Chinese Labour in the Global Economy: An Introduction

Abstract

This Introduction outlines the main purpose of this special issue volume: to analyse new forms of resistance by Chinese workers against conditions of super-exploitation. After an assessment of the new international division of labour, we provide an overview of Chinese production in the global economy, followed by an introduction of the contributions to this volume.

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Keywords:

• Chinese production
• new international division of labour
• resistance
• super-exploitation

China is generally regarded as the new economic powerhouse in the global political economy. Some even talk of an emerging power, which may in time replace the US as the global economy’s hegemon. And yet, there is a dark underside to this ‘miracle’ in the form of workers’ long hours, low pay, and lack of welfare benefits. Increasing levels of inequality have gone hand in hand with widespread working conditions characterised by super-exploitation.

Nevertheless, Chinese workers have not simply accepted these conditions of exploitation. They have started to fight back. The purpose of this volume is to analyse these various forms of resistance by Chinese workers and the way they are organised, be it through the official state trade union All-China Federation of Trade Unions (ACFTU), be it through informal labour NGOs, or indeed both. Considering the large number of workers in Chinese production, what happens in China does not only affect Chinese workers, but equally workers elsewhere. Hence, the findings of this special issue on Chinese labour in the global economy are not only confined to China. They are of relevance for the global economy as a whole.

In this Introduction, we will first analyse key developments in the global political economy to set the stage. Second, we will assess the location of Chinese production within this new international division of labour, before providing an overview of the contributions to this volume.

Global Restructuring: The New International Division of Labour

The post-Second World War years in industrialised countries were characterised by enormous growth rates and increasing wealth. National class compromises between capital and labour were the foundation of this post-war economic recovery. While labour accepted capital’s prerogative over the means of production and the way production is organised, capital in turn agreed on workers participating in growing wealth through a steady increase in wages and improvement in working conditions. In tripartite relationships, the state supported this compromise through Keynesian, demand-led economic policies guaranteeing full employment in a system of mass employment and mass consumption. Additionally, the state supported the class compromise through an expanding welfare state establishing universal access to services such as health and education. Observers often speak of a golden capitalist age when commenting on the post-war period. Nevertheless, when the rate of profit started to decline, economic growth was no longer strong enough to ensure both, capitalist super-profits and rising wages for workers. The late 1960s and the early 1970s saw increasing levels of industrial conflict in Western industrialised countries.

In response, capital renounced the national class compromises. While they technologically innovated production at the high-value added end in industrialised countries, in a spatial fix labour-intensive parts of manufacturing such as the textile industry were transferred to cheap labour locations in the Global South (Silver, 2003, pp. 64–66). Transnational corporations (TNCs) became the dominant companies within the new, transnationalised social relations of production, and a transnational capitalist class emerged as the new key agent of global capital within what has been referred to as globalisation (Robinson, 2004).

The increasing transnationalisation of production is reflected in the drastic increase in FDI especially since the mid-1980s, establishing lasting production links across borders. Outflows of FDI rose from US$88 billion in 1986 to US$1187 billion in 2000 as peak year (Bieler, 2006, p. 50). A period of recession caused a decline in FDI flows from 2001 to 2003, but four years of consecutive growth led to a new all-time high of FDI outflows of US$1996.5 billion in 2007 (UNCTAD, 2008, p. 253). Overall, there were close to 80,000 TNCs with roughly the same number of foreign affiliates in 2007 (UNCTAD, 2008, p. 212). Unsurprisingly, FDI flows have again declined since the onset of the global financial crisis in 2008 (UNCTAD, 2015, p. 18), but even slightly lower levels contribute to the continuing build-up of FDI stocks over time, indicating the ever more important role played by TNCs. While outward FDI stocks had been US$2,253,944 million in 1990, they were US$7,298,188 million in 2000 and US$25,874,757 million in 2014 (UNCTAD, 2015, p. A7).

The increasing transnationalisation of production has gone hand in hand with greater decentralisation and fragmentation of the production process itself through processes of outsourcing along the production chain. Thus, transnational production, under the direction of TNCs, is increasingly organised in global commodity chains (GCCs) (Robinson, 2008, p. 27). In this process, TNCs ‘began dividing the production process into ever finer segments, both vertical and horizontal, and locating the separate stages in two or more countries, creating cross-border production networks’ (Hart-Landsberg, 2013, p. 91). In these networks, TNCs no longer own the various production sites along the GCC, but rely on ‘independent contract manufacturers to procure the necessary parts and components and oversee their assembly into final products’ (Hart-Landsberg, 2013, p. 92). In other words, TNCs are still in charge, but their strategy has significantly changed. From owning cross-border production structures, they have moved to co-ordinating GCCs. As confirmed by the UN, ‘TNC-coordinated [GCCs] account for some 80 per cent of global trade. Patterns of value added trade in [GCCs] are shaped to a significant extent by the investment decisions of TNCs’ (UNCTAD, 2013, p. xxii).

Developing Asia occupies the leading position in the new international division of labour. The region’s share in total world exports of manufacturers grew from 11.1 percent in 1996–1997 to 33.8 percent in 2009/2010. Its share of total third world exports of manufactures increased from 68 percent to 76 percent over the same period. (Hart-Landsberg, 2015, p. 4)

Within Asia, China mainly operates as the regional assembly platform.

It is China’s unique position as the region’s production platform that enabled the country to increase its share of world exports of IT products from 3 percent in 1992 to 24 percent in 2006, and its share of electrical goods from 4 percent to 21 percent over the same period. (Hart-Landsberg, 2013, p. 34)

In turn, these products are mainly destined for markets in North America and Europe integrating East Asia tightly with the global economy, but also making it dependent on continuing demand in the Global North. In sum,

since the region’s trade activity largely involves an intraregional trade of parts and components culminating in China-based exports aimed primarily at the United States and the European Union, the reality is that Asia has become ever more tightly integrated and dependent on exporting to developed capitalist markets, especially the United States. (Hart-Landsberg, 2013, p. 36)

The idea of South–South trade and economic co-operation as an alternative growth model for developing countries has not materialised. Rather, while China is the assembly platform of global capital, Latin America and Africa have mainly been reduced to exporters of primary commodities, with China having become their main customer.

While Latin American and sub-Saharan nations have long specialised in the export of primary commodities, developing Asia, especially China, has now replaced core capitalist countries as their main export market. China has surpassed the United States as the world’s largest consumer of major metals and agricultural commodities. In 2011, it consumed approximately 20 percent of all non-renewable energy resources, 23 percent of major agricultural crops, and 40 percent of base metals. (Hart-Landsberg, 2015, p. 6)

Importantly, as David Coates remarked, the increasing organisation of production across borders and the related possibility for capital to move labour-intensive production to cheap labour locations is not due to new technology, but the result of social developments. ‘Capital is more geographically mobile than it was in the past because it now has more proletariats on which to land’ (Coates, 2000, p. 255) and more proletariats to create. The integration of China, India, and the former Soviet Union during the 1980s and 1990s doubled the global workforce to almost three billion by 2000 (Freeman, 2010). In 2011, China’s working-age population alone numbered over 1 billion (Economist, 2012). The increase in the global workforce has also fuelled the informalisation of production. This is especially the case in developing countries, which had never been in a position to establish a large industrial sector with permanent and secure employment.

According to the most recent estimates, non-agricultural employment in the informal economy represents 82 per cent of total employment in South Asia, 66 per cent in sub-Saharan Africa, 65 per cent in East and South-East Asia (excluding China), 51 per cent in Latin America and 10 per cent in Eastern Europe and Central Asia. (ILO, 2014, p. 6)

Nevertheless, informalisation more and more also affects developed countries in the North, where employers are on the offensive and demand a flexibilisation of the labour market with the argument that it is necessary in order to retain competitiveness (Standing, 2011). ‘Although affecting workers in all core countries, the trend has probably gone furthest in Japan. There, part-time workers, who make on average 38 percent less per hour than full-time workers, now account for approximately 40 percent of the workforce’ (Hart-Landsberg, 2015, p. 9).

The implications for workers around the world are clear. In times of transnational production, national labour movements are increasingly put into competition with each other. If workers in one country do not accept the demands by capital, production is moved to other locations where workers are more amenable. While trade unions were able to organise workers well at the national level, they have struggled to avoid cross-border competition. Additionally, it has been very difficult to organise along GCCs as well as within the informal economy (Bieler, Lindberg, & Sauerborn, 2010).

Chinese Production in the Global Political Economy

As a result of the particular location of Chinese labour in the global political economy as outlined above, Chinese production is characterised by two key aspects. First, it is predominantly based on cheap labour, necessary for assembling the various parts into final products for export to North American and European markets. ‘Chinese leaders have, like the leaders of most other countries, consciously pursued a low-wage growth strategy for some time’ (Hart-Landsberg, 2015, p. 14). Second, Chinese exports are dominated by foreign TNCs. By 2003, foreign TNCs and joint ventures ‘accounted for almost 80% of China’s exports of industrial machinery, 90% of computers, components, and peripherals; and 71% of electronics and telecommunications equipment’ (Panitch & Gindin, 2014, p. 152). This tendency has intensified further in recent years.

TNCs produce approximately 85 percent of China’s high technology exports. Moreover, the share of China’s high technology exports produced by wholly owned TNCs continues to grow, from 55 percent in 2002 to 68 percent in 2009, suggesting a tightening of foreign control. (Hart-Landsberg, 2015, p. 5).

Unsurprisingly, it is these foreign TNCs that reap super-profits from exploiting Chinese workers. Foxconn, assembling products for Apple, is a clear example in this respect. ‘Hon Hai [Foxconn] made $2.4 billion in profits in 2010, or $2400 per employee, compared to $263,000 in profits reaped by Apple for each of its 63,000 employees (43,000 of whom are in the United States)’ (Smith, 2012).

As most export production is based on cheap labour, China must ensure a continuing supply of workers willing to work for low wages. This has been secured partly as a result of the privatisation of state-owned enterprises in the mid-1990s, which resulted in the redundancy of some 60 million workers, and partly due to the growing group of migrant workers, which amounted to 269 million workers by 2013, coming from the countryside to the new production power houses in the coastal areas (Chan & Selden, 2014, pp. 600–601). The power of workers decreased significantly as a result of increasing precarity and labour’s share of GDP ‘fell from approximately 53 percent of GDP in 1992 to below 40 percent in 2006. Private consumption as a percent of GDP also declined, falling from approximately 47 percent to 36 percent over the same period’ (Hart-Landsberg, 2013, p. 50; see also Qi, 2014).

The agricultural sector has played a crucial role in ensuring the supply of cheap labour in that it provided a separate stream of income especially for the dependents of migrant workers left back at home. In turn, this facilitated the super-exploitation of migrant workers themselves. Agriculture is, thus, closely linked to industrial production in that

agriculture and the rural society provide the conditions for the reproduction of labour power. For rural households, agriculture in most cases is merely one of their income sources. Rural households are semi-proletarianised as they are participating in both household-organised agricultural production and wage employment. (Qi, 2014)

Unsurprisingly, this development model has led to enormous levels of inequality. Capitalism in general is driven by dynamics of uneven and combined development and unevenness characterises the international situation between different countries, as well as the situation within countries. China is no exception in this respect (see the contribution by Jane Hardy in this volume). Internationally, despite Chinese development the gap between China and industrialised countries has remained large.

In 2010 (even after the aftermath of the crisis and recession) China’s GDP was $5.9 trillion—only 40 percent of the US’s $14.6 trillion. Translated into GDP per head this gap is even starker: China’s $4,260 was only 9 percent of the US’s $47,240. (Hardy & Budd, 2012)

As Neil Davidson concludes, ‘although China develops more dramatically than any of the countries, like India, with which it is usually bracketed, it is unlikely on any remotely foreseeable scenario, to “catch up” with the West in any overall sense’ (Davidson, 2006, p. 226). Within China, inequality has increased too.

Whereas inequality in China in 1980 was comparable to that of social democratic Germany (Gini coefficient = 0.25), by 2005 it was less equal than Russia (Gini coefficient = 0.45). The wealthiest 10 percent of the Chinese population earned seven times that of the poorest 10 percent in the 1980s but by 2005 that inequality had risen to a factor of 18. The richest 10 percent of the population now accounts for 45 percent of the country’s wealth, the poorest 10 percent only 1.4 percent. (Smith, 2008, p. 256)

Hypermodern coastal regions are counterpoised to backward, inner rural areas.

According to one estimate, the ‘winners’ of the economic reforms—the state administrators, managers, private entrepreneurs, professionals and technicians—amount to approximately 9 per cent of the entire population. The losers, on the other hand—the production workers, service workers, farmers, the unemployed and underemployed—amount to about 82 per cent of the population. (Gray, 2010, p. 460)

In response to the global financial crisis, China implemented a stimulus package of US$586 billion in 2008 and 2009. Highly praised at the international level and regarded as proof of the narrative of China as a lender able to lead the global economy out of crisis, the way it was structured had dramatic implications at the national level. Because local governments were asked to provide matching funds for central government investment, the result was an ‘increasing commodification of land as a means to generate income’ (Sum & Jessop, 2013, p. 457). In turn, this had social consequences. ‘Land sales and property development became important investment and speculative activities with consequences such as a property bubble, forced displacement from land, peasant riots, state terror, dispossession of the already vulnerable (e.g. migrant children) and increasing inequalities’ (Sum & Jessop, 2013, p. 463). Moreover, this stimulus package has not increased private consumption as a percentage of GDP. In 2012, it was still at 35% (Hart-Landsberg, 2015, p. 14).

And yet, importantly, workers are not only victims of capitalist exploitation. They have also got agency of resistance. As Chan and Selden indicate, labour disputes are on the rise, workers are fighting back:

Official statistics show that in 1996, 48,121 labor disputes were accepted for arbitration, the total rising sharply to 120,191 in 1999, involving more than 470,000 aggrieved laborers as numbers soared in the context of massive layoffs of state sector workers. The upward trend continued from 2000, reflecting widespread incidences of rights violations as the private sector expanded. Labor cases further skyrocketed to 693,465 involving more than 1.2 million laborers nationwide in the economic crisis of 2008. These were disputes over wage and insurance payments, illegal layoffs, and inadequate compensation payments. (Chan & Selden, 2014, p. 607)

Demanding higher income, better working conditions, respect for their dignity, and social protection, Chinese workers are no longer prepared to work in conditions of super-exploitation. This volume is dedicated to a focus on workers’ resistance and an assessment of the possibilities of Chinese workers to improve their situation.

Overview of Special Issue Structure

In her contribution, Jane Hardy analyses in detail how Chinese production is integrated into the global political economy along lines of uneven and combined development. While Chinese development is closely combined with global development, it is also extremely uneven between China and other countries as well as within China itself. Hardy further indicates how the stimulus package in 2008, with which the Chinese government attempted to avoid being dragged into the global recession, resulted in a huge crisis of overaccumulation. The official figure of US$586 billion needs to be complemented by the additional loans taken up by local governments across China, all in a desperate search for profitable investment opportunities. Ultimately, China’s response to the global financial crisis is based on a fundamental contradiction. On the one hand, the government intends to boost domestic demand through higher wages to become less dependent on exports to North America and Europe; on the other, however, it needs to keep wages low to ensure increasing productivity and continuing competitiveness, on which large parts of Chinese exports are based. It is, therefore, not surprising that the results of the stimulus package are highly mixed and private consumption as a percentage of GDP has not increased (see above).

Andreas Bieler and Chun-Yi Lee, in turn, start their comparative analysis of resistance in the cheap labour, low value-added electronics sector in the Pearl River Delta (PRD) area and resistance in the higher-value added IT sector in the Yangtse River Delta (YRD) with an assessment of the different locations of these two production sectors in the global economy. Because the electronics sector is mainly based on cheap labour, there are higher levels of industrial conflict over pay and working conditions. By contrast, the higher-value added IT sector depends on a more skilled and stable workforce. Hence, it has to provide better pay and working conditions. Unsurprisingly, these different locations in the global political economy shape the forms of struggle in the two sectors. In the electronics industry, informal labour NGOs generally assist workers individually and collectively in securing their rights, often in open confrontation with management, while more formal labour NGOs in the IT sector focus on organising interesting after-work activities for workers. Does this indicate that general upgrading to more high-value added activities could be a more general path towards improved working conditions for workers?

Boy Lüthje and Florian Butollo’s research casts doubts over this assumption. They investigate in more detail the electronics contract manufacturing (ECM) industry in China’s Pearl River Delta (PRD). They identify technological upgrading and diversification of production, combined, however, with a continuation of super-exploitation of workers, based on extremely flexible mass production with a low-skilled workforce and a high turnover of personnel. There have been some continuing, modest wage increases due to a raising minimum wage, but base wages in general remain low and workers continue to depend on excessive overtime. In short, the linkage between industrial upgrading on the one hand and an upgrading of work and labour relations on the other is weak. Social innovation in the workplace is still missing. Interestingly, the PRD continues to be a major site of ECM production with new factories further inland complementing rather than replacing factories in the PRD.

How can we then understand the role of the Chinese state in industrial development and workers’ struggles for their rights? In their chapter on class struggle and the Chinese state, Chan and Hui argue that neither the notion that the role of the state has been undermined by globalisation, nor the concept of the state as an autonomous, independent actor is adequate, when assessing the Chinese state. Rather, the state needs to be understood as a field and condensation of class struggle. Hence, during the economic crisis global capital pushed the Chinese state towards reducing the protection of workers. In the wake of economic recovery, however, workers started to re-assert themselves in a wave of strikes such as the strike at Honda in 2010 and at Yue Yuen in 2014. To ensure the overall continuation of capitalist accumulation the state had to intervene in their support in relation to demands around collective bargaining and company contributions to social insurance systems. In short, class struggle rather than technological upgrading is the way towards improved working conditions.

This conclusion is supported by Tim Pringle. In his contribution to this volume, he pursues a class against capital approach in his analysis of rising demands for collective bargaining by Chinese workers. Rather than drawing on the notions of ‘class-in-itself’ and ‘class-for-itself’, where especially the former is considered to be the result of workers’ location within production and, thus, delinked from struggle, the notion of class against capital emphasises the centrality of class conflict. Pringle, thus, overcomes artificial notions of fragmented working classes, often imposed by capital and the state from above to undermine labour solidarity. Interestingly, in his analysis of class struggles in the southern province of Guangdong, he also investigates in detail the struggles of the highly precarious and fragmented sanitation workers in Guangzhou in addition to the more well-known strikes in the Honda-owned auto parts factory in Foshan, at the Yantian International Container Terminals and the Yue Yuen shoe manufacturer in Dongguan, examined by other contributions to this volume. Overall, he argues that labour has emerged as a class against capital in Guangdong changing the balance of class forces and pushing capital and state into forms of collective bargaining.

The article by Chan and Selden focuses specifically on the situation of China’s migrant workforce. A new generation of migrant workers is emerging, they argue, which no longer intends to return to their homes in rural China, but wants to improve their lives in the cities, where they are working. Against the background of super-exploitation in companies such as Foxconn they adopt a variety of strategies to support their demands for better pay, better social benefits, and more human working hours. The state increasingly attempts to intervene in disputes also through the official ACFTU to mediate between workers and employers, but workers are continuing to push independently to secure their rights from employers. Considering the crucial location in GCCs and the fact that there is a decrease in the number of young workers, these workers enjoy considerable bargaining power vis-à-vis employers and the state. It is this bargaining power that ultimately ensures that class struggle results in gains for workers.

Xuebing Cao and Quan Meng analyse the strike by dockworkers at the Yantian International Container Terminals in 2013. They demonstrate how these workers were able to organise themselves towards strike activity in the absence of an active official union, which resulted in a pay increase of 30%. They could rely on a range of different sources of bargaining power, including, most importantly, workplace bargaining power. The introduction of new technology in ports had implied that the work carried out had become ever more specialised. Hence, when these workers went on strike, their company was unable to replace them.

In their contribution to this volume, Schmalz, Sommer and Xu analyse the underlying dynamics of the mass strike at the shoe factory Yue Yuen in Dongguan. Overall, three factors contributed to the strike. First, there has been increasing low wage competition by other regions in China and other countries putting downward pressure on shoe factories in southern China. Employers such as Yue Yuen attempted to cut costs by not paying social insurance contributions. Second, the Communist Party’s anti-corruption campaign is creating new spaces for workers to demand that employers comply with their legal obligations. Third, social insurance payments and their vital importance for older workers close to retirement have increasingly become an important issue for industrial conflict. Interestingly, unlike Chan and Selden in this volume, they point out that it is not necessarily always younger migrant workers who take strike action. Middle-aged and older migrant workers too go on strike in order to defend their social protection such as pensions upon retirement. When it became apparent that their employer Yue Yuen had not paid the legally required social insurance payments, 40,000 workers took strike action concerned about their personal future.

Against the background of two closely related hope projects—the global hope project of China as an object driving global growth as well as the Chinese hope project based on building national strength and modernity—Ngai-Ling Sum traces the emergence of a new subaltern class in China, the so-called Diaosi. This new group, on the one hand, actively embraces its loser identity and marginality in Chinese society. At the same time, she also demonstrates that this development does not automatically imply that these Diaosi form a group of resistance to their exploitation. Many actions are also an expression of resignation. Capital, moreover, attempts to re-integrate the Diaosi into society by providing particular avenues of specific consumption for these people. It discovers the Diaosi as a potential market and thereby pacifies them. Finally, the state increasingly attempts to control their actions of resistance in the name of civility and social stability. In short, mounting resistance by Chinese workers against super-exploitation should not be taken for granted. It emerges in processes of class struggle, which also include moments of exploited workers’ co-optation into the hegemonic Chinese modernisation project.

Globalisation has put different national labour movements in competition with each other. Hence, the level of exploitation of workers in China has direct consequences of exploitation levels of workers in other countries. Unsurprisingly, the global labour movement in its institutional expression of the International Trade Union Confederation and various Global Union Federations assesses its possibilities of engaging with Chinese labour organisations and workers’ struggles and here in particular the ACFTU. With about 134 million members, it appears to be too powerful an organisation to be disregarded. And yet, in their contribution to this volume, Rob Lambert and Eddie Webster caution against a rush towards official contact. As they point out, the ACFTU is actually part of the Chinese labour regime. Being closely aligned with, and subordinated to, the Chinese Communist Party, the ACFTU has little room for independent manoeuvre. Most importantly, the ACFTU has not accepted the international labour standards of the ILO including, for example, the right to free association. It is, therefore, not a ‘proper’ trade union independent from the Chinese state and can, as a result, not fulfil the function of organising workers’ resistance against exploitation. Rather than co-operating with the ACFTU, Lambert and Webster conclude, international labour organisations should support local workers and their struggles. Simultaneously, they should intensify their pressure on the ACFTU to accept international labour standards. In the Conclusion to this volume, we will pick up on the issue of how to support best Chinese workers in their struggles for social justice.

Acknowledgements

This special issue is the outcome of the workshop Chinese Labour in the Global Economy, held at the University of Nottingham/UK on 11 and 12 September, 2014. We thankfully acknowledge the grant of £275k by the Economic and Social Research Council (ESRC) for the project on ‘Globalisation, national transformation and workers’ rights: an analysis of Chinese labour within the global economy’ (RES-062-23-2777). The workshop as well as this special issue are part of our outputs from this research project. Many thanks to the contributors to the special issue and Barry Gills for their comments on the Introduction and to Jon Mansel for his research assistance in editing this special issue.

Disclosure Statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the Economic and Social Research Council (ESRC) [grant number RES-062-23-2777].

Notes on contributors

Andreas Bieler

Andreas Bieler is Professor of Political Economy and Fellow of the Centre for the Study of Social and Global Justice (CSSGJ) in the School of Politics and International Relations, University of Nottingham, UK. He is author of The struggle for a social Europe: Trade unions and EMU in times of global restructuring (Manchester University Press, 2006) and co-editor (with Bruno Ciccaglione, Ingemar Lindberg and John Hilary) of Free trade and transnational labour (Routledge, 2015). His personal website is http://andreasbieler.net and he maintains a blog on trade unions and global restructuring at http://andreasbieler.blogspot.co.uk

Chun-Yi Lee

Chun-Yi Lee is Lecturer in the School of Politics and International Relations at the University of Nottingham/UK. She is author of Taiwanese business or chinese security asset? (Routledge, 2012). Chun-Yi’s constant involvement in research testifies to her enthusiasm for and commitment to the field of Chinese Studies, International Relations and Political Economy. Her PhD addresses the changing pattern of interaction between Taiwanese businessmen and the Chinese government. Building on her PhD, currently Chun-Yi’s research interest aims to investigate the influence of different foreign investors on Chinese workers and labour rights. She can be contacted at [email protected]