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China’s Manufacturers Seek
Business — Where Are the Unions?


The email from the unfamiliar address lost no time in getting to the point: "Owing to the low cost of labor and raw materials in China, cooperation with us can reduce your costs and bring you more profits."

In the year since China joined the World Trade Organization (WTO), the UE NEWS has received several unsolicited email messages from Chinese companies thinking they had reached a potential customer. Many of the products on offer are similar to those made by UE members.

The first message, from Gold Dragon Castings, sought to interest the union newspaper in the products of its foundry, machining shop and welding shop. These ranged from flanges and pipe fittings to motor frames and machine parts to manhole covers. General Manager Qian Zhang argued that in China, "the cost of castings is much lower than any other country and the quality is better."

Similarly, the Steel Engineering Corporation Ltd. assured us that "no job is too small," and few would be too big — they can supply large castings up to 300 tons. Their castings, forgings, welded pipe, valves and machining are made to order.

Beijing Hithertop Precision Castings Co. is a privately owned, export-oriented foundry claiming low-cost, quality castings with prompt delivery. "The cost is about 50 percent of that in your domestic market," a manager boasts in his email.

Gatoson Holdings Ltd., based in Hong Kong, offers a wide array of industrial and consumer products, including industrial control and automation systems and aerospace equipment. Other companies have mistakenly written to the UE NEWS in a misguided effort to sell ball bearings, magnets and paper.

Quite possibly other email recipients responded to such offers.

"Galvanized by its WTO admission, China’s macroeconomic situation has improved remarkably," according to an economist writing for the China Daily News. "China is clearly experiencing an economic boom of enormous magnitude," writes Gregory Mantsios in New Labor Forum.

China’s exports increased by 19.4 percent in the first three quarters of 2002. The country’s total trade volume for that period was $445.1 billion, a 18.3 percent increase. China’s gross domestic product grew by 7.9 percent during the same period.

China’s economic success is in sharp contrast to a largely stagnant world economy.


According to a recent WTO report, China has become the fourth largest trade body in the world, behind the U.S., the European Union and Japan.

The Chinese turn to a market economy, including privatization of state-owned enterprises, has led to a dramatic rise of foreign investment. Foreign investment rose by 22.55 percent in the first nine months of 2002. China was expected to be the largest foreign investment destination in the world last year.

"The country’s WTO entry makes it an irreversible trend to integrate its economy into the global economic framework," says a Chinese economist. "Its rich, low-cost labor resources and the vast market, both of which provide much scope for profit, make foreign investors more confident in investing in China."

But China is far from being the world’s factory. Lu Zheng, director of China’s Industrial Economics Institute, points out that his nation’s industrial sector lags behind the U.S., Germany and Japan in terms of research and development. Well into the future, Lu says, China’s exports will be dominated by labor-intensive, rather than technology-intensive products.

What does that mean for China’s workers?


In a report on a March 2002 delegation to China of U.S. labor educators, the Americans found less equality than 20 years ago but a much greater profusion of consumer goods, high-tech products retail stores and restaurants. The "extraordinary economic boom," writes Mantsios on behalf of that delegation, "has made some people in China very wealthy very fast."

Chinese workers are represented by the All-China Federation of Trade Unions, the only legally recognized labor organization in China, and one of the world’s largest with 103 million members. The ACFTU has responsibility for safeguarding workers’ interests; it is also tied to the government and the ruling Communist Party.

The U.S. labor educators found that the ACFTU in some ways is doing its job, helping to raise living standards, successfully pushing for a system of collective bargaining and labor laws that mandate an 8-hour day, 40-hour week, paid vacations and maternity leave, and promoting democratic management.

According to Mantsios, "China’s labor laws limit the workweek, define the rates of compensation, restrict management prerogatives, and specify worker protection. Yet these laws are routinely ignored." Newspapers in China and abroad report on conditions ranging from forced overtime to indentured servitude. The injustices accompanying China’s economic boom have prompted some workers to organize independent unions. These are seen as threats to Communist Party rule.

For example, Di Tiangui, a former state worker, was jailed last summer on charges of "incitement to subvert state power" for his role in attempting to organize a national federation of retired state workers to fight for adequate pensions.

Some 30,000 workers and activists marched in Hong Kong last month to protest an anti-subversion law proposed for the former British colony and "special autonomous region" that they say would restrict workers’ ability to campaign for improved rights.


The ACFTU advocates stricter enforcement of existing labor laws but clearly not all workers are satisfied. As Mantsios points out, "ACFTU participation in governing China means it must bear responsibility for human and labor rights violations in China."

Mantsios and the other labor educators concluded that the ACFTU "is both caught in the middle and thriving in the middle."

The American labor educators have recommended that U.S. unions establish relations with the ACFTU for several reasons. Isolation, they say, does not help either Chinese or U.S. workers.

And with China increasingly involved in global trade, organized labor needs to be involved, too.

This is the conclusion reached also by Japan’s National Confederation of Trade Unions (Zenroren), which only recently began formal, and still quite preliminary, relations with the ACFTU.

UE News - 1/03

Home -> UE News ->  2003 Archives -> Article

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