for Wal-Mart, which won’t allow unions in any of its US shops. The Chinese press is full of articles explaining how this happened, as well as on the clandestine methods to which the union had to resort, to say nothing of articles on the exploitation of internal migrants, unpaid wages, insecurity of employment, lack of hygiene in factories and mines and compulsory overtime. All this is accompanied by interviews, features and photos. Every time, you can read between the lines the call made to workers to ensure that employers obey the law.

Translated from Solidaire, newspaper of the Workers’ Party of Belgium, 22 November 2006, with thanks.