China's New Labor Contract Law and Corporate Hypocrisy

Multinationals have long blamed abuses of workers in their factories in China on the peculiarities of the country’s political system, arguing—quite rightly—that the Chinese government, especially at the local level, does not do enough to enforce its own laws, which are in turn argued to be too vague.

However, faced with the prospect of real labor rights regulation, the same companies who once talked so earnestly about rule of law have balked. Many corporations have joined a protest against draft revisions to the Labor Contract Law of the People’s Republic of China, which would restrict corporations’ ability to hire temporary, un-contracted workers, expand the ability of unions to negotiate working conditions, and most importantly, apply tough criminal penalties to sweatshop bosses.

Shoe giant Nike, for example, used to argue that “it is not realistic nor wise” to demand that companies divest from nations like China that do not have strong collective bargaining traditions. According to Nike, “It is more effective to stay invested in these countries and build greater recognition for these rights.”

This is an entirely reasonable position. Yet the American Chamber of Commerce in Shanghai, of which Nike is a member, objects to the new Contract Law because, “It is not feasible to state that an employer’s regulations and policies shall be void if they are not adopted through negotiation with the trade union.”

In other words, unions are great in theory, as another bullet point on some vague, aspirational “corporate code of conduct”— just not when you have to actually negotiate with them.

The Chamber of Commerce even lectures Beijing, like some wise elder brother, “National legislation would better not to be too detail-oriented. And it would be better for local authorities to work out such details according to local situations.”

Weren’t companies saying that the laws were too “loose” and varied before? And aren’t local authorities precisely the ones that supposedly can’t be trusted with formulating and fairly administering the law?

The real issue at stake here is not this one law, but who gets to shape the moral community of the shop floor—capitalists alone, or capitalists alongside labor and the state? What is “fair”? What is a “rational” way of doing business?

Multinationals have warned that the Labor Contract Law means a return to the labor-management relations that prevailed under China’s old planned economy.
Would this be such a bad thing?

There certainly were not enough incentives in the Mao era. Workers enjoyed virtually guaranteed lifetime employment at factories, regardless of their performance.

And until the 1980s, employees were locked in tight patron-client relationships that Alexander Walder, in a pioneering study, described as “Communist neo-traditionalism.”

Yet because of the close-knit nature of socialist-era factory life, workers also commanded a strong voice in plant decisions. And they had to be treated with a minimum of dignity for the whole, precarious system, based on campaigns and slogans, to function.

It is this reciprocity, the idea that a corporation can’t just plow ahead but must rally workers behind its proposals, that companies are fighting against in China—and in other parts of the world.

The Chinese government should not bend to the Chamber of Commerce’s pressure. Most of these big shots will not leave China if the law is enacted, despite their threats—the law is not really all that harsh and China has many pluses in its favor like solid infrastructure and relative political stability.

Those companies that do leave will make way for progress. China cannot compete forever for the bottom rung of the wage ladder if it wants to boost consumption at home. The country must follow the lead of cities like Shanghai in attracting high-skilled and high-paying blue collar jobs.

This will require a changed education policy, new investment incentives… and stronger worker protections like the draft Labor Contract Law.

The New Left

A great piece from the NY TImes magazine: China's New Left Calls For Social Alternative by Pankaj Mishra. It's funny how China's principled, reasonable Left gets such little press.

Instead, Western readers are treated to an extended (two-decades now!) collective cry of surpise that--shock!--China is a capitalist country run by a Leninist government (like the Leninist governments that once ruled Taiwan and plenty of other places that were anything but socialist, but that's another story). That story is old.

It is time to move beyond marveling at the contradictions of China and look to the people with prescriptions.

Labor strategies for China

Brendan Smith, Jeremy Brecher and Tim Costello have an interesting piece on Global Labor Strategies entitled "China's Emerging Labor Movement." In it they argue that China is in the early stages of a full-fledged labor movement. Like workers in the United States before the introduction of the Wagner Act, Chinese workers must organize outside the law and without the representation of proper unions--for now.

Smith, Brecher and Costello approve of China Labour Bulletin's "CC-2005 Campaign" of exploiting the loophole in Chinese labor law that allows workers to collectively bargain on their own if there are no ACFTU representatives on their shop floor. In campaigns like CC-2005 the authors see the possibility of transforming China's thousands of protests (87,000 last year alone) into something more solid.

I find their historical analogy compelling. However, there are two things worth noting.

First, many of China's protests are in the countryside, not factories. This is not important because of some Marxist dogmatic distinction between farmers and proletarians. It matters because China is huge and protests are so spread out and so cut off from each other (due to government censorship and a documented penchant on the part of protesters to AVOID linking up with others for their own safety) that they do not necessarily pose any threat to the state or capital. Many countries--India, across Latin America, etc.--have done just fine with massive unrest as long as it is scattered.

Second, the Chinese state's capacity for repression exceeds that of the U.S. at the beginning of the twentieth century (when China too had a powerful labor movement). Nor is there a separate party within the state to take advantage of / moderate / channel popular discontent, as Roosevelt did.

This is not to say that a real, fairly unified labor movement can't be built. And China Labour Bulletin's plan is the clearest on the table yet. But we must keep innovating, based on what makes the Chinese case different.

Yardley's Article

I've enjoyed Jim Yardley's writing in the past, especially his pieces on environmental degradation. Yardley's articles, with their emphasis on economics and everyday people's lives, are often a refreshing counterpoint to the elite, stuffy, "final stamp of importance courtesy of the NY Times"-style scoops by Joseph Kahn.

But what to make of the article today Dead Bachelors in China Still Find Wives? What does this article add?

I'm not exactly against cultural, pseudo-anthropological stuff. Public excitement for all things China has the benefit of allowing a wider range of reporting from the P.R.C.--from pop culture to family life to political intrigue to class tensions-- than the American media will support from almost any other part of the world, save perhaps Iraq.

Yet I cringe when an obscure practice in Shanxi and Shaanxi gets splashed across the front pages of the Times, when there are so many other trends to pay attention to. Why barge in on these farmers practices, which clearly harm no one? Why not focus on aspects of China's tradition and change that lend themselves more to fruitful, comparative analysis?

Should I cringe? Am I just being defensive? But again, what does this article exactly add?