China: Capitalism means war against the working class

China’s drive to the “socialist market” has fostered a booming economy, but concealed behind this is a mass of contradictions. In spite of the growth a crisis is inevitable. A terrible price is being paid by the working class for the drive to a market economy. Heiko Khoo looks at the real face of China.

China’s drive to the “socialist market” has fostered a booming economy. This concealed a mass of contradictions which an economic crisis will unravel. Here we expose the terrible price paid by the working class for capitalist “reforms.”

The leadership of Hu Jintao

September 2004 saw the transfer of leadership from Jiang Zemin to Hu Jintao, thus consolidating his political and military power. Born in 1942 Hu is the first leader to have grown up after the revolution. Hu graduated and started working as a researcher at Qinghua University when factional battles, from which he stood aloof, broke out at the start of the Cultural Revolution. When the Universities were closed he was sent to Gansu province. From 1965 until 1980 he worked on technical and administrative tasks receiving favour from the provincial Party secretary Song Ping and promotion within bureaucratic and Communist Party ranks. In 1980 Hu returned to Beijing to study at the Central Party School.

Premier Hu Yaobang was seeking out young talent for the Central Committee, in 1982 he created a search posse which began its hunt in the Central Party School in Beijing. “We picked (Hu) because he stood out above the others. His was an easy choice, because what was rare at that time was that he had a university degree, and from Qinghua at that,” recalled a member of the search party.[1]

Hu Jintao with George Bush

At 42 years of age Hu Jintao became head of the Communist Youth and entered the Central Committee. From 1985-1988 he was put in charge of Guizhou province, China’s poorest. There he instituted no major reforms or innovations but learnt the art of doing inspection tours to familiarise himself with conditions on the ground and administrating the masses through government structures. His former mentor Premier Hu Yaobang fell from power in 1987 following his unwillingness to repress national student protests in 1986. Hu Jintao was appointed Secretary for Tibet in December 1988 during a wave nationalist unrest. In March 1989 Hu Jintao imposed martial law and put down the revolt, earning him nationalist credentials and the trust of those who would quell the Tiananmen occupation.

Hu Jintao was appointed to the politburo and made head of the Central Party School, there he sought to groom a layer of officials who owed their fortunes to his patronage. He was given responsibility to compile a ‘Selected works of Jiang Zemin’ designed to present Jiang as a theoretician and great leader. In 1995 Hu collaborated with Jiang Zemin to drive out fellow politburo member and Beijing Mayor Chen Xitong, to serve as an example that top heads can roll in national anti-corruption campaigns.

After Deng’s death on February 20, 1997 Hu Jintao took responsibility for implementing the decision to eliminate business interests within the Police, Army and Judiciary, to ensure the loyalty of the state apparatus to its political masters.

On May 9, 1999 Hu was the public face of the condemnation of the US bombing of the Chinese embassy in Belgrade. He played two roles, condemning US ‘barbarism’, thus being in tune with the popular mood, and seeking to pacify and control the anger of students and workers. Hu presents himself and his administration as aware of and in touch with the problems and concerns of the masses. This is because China’s rulers fear that the coming period will bring a generalised revolt of the workers and the poor.

Hu Jintao now governs over a booming economy and an apparently flourishing society, behind this appearance is a complex maize of interconnected contradictions, key parts of which this article seeks to expose. To understand what is taking place it is necessary to unmask the contradictory threads, elaborate which tendencies conflict, and identify the forces that will shape the future. Unfortunately the task of understanding the processes controlling and giving direction to Chinese society is not assisted by the ideas and analysis propagated by mainstream Chinese Communist Party journals and theoreticians. However, there are an increasing number of honest journalists, individuals and activists who are exposing the terrible price paid by the masses for the move towards capitalism.

Modern Times

Walking around the big cities of China, you cannot help feel that you are at the centre of world production, the workshop of the world. In Xian the ancient capital of China, miles upon miles of small outlets appear to sell every component involved in the building of an entire city or indeed of an entire continent. Machinery and equipment you never see for sale on the streets in Europe are sold like fruit and vegetables on a street market. In the centre of the major cities huge shopping complexes as large as the largest I have seen in Britain or Europe have opened in the last 10 years.

In this period Shanghai has become a city of skyscrapers, the narrow beautiful streets of the French sector have been bulldozed, huge highways criss-cross the city and an underground rail system shuttles the masses to and fro. The entire city centre, and as far as the eye can see from the Pudong Tower, is unrecognisable. One cannot but be impressed!

Now there are computer and digital video shops, all the latest fashions for sale, there are sex shops, more than a dozen TV channels, even a 24-hour English language Chinese TV station. A friend in Beijing said the city is unrecognisable every 3 months. Such constant transformation created by working hands makes the entire world appear changeable.

I stop outside a pirate DVD shop where a small crowd is gathered around watching a black and white film, Charlie Chaplin’s Modern Times. Over the weeks I notice the same film is being shown outside many such shops all over the country and likewise small crowds have gathered to watch and laugh; it is as if they were watching a film about Modern China.

Modern Times

In the brand new shopping complexes, the cheap ground floor sections are bustling with thronging crowds, but as you rise up the escalators, each floor with more exclusive goods, the staff start to outnumber the customers until the ratios become laughable. I found myself alone with 30 staff in an entire floor of a department store. I thought capitalism was supposed to eliminate waste!

In spite of the huge boom in production, consumption is limited by the purchasing power of the masses and the income insecurity which limits their spending. A recent survey for the Ministry of Commerce found that of 600 major consumer products, 446, or 74.3 per cent, were in oversupply. [2] China is confronted by a classical capitalist crisis of overproduction. The workers cannot afford to buy the goods they produce. There are too many houses, too many computers, too many clothes, at the same time as the workers receive wages which are only just sufficient to keep body and soul together.

As far as the eye can see and thousands of miles beyond, there is a giant construction boom. Crass kitsch housing for the nouveaux riche, mirror windowed office complexes of all shapes and form, colossal new apartment blocks appear to go on and on into the horizon. The dust from construction sites fills the air. The dirty gritty faces and clothes of building workers squatting by the roadside are not those who will occupy these buildings. These are migrants, part of the 100-150 million strong army of unskilled workers, who are building China’s cities and prosperity. After thousands of years of rural life they have either been driven off the land by poverty or enticed by the hope of escape into the future. In the last 25 years China’s industrial revolution has fostered the largest migration from the land to the cities in history.

Property Speculation

Property speculation has reached fever pitch. In 2003, 11.31 trillion yuan (US $1.36 trillion ) were invested in property. The so-called “Wenzhou property buying gangs” wander from city to city wielding 100 billion yuan ($12.5 bn). When using this as down payment on bank mortgages they leverage many times this amount to buy up everything available, and when prices skyrocket they sell, then move city to secure their next “victory for market forces”.

They started in Wenzhou itself (Zhejiang province) and property doubled in price, then to Shanghai, Hangzhou, Chengdu, Chongqing. Of course we are all familiar with this in Britain and the west, but in Mao’s time no-one could buy or sell property in China.

In Shanghai 39% of commercial housing with a value below 7000 yuan a square meter (US$840) is for investment or speculation. [3] Those who aren’t in on the game are obviously seething with discontent. Government action to curb property speculation has been half-hearted and piecemeal, reflecting the interconnected interests between speculative capital and administrative power, reaching into the highest levels of the bureaucracy, government and Communist Party. “Oh but we are just acting like the government of any market economy,” bleat the apologists.

Property is the best money making game around. Borrow money from state banks, get migrant workers to build apartment blocks, don’t pay them, drive up prices by monopolising supply and cornering markets, then sell at huge profits. Is this really the behaviour that Communists can approve of? Property speculation has driven housing beyond the reach of the working classes and when the bubble bursts threatens to bring the wider economy to a collapse.

The Crisis of Overproduction

The property bubble caused overheating in the steel, cement and aluminium industries. “A bursting of bubbles in the property market would naturally deal a heavy blow to the steel industry... loose land management and speculation were the major causes of the property markets’ soaring temperature.” [4] New investment in the steel industry has grown 150% in the year to April 2004, profits have skyrocketed, production is increasing at 25% a year, far more than demand. A crash is inevitable. The cause of the crisis is the subordination of industrial production to the whims of the market and the fragmented state of production.

“There are 53 companies, each with an annual steel production capacity of 1 million tons or more, and hundreds of smaller or even illegal steel makers in China.” [5] Each company is competing against each other and exacerbating overproduction. Steel production reached 236 million tonnes more than that of the US and Japan combined. “More than two thirds of the investment in property construction, steel, non-ferrous metal and building materials comes from bank loans.” [6]

Factory in West Bejing

In the year to February 2004, local governments increased spending on roads, factories and infrastructure by 65%. In the year to April 2004, investment in property rose 41%, in machinery, 74%, none of which has resulted in major improvements in the technology used.

Duplication of effort squanders away the benefits of economic growth. “Only eight of China’s more than 280 steel works have an annual output above 5 million tons. The others produce less than 700,000 tons each year on average. Statistics show most of these steel factories only turn out low-end products. And the steel products badly needed in China still have to be imported.” [7]

Aluminium supply exceeded demand in 2002, yet new projects to produce more capacity have begun, raw materials for which must be imported. Automobile production takes place in 23 locations, few have independent design capacity. Of 123 auto works, only 18 produce more than 50,000 units a year, some only make 2-300 cars a year. [8]

The railway system is unable to cope, because daily demand for goods carriages is 300,000, but current daily capacity is only 100,000. Market madness appears to know no end; pro-capitalist researchers blame State ownership for the inability of the railways to meet demand.

Power shortages have resulted from the huge spike in demand. To fill the gap in the market illegal electricity generating companies have sprung up. They now produce 30% of generating capacity. They are backed by local governments in East China, Inner Mongolia, Hebei, Guangdong and the Ningxia region. Most of them are funded by state bank loans. Demand from these illegal power plants places huge stress on coal supplies resulting in rail transport bottlenecks which have forced some legal power plants to close down. Coal shortages have resulted in a 30% rise in coal prices. There is a shortage of energy now, but as the economy turns downwards a glut is expected. [9] The market has brought uneven and chaotic economic development, and boom-bust cycles to the core of the national economy.

Migrant workers

Those who build the skylines and the highways, extract the minerals, weave the cloth, manufacture the wealth and dig the soil have not shared in the spoils of the market. Of the 38 million workers employed in the construction industry in China 30 million are migrant workers.

On August 7, 2004 Vice Premier Zeng Peiyan revealed that “360 bn yuan (US $43 bn) in unpaid wages remains owed to migrant workers at thousands of projects invested in by the government or real estate developers. ‘Some have remained unpaid for 10 years,’ said Zeng.” No wonder the construction industry is so lucrative.

Zeng declared his aim that such arrears affecting 124,000 projects “should be paid” by the end of 2006, claiming that “wages unpaid in 2003 for migrant workers have basically been cleared up” [10]

Let us remind Comrade Zeng that in 2003 it was reported that, “Statistics from the All China Federation of Trade Unions (ACFTU) reveal that employers across the country owe 100 billion yuan (US $12 bn) to the nation’s huge army of 94 million migrant workers.” [11] In other words arrears of wages have more than trebled in one year! What is to stop new arrears on an even grander scale from accumulating before 2006?

Hu Jintao’s “in touch” administration made much of the tale that Premier Wen Jianbao took up the case of an unpaid migrant worker, Xiong Deming. Xiong was owed 2240 yuan for construction work, but as reporter Guo Zi points out:

In Xiong’s case, right after Premier Wen asked about it, Xiong got her money that very evening. What about other villagers who suffer from the default, yet had no chance to talk directly to the premier?

“One estimate is that there are 100 million farmers-turned-workers labouring in the country’s construction, catering, garment and shoe-manufacturing industries. Legal protection of their rights and interests remain woefully absent. The employers that refuse to sign contracts with their workers and deliberately default on payments always seem to get away without punishment.” [12]

In reality Government ministers are complicit. They organize and benefit from the ‘market’ system which creates the generalised abuse of migrant workers. If they really wanted to eliminate late payments, why don’t they introduce a system of rewards for exposing late payers? Why not declare late payment an act of ‘counter revolution’? Or introduce prison sentences for employers guilty of late payment? Would that not be the natural response of a Communist to such ruthless and blatant exploitation?

So what is being done? “The Ministry of Construction is proposing a revision of the Construction Law, according to Li Changchun, a senior official with China’s Seamen’s Construction Trade Union. A heavy fine should be imposed upon the companies which postpone paying their employees, the ministry suggests. If the law gets passed, the fine will reach 300,000 yuan (US $36,300) at a maximum.’” [13]

If the truth be told, 300,000 yuan is nothing to these construction companies. You can’t even buy a one room apartment in Beijing for that money, yet it is often precisely the unpaid migrant workers who are erecting such apartments by the tens of thousands.

Trade in flesh and blood booms

The development of a so-called “socialist market economy” has seen significant diversification of entrepreneurial activity. Three dynamic growth industries are: the selling of children, the capture and sale human beings and the selling of blood.

Selling Children

For example, a gang of baby traders from Guanxi province was recently arrested for selling 117 girls. In court one of the accused Xin Lifang cited confusion about the rules in the “Socialist Market” economy, “I’m illiterate and didn’t realise it (i.e. selling Children) was illegal.” She had been aided by medical workers and midwives.

In this buyers’ market, say some insiders, girl children are deemed a kind of investment, as girls are expected to work and earn money for their adoptive families.” Another perspective on the justice of baby trading was given by a relative of another of the accused, “What my sister in law did was philanthropic. Many people here would put new born daughters into cartons and place them on the roadside. Their chances of living would be slim if no one picked them up. I can’t understand why these good hearted people should be arrested.” [14]

Capturing and Selling Human Beings

Some clever entrepreneurs have discovered it is more lucrative simply to sell children, cutting out the buying process. If you are going to seize children to sell, why not women as well? The following report is from Renshou, a city of some 71,000 registered inhabitants in Sichuan province:

The buying and selling of young women is endemic in the poor areas of China’s south-western provinces of Yunnan, Guizhou and Sichuan. Although the exact number of young women so victimized in the country is not available, police officer Peng says the ‘figure has definitely reached alarming proportions’.”

In Renshou alone, some 2,458 women and children have been abducted from pastoral villages or labour markets in the last six years. Most women were tricked by phoney job offers and then sold into marriages in impoverished villages in Henan, Shaanxi and Inner Mongolia, according to Cao Guihua, chairwoman of the Renshou Women’s Federation.

A local police officer, Mao Guoqi, recalls that the situation was extremely grave in 2000, when a local market more or less became a ‘women trading centre’, in which at one time traffickers tried to auction off as brides five women they had abducted from remote ethnic villages in Sichuan. The victims could fetch as much as US$120 each. Mao calls it ‘the most degrading case in Renshou police records since the founding of new China in 1949’.” [15]

Nationally, police reported 42,215 cases of captured women and children whom they located and freed in the years 2001-2003. [16] One can assume the numbers enslaved in this market are many times more than those found by the police.

Selling Blood

Every hospital requires blood supplies and local government in China is responsible for meeting blood collection quotas. They require factories and companies to ask their staff to donate blood, but many are reluctant resulting in shortages. Some ‘entrepreneurs’ started up business offering to collect blood on behalf of the companies. As blood products are sold on the market, it is therefore legal to buy and sell blood. “Echoing the term ‘snake head’, (used for human traffickers) a special new word ‘blood head’ has appeared in the Chinese vocabulary in recent years, referring to a person who profits from organizing people to sell their blood.” [17]

In Shanghai blood sells for 2200 yuan (US $266) for every 400 millilitres. Companies pay ‘blood heads’ about 2000 yuan per 400 millilitres and blood heads pay the donor 1000 yuan. Everyone profits in the market!

Naturally, for such a noble cause... the healing of the sick, the blood heads strive to buy and sell as much as possible and the 100% profit margin acts as a useful incentive. Legal restrictions incorporated in the Chinese Blood Donation Law of 1998 stipulate that donors must wait 6 months between donations. Examinations of donors are required a week beforehand and ID cards and work certificates must be shown to doctors.

Luckily for them blood heads manage to find ways around these petty restrictions on the free market! Fake ID cards are bought, or real employees are paid to take the preliminary test and then replacement donors actually give the blood. Flyers are distributed to University students on campus as they look more like company staff than migrant labourers. Internet messages offering to pay donors 800 yuan (US $96) for every 400 millilitres attracted the attention of Shanghai’s Police who then arrested 6 blood heads. “Most of the donors were students who needed money”, said Yang Jiong, an official with the police bureau.” [18]

In some parts of the countryside selling blood to blood heads has become the life blood of the local economy. “ ‘Selling blood- as long as I am alive and to the end of my life’, has long been a popular saying among farmers who make a living exchanging blood or blood plasma for cash.[19]

In the countryside profit rates for blood heads are lower than in the cities, in the region of 10%, so they make up for this in volume sales. In some poor regions 80% of villagers sell their blood frequently, “it seems to have become a custom among farmers in poorer areas to sell their blood to alleviate poverty.” [20]

Unfortunately, the free market for human blood had rather negative consequences. Many donors became infected with HIV, because ensuring safe sanitary conditions would have eaten into profits.

“Before finally being tested positive for HIV/AIDS, Lao Wang sold his blood plasma for nearly 10 years. ‘At the very beginning, I was persuaded by other villagers to sell it. They said that it would do little harm to my health and that I would make much more money than I did farming,’ “ says Lao Wang. ‘In the first several years, I sold my blood plasma about a dozen times a week.’” [21]

In Henan province alone, “more than 200,000 people sold blood in the early 1990s, with 25,000 of them confirmed as HIV carriers and AIDS patients.” [22] An official report in 2003 estimated that there are now 840,000 HIV carriers in China, some 168,000 of these were infected by blood donation. [23]

The expropriation of the Working Classes through State Enterprise Reform

The number of State owned and State controlled enterprises fell from 238,000 in 1998 to 150,000 in 2003. At the same time profits rose from 21.4 billion yuan (US $2.6 bn) to 495.1 billion yuan (US $59.8bn). [24] During the period 1990-2003 the State owned sector reduced their employees from 103 million to 68 million. From 1998 to 2002, 41 million urban workers were laid-off by their employers of which two-thirds were re-employed.

In the last 15 years the former planned economies witnessed what was probably the greatest robbery in human history. In each country the methods were slightly different; a complete record of all the thefts of public assets worth over US $1 million could fill a giant library with a new crime genre. The land, the buildings, the industry, scientific base, cultural facilities, etc., all were stolen from the people, here by the Russian Mafia, there by the West German capitalists, and in China by self-serving bureaucrats, now ‘businessmen’. The robbery continues apace.

The western press and “modern” Chinese economic theorists claim the state sector is massively in debt, is inefficient, needs capitalist methods, and has been outstripped by the dynamism and superiority of the “invisible hand” of the market system.

The reform of state enterprises gave managers powers to use a thousand and one tricks to rob the people. In the early 1990s theft of state assets by illicit transfer was estimated by Chinese government consulting bodies to be in the region of 50-100bn yuan (US$ 6-12bn) per year. “The constant bleeding of the state sector is one of the main reasons for its poor performance, its mountainous debts, and its shrinking share of production.” writes X.L. Ding. [25]

Shanghai, the centre of business

The same author has made several case studies which illustrate this process of plundering and robbery. For example in the early 1990s the senior managers of a woollen mill employing 2000 workers in Shanghai set up twelve new companies, then apparently this initiative led to improvement in company performance and pay rises. The company was officially designated a “model enterprise”, the director a “pioneer”.

In 1994 an investigation of company finances revealed debts of 60 million yuan (US$7 million). The 12 companies had milked the state company, its debts being the source of their profits. They intercepted orders to the enterprise, bought at subsidized prices from the enterprise, and sold to the buyers at market rates. All profits went to the 12 companies and if any of them made losses, the loss was shifted to the state owned mill.

This method of asset stripping essentially means that so-called “reform” empowers managers to set up internal, but formally separate enterprises, which take all the benefits from, and assume none of the responsibilities of, the state enterprise.

Ding continues, “What had changed was that previous intra-firm work assignments had become, in appearance, inter-firm market transactions... With intra-firm assignments being turned into inter-firm transactions, abnormal movements of assets, production costs and profits between a state firm and its affiliates became routine” [26]

In advanced capitalist countries we often hear of mergers of independent companies into one, to reduce costs and create economies of scale. What we see in China is the break up of organic entities, some of colossal scale. They are replaced by parasitic “collective enterprises” sucking the life blood out of state enterprises. Their profits are fed by spiralling debts accumulated by the state enterprises from state banks.

At present non-performing bank loans total 1.7 trillion yuan (US$205bn). [27] Much of this money has gone to “red-hat merchants”, bureaucrats turned businessmen. They have pocketed vast sums illegally and have then sailed off into the sea of private enterprise, where the source of their money is not questioned. “...if you’re a civil servant, it’s easy for others to discern your corruption if you live way beyond your means; but once you put on the cloak of an executive or entrepreneur, the sky is the limit.” [28]

In a survey of 10,000 respondents into the class structure of Chinese society, sociologist Lu Xueyi deciphered the following fundamental social divisions:

  1. Senior government officials (2.1%)
  2. Senior business executives (1.6%)
  3. Private business owners (with eight or more employees) (1%)
  4. Professionals (academic or technical, including teachers) (4.6%)
  5. Private business owners (with 7 or fewer employees) (7.1%)
  6. Clerical workers (including lower level officials) (7.2%)
  7. Service industry workers (11.2%)
  8. Industrial workers (“workers” in the traditional definition) (17.5%)
  9. Farmers (42.7%)
  10. Urban and rural unemployed and underemployed (4.8%)

The list depicts a pyramid-like structure, with the three classes at the bottom making up more than half the working population.” [29]

The doctrine that State Owned Enterprises (SOEs) are inefficient has been turned into a dogma, which must be accepted regardless of the facts. The way to prove it is to engineer things so that the SOEs make losses. This serves as a means to lower the value of the company in advance of Management Buy Outs (MBOs). If you go against the dogma, beware!

Larry Lang professor at the Chinese University of Hong Kong studied MBOs at home appliance makers, Kelon, Hai'er and TCL. Professor Lang concluded that managers had abused their rights to make personal gain, had deliberately engineered low prices to buy on the cheap, and had systematically embezzled public funds. Management at Kelon were outraged and filed law suits against Lang. Previously these companies were presented as models of state enterprise reform. Even more outrageous was the fact that Lang was, “bold enough to challenge the very idea that State companies are less competitive than private ones.” [30]

Workers in State Owned Enterprises (SOE’s) under the planned economy and Maoism were provided for by their work unit. Many factories, particularly larger State Owned ones, would provide housing, health care, education, créches and a raft of other benefits to the workers, in addition to life time employment and the right for their children to inherit their jobs.

All these rights and privileges known as the “Iron Rice Bowl” have been ruthlessly attacked in the name of “reform”. Nevertheless SOEs still run 11,000 primary and middle schools and 6,100 hospitals. [31]

Attempts by managers to sack workers and remove all welfare rights cause workers’ protests to escalate year on year. Disputes often involve questions of basic existence. Miners in a 1998 protest are reported to have shouted: “Since our rice bowl has been broken, what else have we to fear?”

Workers laid off by State Enterprises watch as their former managers, after declaring the impossibility of keeping the workers employed, suddenly become millionaires by selling off state assets and setting up profitable companies from the “bankrupt” state firms. The managers’ bank accounts, both local and foreign swell, their banquets are imperial in scale, their concubines innumerable, their gambling prolific, their corruption total.

Millions of workers have been laid off, and 50% of State Enterprises have been closed down in the last decade. Officially laid off workers are paid 50% of their wages for three years and get training. In practice many managers simply refuse to pay up. Thus 75 % of impoverished urban residents were formerly working in State Owned Enterprises.

Medical care is refused unless they have insurance, and many find education fees make schooling their children too expensive. This year 21 million urban residents received some assistance if they lived below the minimum subsistence level.

The problem is not going away. At the forecast annual growth rate of 7% it is estimated that 8 million jobs a year will be created, but 15 million new workers come onto the urban labour market every year. [32] A large scale study conducted by the ACFTU found 17% of SOE workers were paid between 1-6 months late; among laid off workers 67% lived in debt and 31% had no income at all. [33] Hunger stalks the former “masters of the country.”

War against the working class

In Dongguan city (in Guangdong province) a brick making factory lacked hands over the Spring festival period. Gang boss Li Meng and eight accomplices went to town and grabbed four migrants. Back at the factory they forced them to work, beating them “for working slowly”, stealing their possessions from them and locking them up at night. The factory and gang bosses gambled and drunk every day. When these migrants attempted to escape they were beaten to death, their bodies floated down the river resurfacing days later. The bosses were arrested and detained for three days and then released without charge. After media publicity and a national outcry compensation money was paid for the dead. [34]

In the Taiwanese owned Yixin Footwear Factory in Guangzhou migrant worker Jiang Wenqing got a job in the factory in March 1997, but he tried to leave voluntarily in July of that year. Taiwanese boss Wang had six security guards pin Jiang down while the assistant manager hit him with a plastic rod, then the guards took it in turns to beat him for an hour and dumped him outside the factory gates. As regular punishment in this factory workers were forced to stand in the blazing sun, carry iron weights, run with them hanging around their necks, and work compulsory overtime on piece rates. Taiwan’s footwear manufacturers trade journal vehemently defended practices at Yixin, “the more direct and primitive the method the more effective it is.” [35]

In the Zhili toy factory in Shenzhen 87 workers were burned alive in 1993, and 45 suffered severe burns. The cause of the fire a short circuit, the cause of the deaths bars on the windows, locked fire escapes, dangerous chemicals stored unsafely, managerial abuse and local government complicity

Is this not all the inevitable product of national government policy? “There is a common saying, ‘After decades of bitterness, things are what they were before Liberation.’ This expression is very common among workers in foreign ventures and may not be far from the truth.” [36]

Glittering Shenzhen has a total population of 2.6 million, of which more than 1.8 million are migrant workers. According to one of China’s most eminent sociologists Lu Xueyi, “Some factories have been paying 300 yuan (US$36) in monthly wages for the past 20 years, and given the rate of inflation it means actual wages have been decreasing steadily”.

A government survey reveals that average wages for migrant workers in Shenzhen are still 588 yuan (US$71) a month. Lu continues: “When a foreign journalist asked me recently about the shortage of migrant workers, I replied: ‘what shortage? there is no shortage’. We have an additional 150 million surplus rural labourers. It’s a few black-hearted employers who have caused this. Even for such abysmal wages they owe a whopping 100 billion yuan in back pay... Why should government officials always side with the business owner when there is a labour dispute?... What’s wrong with a two day strike if migrant workers can secure from it, a little improvement in their working conditions or wages?” [37] (NB We earlier quoted Vice Premier Zeng, who admitted 124,000 projects now owe a total of 360 billion yuan, hardly a case of a few rogue employers!)

Last week’s mining disaster in Chenjiashan in which 166 miners died is just the latest expression of the flagrant disregard for the rights of the working class in the “Socialist Market”. China extracts 35% of the world’s coal yet produces 80% of the world’s mining deaths. In the first nine months of this year 4,153 coal miners were killed. Some 600,000 miners suffer from pneumoconiosis, a disease of the lungs caused by long-continued inhalation of coal dust and the figure increases by 70,000 a year. China’s workers now fall victim to a million industrial injuries a year.

In the war against the workers, casualty figures have been rising sharply with each victory for market forces; 79,422 workers were killed in 1991, 136,340 in 2003, [38] collateral damage in the Long March to capitalism. The monetary costs of the war are also huge, “direct economic losses from various workplace accidents have amounted to 100 billion yuan (US$12.1 billion) every year.” [39] In fact according to the State Economic and Trade Commission there is an “equally huge amount in indirect economic losses.” [40] The total economic losses from injuries and casualties to China’s workers equal the nation’s annual military budget!

At the top echelons of the Communist Party one finds that concern for the workers’ plight boils down to a fear that social stability may be threatened unless some actions are taken to pacify the rabble. A recent survey of 107 senior officials revealed that 61% found the overall “pace of reform is good,” and for 28% it was too slow. “Nearly 51% of senior officials consider ‘maintaining social stability’ the most decisive factor to the smooth development of reform.” [41]

For whom is reform supposed to be carried out? And whose social stability are we talking about? What stability do the 100 million migrants have, or the tens of millions laid off from State Owned Enterprises?

Workers’ Protest

The destruction of the permanent employment system in SOEs in 1995 marked a watershed in labour relations. Millions of workers were redeployed or simply laid off. Real living standards began to fall dramatically and labour protests escalated. A survey in Henan showed 55 per cent of protests concerned wage and pension arrears, 37 per cent stemmed from bankruptcies orchestrated by management.

So far protests have remained localised. At the Yangjiazhangzi molybdenum mining complex in Liaoning province a mine was declared bankrupt and miners were offered 560 yuan for each year worked as final compensation. 20,000 workers rioted! Other recent protests saw protestors shout, “we want jobs”, “We want food”, “We don’t demand fish or meat, just some porridge”, Not a yuan in six months, we want rice to eat”, “We need to eat, we need to survive.” Desperate demands from those formally defined as “masters of the state.”

A worker from Jiangxi province told an interviewer, “A few days ago workers from a factory here had a demonstration. Their slogan was, ‘We don’t demand fish, meat or eggs – we only demand a mouthful of rice!’ How pitiful we workers are! But how about the cadres? They are gambling, womanising, living in luxury houses, and driving fancy cars. Where does their money come from? They cannot possibly earn that amount of money even in ten thousand years. While the situation has not yet reached the extent where ‘on the road lie the bones of those frozen to death’, the situation is already one where ‘behind the vermilion gates meat and wine go to waste’... what do we workers hope for? We hope there will be another Cultural Revolution and all those corrupt cadres will be killed” [41]

Workers will organise again

The main concern of the government bodies has been to isolate each individual protest, make concessions, and have the ACFTU attempt to intercede to pacify the workers. Any attempts to create organisations to unify protests are treated as “subversion”. Knowing that, “the bird that shows its head first will be shot first”, protests often appear as completely unorganised and leaderless, an expression of an inability to tolerate conditions any longer. One Henan Provincial Trade Union Official noted “an unavoidable consequence is that other workers will see how quickly these protests are able to concentrate the minds of local Party committees or government authorities and imitate these methods themselves.” [43]

Those activists who seek to create organisations to represent the workers as a whole are repressed. It is inevitable at some stage that democratic organs of workers’ struggle will emerge, they may come from illegal underground cells, from honest worker activists within the ACFTU or even Communist Party members who question the communist credentials of the leadership. Such forces swim with the tide of history, expressing the will of the majority of the working class and poor. They will become an unstoppable revolutionary power, returning to the original ideals on which Chen Duxiu founded the Chinese Communist Party.

In a magazine of the All China Federation of Trade Unions called “Chinese Workers”, Yi Fu, a union researcher, wrote, “How do we put the Shenzhen migrant labour force of 1.8 million people into comparative perspective? In 1919, the entire industrial workforce in China totalled 2.8 million. Based on this the Communist Party built a class foundation. This is to say that Shenzhen’s workforce alone constitutes 70 per cent of the manufacturing workforce of previous years. As Karl Marx pointed out, ‘Numerically the workers have attained their critical mass. But it is only when they have become organised and are guided by knowledge that this numerical strength can be transformed into a decisive factor in determining whether victory will be theirs or not.’” [44]


[1] (Singapore Straits Times. 5 April 1998)
[2] (China Daily 17/9/2004)
[3] (China Daily 21/5/2004)
[4] (China Daily 9/6/2004)
[5] (ibid.)
[6] (China Daily 22/4/2004)
[7] (ibid.)
[8] (China Daily 4/9/2004)
[9] (China Daily 29/11/2004)
[10] (China Daily 8/8/2004)
[11] (China Daily 25/11/2003)
[12] (China Daily 30/10/2003)
[13] (China Daily 11/11/2004)
[14] (China Daily 28/10/2003)
[15] (China Daily 22/3/2004 my emphasis)
[16] (China Daily 28/10/2004)
[17] (China Daily 3/12/2003)
[18] (China Daily HK edition 3/12/2003)
[19] (ibid)
[20] (ibid)
[21] (China Daily 1/4/2004)
[22] (China Daily 1/12/2004)
[23] (China Daily 1/4/2004)
[24] (China Daily 30/9/2004)
[25] (China Journal no 43. Jan 2000)
[26] (ibid)
[27] (Peoples' Daily 3/12/2004)
[28] (China Daily 7/1/2004)
[29] (China Daily 28/10/2004 Hong Kong edition p18)
[30] (Peoples' Daily 6/9/2004)
[31] (China Daily 25/2/2004)
[32] (China Daily 16/2/2004)
[33] (Feng Chen The China Journal April 2000)
[34] (p38-42 Anita Chan Chinese Workers Under Assault)
[35] (p47-51 Anita Chan Chinese Workers Under Assault)
[36] (ibid p117)
[37] (China Daily 28/10/2004)
[38] (China Daily 3/12/2004)
[39] (China Daily 24/6/2002)
[40] (Ibid)
[41] (China Daily 29/11/2004)
[42] (China Labour Bulletin Oct 1998 p149-50)
[43] (China Labour Bulletin No.12 1999, quoted in Feng Chen The China Journal Spring 2000)
[44] (cited p129 Anita Chan Originally published Zhongguo Gongren No.5 1994 pp4-11 and No.6 pp8-11)