Financial Times: Chinese labour is licensed to stake its claim

China Labour Bulletin director Han Dongfang is quoted in the following article. Copyright remains with the original publisher.

By David Pilling

Published: June 3 2010

Listen to the following statements about the strike at Honda's transmission plant in Guangdong province, one that has brought the Japanese company's car production throughout China to a juddering halt. The first goes like this: "The strike reflects the low wages the bosses are paying the workers . . . The system does not provide a legal base for collective bargaining." The second, like this: "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 . . . highlights the necessity of organised labour protection in Chinese factories."

The first speaker is Han Dongfang, a former railway electrician who, in 1989, tried to unite workers and students during the Tiananmen Square protests. He was jailed for his troubles, contracted tuberculosis in prison and had a lung surgically removed. Now living in exile in Hong Kong, he works as a trade union activist, monitoring workers' rights in mainland China.

The provenance of the second - almost identical - statement is more surprising. It is an editorial in the Global Times, a tabloid founded by the People's Daily. Chinese newspapers are not in the habit of writing about strikes, let alone endorsing them. Anything that smacks of an alternative pole of power or tarnishes China's image as a hassle-free investment destination has generally been taboo. In any case, strikes are rare since independent labour unions are banned and "official trade unions" rarely, if ever, organise industrial action.

So why are a leading dissident from Tiananmen Square and a newspaper with close ties to the Communist party speaking with one voice on such a delicate issue?

First, government authorities, through the media, are simply acknowledging reality. The years of an endless supply of cheap labour, on which the first three decades of China's economic lift-off was built, are coming to an end. That is partly demographic. Because of China's one-child policy, the supply of workers under 40 has dwindled by as much as a fifth. Fewer workers mean more bargaining power. Honda staff are demanding no less than a 50 per cent rise. Foxconn, a China-based Taiwanese contract manufacturer plagued by a recent spate of worker suicides, has just granted a 30 per cent wage increase.

Unlike the first wave of migrants who came to the cities in the 1980s and 1990s, the current batch has more options and higher aspirations. Many are not content to save money for a few years before returning home. They want to settle in the booming cities. That means they need higher wages. If they can't get them, there are opportunities at home. Under cost pressure, some factories have shifted inland, away from the factory towns on the east coast and the Pearl River Delta, and closer to the provinces from which most migrants come.

The second reason for the cautious sanction of industrial action is that the Communist party has a stake in better working conditions. Providing cheap Chinese labour to multinationals from Japan, the US and Europe was a means, not an end. Deng Xiaoping said it was glorious to get rich, not to make foreign-invested capital rich. As elsewhere, the share of labour in corporate profits has been falling. That runs contrary to the emphasis placed by China's leadership on a "harmonious society". Chinese media coverage of the Honda strike, as well as of the Foxconn suicides, has been heavy with analysis of the widening income gap.

There are other signs that the scales may be tipping labour's way. In 2008, Beijing enacted the labour contract law, stipulating that workers be given written contracts. Coupled with growing wage pressure, this changed atmosphere has obvious implications for foreign investors grown accustomed to a low-wage, strike-free, hire-and-fire environment.

Yet few are likely to pull out. That is because China has ceased to be merely a low-cost production centre. For many companies, it is also becoming an important market and an integral part of their global supply chain. Walmart sources $30bn worth of goods from China each year. Japanese car manufacturers, such as Honda, have brought with them a network of components makers, and built ties with Chinese parts suppliers. What goes for cars goes for iPads, mobile phones, digital cameras and colour photocopiers. Such a clustering effect makes it almost impossible for manufacturers to pick up sticks and start afresh elsewhere.
For all these reasons, Beijing may continue to offer cautious support to an emboldened workforce, though it will keep a watchful eye on wage inflation. But on no account will it tolerate any hint of organised labour evolving into a political force. Even Mr Han, whose political activities in 1989 landed him in jail and exile, has reached the pragmatic conclusion that labour rights and political rights must be separate. "I'm trying my best to depoliticise the labour movement in China," he says. When a Chinese labour activist wants to take the politics out of collective bargaining and official China is cheering on strikers, change is clearly afoot.
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