FEER on China: Fighting To Organize

Saul Thomas stthomas at uchicago.edu
Sat Sep 1 16:22:00 MDT 2001

Far Eastern Economic Review
Issue cover-dated September 06, 2001

Fighting To Organize

Outrage at the sight of former managers looting assets at state-owned
factories is providing a breeding ground for organized labour in China. A
worried Beijing is battling its elusive leaders every step of the way


ON A HOT, still summer's afternoon in Zhengzhou, the industrial wasteland
capital of China's Henan province, a convoy of vans arrives at the gates of
a factory. The doors of the vans burst open, revealing an army of about 300
men. Jumping down into the dust of the road, the men rush the gates of the
factory. Inside, a small group of workers springs into action. They ring the
factory bell, and within minutes almost a thousand workers materialize.
Overwhelmed, and beaten back with kicks and punches, the invaders struggle
back to the vans and speed off.

For the workers at Zhengzhou Power Generation Apparatus Works, the battle on
July 24 this year was a small victory in a long and difficult war. Back in
1996, the 1,800 employees at this state-owned factory were told that it was
to be closed and liquidated. Shocked at the prospect of losing their jobs,
they could at least comfort themselves with the knowledge that they would
receive--as set down in the law--a substantial share of the proceeds from
the sale of the factory's assets.

But when trucks arrived one night and started moving out equipment, the
workers realized what was going on: Factory managers were attempting to sell
the equipment and land for fire-sale prices to their friends, and pocketing
the proceeds.

The workers were furious. A small group of them sought the advice of outside
labour activists and began organizing their fellow workers to resist the
asset-stripping. Today, after almost five years of confrontations and
several arrests, the former employees remain defiant. "The workers are
united, and we're confident we'll win," says Zhou Jinduo, one of the worker

In recent years, scenes like these at state-owned enterprises have been
repeated across China as the country moves to a market economy. Few groups
have been hit harder by the end of the iron rice-bowl than the 80 million or
so people who once worked at state-owned factories. Since the early 1990s
more than half are estimated to have lost their jobs.

Few outsiders would argue that many of these factories were living on
borrowed time, but what has shocked almost everyone is the way that the
state-owned assets of these enterprises have been systematically looted by
their former managers. In 1998, the liberal economist He Qinglian wrote a
best-selling book, China's Pitfalls, about the phenomenon. Dai Jianzhong, a
sociologist at the Chinese Academy of Social Sciences who specializes in
labour relations, believes the culture of corruption is in itself an active
factor in the collapse of many state-owned factories: "The most important
reason for failures is lack of accountability in management, who use power
to transfer wealth from workers to themselves."

Anger over such acts is one factor in the huge rise in spontaneous worker
protests. On July 9 this year, for instance, about 10,000 workers of the
state-owned railway blocked a major railway line in Jilin province demanding
unpaid wages. According to the Hong Kong-based Information Centre for Human
Rights and Democracy, China witnessed a total of 60,000 labour protests in
1998, most involving former state employees; the following year there were

For the ruling Communist Party, such incidents represent one of its biggest
headaches: In its eyes, independent organized labour can represent only one
thing: a threat to its monopoly on power. Unlike the Falun Gong, though, the
workers can't be dismissed as an evil cult. These, after all, are the
proletariat--the backbone of Mao's People's Republic.

For remnants of the Left, many still wedded to Mao's vision for China, the
rising anger of workers represents an opportunity to once again wield
influence in China. "Most state enterprises are finished," says one
Beijing-based activist. "But they have equipment and land that could be sold
off, so workers have something to fight for. Workers only ask for what is
theirs, and to work to make a living."

WU QIANG (not his real name) is typical of the far-Left labour organizers
active in China. On a humid afternoon, he arrives at a watch factory in
Chongqing to discuss with workers an offer aimed at settling a four-year
stand-off. Back in 1997, a local entrepreneur attempted to merge his company
with the watch factory. The "merger" was soon exposed for what it was:
asset-stripping. The workers managed to hold their ground and today, after
four years without a salary, they want advice from Wu on whether they should
accept an offer from the businessman to split the proceeds of the asset

"You must refuse to compromise," shouts Wu, banging his fist on the table.
"You should use the law, sue him, and get the factory back." After
convincing the workers, Wu races out, and spends the rest of the afternoon
trying to find a lawyer to represent the workers.

For Wu, a strong-looking man in his mid-50s, such battles are about more
than just workers' rights. Just graduating when Mao Zedong declared his
back-to-basics Cultural Revolution, few can have heeded Mao's call with
greater passion than Wu, and his devotion turned him into a powerful figure
in Chongqing. But after Mao's death and the fall of the Gang of Four, the
glory days ended, and Wu was imprisoned for 15 years.

Released in the early 1990s, Wu found himself in an unfamiliar country.
Industry was booming, and Deng Xiaoping's economic reforms had raised
standards of living, lifting 200 million out of poverty. But amid the
progress all Wu could see was corruption, an ever-growing wealth gap--and
disgruntled workers. Unable to find work and driven by nostalgia for the
past, he returned to organizing workers, supported mainly by the generosity
of his friends. Today, Wu admits the going is tough: His once-proud Left is
powerless, its ranks filled mainly with relics of the past.

Beijing, though, is taking few chances that it might revive. Just weeks ago,
it ordered the effective closure of the Left's two main mouthpieces, The
Pursuit of Truth and Indomitable--both vital to the labour activists'
propaganda efforts--after criticisms by leading leftists of President Jiang
Zemin's decision to welcome capitalists into the Communist Party.

The secret police, too, have long been wary of labour activists, fearing
that as they travel across China they are building the foundations of a
future nationwide labour movement. That's why most of the activists
interviewed for this article asked not to be named. It's also why they
refrain from forming an active network, and try to keep a low profile. "We
only work as consultants, because organizing is too sensitive," says the
Beijing-based activist. "We research the workers' situation, find out what
ways work best. We only help workers who request help. If they don't request
help it's best to keep a distance from them."

The wariness of workers is evident during a visit by labour activist Li
Liqun (not his real name) to staff laid off from a ceramics factory in
Zhengzhou. University-educated, Li is a rare young face among the ranks of
China's labour activists. While most of his peers headed off into good jobs
after leaving college, Li took the activist's path, becoming part of what's
often called the "New Left"--Marxists who spurn both the excesses of Mao and
the reforms of Deng, and seek instead an egalitarian society through
continued heavy state involvement in the economy, but with greater
democratic representation.

Today, in Zhengzhou, Li is on his third visit, but only slowly gaining the
trust of the suspicious workers, who are idly playing cards opposite the
site of their old factory.

"They're selling off the inventory for 10% of value--the police, government,
and factory managers are all in the scheme," complains one old woman.
"They've sold off the equipment already." Turning to a group of workers, Li
asks, "Why don't you stop them from taking the property?"

"Don't dare," comes the reply.

"Workers don't recognize they have the power to protest," says a frustrated
Li, a tall young man with crewcut hair and deep-set eyes. "As long as they
can eat they'll remain obedient. If they can't eat then they'll sell off
their belongings. Workers believe it is right that managers have all the
power, and workers have none."

Adds Wu in Chongqing: "Workers who are employed are afraid if they organize
they'll lose their job. Workers who are unemployed cannot organize because
they are dispersed."

MANY OBSERVERS believe that independent organized labour poses no real
threat to Western multinationals operating in China. "Most of the instances
of worker unrest that are reported occur where local management, due to
corruption, has caused the collapse of an enterprise," says Lawrence Brahm,
a Beijing-based consultant to multinationals. "This situation does not
generally apply to multinationals, which offer higher wages, incentive
programmes, and have the financial sustainability to provide long-term

According to sociologist Dai, it is the Communist Party that has most to
fear. "The government will not permit workers to organize because they're
afraid of the Solidarity example in Poland," he says. In addition, the lack
of an independent voice for workers allows officials to sweep injustices
under the mat. "Beijing thinks that without an organization workers are not
a real threat so they can just brush aside the problem," says Dai. The
government, for instance, is able to short-change workers of statutory
payments, as it is doing in Zhengzhou, according to Zhang Yuzhu, head of the
city government's statistics department. "In Zhengzhou every person is
supposed to get 170 renminbi a month as social security," Zhang says. "Since
1998 most workers have each collected only about 1,000 renminbi altogether."

According to Marc Blecher, a political scientist at Oberlin College in the
United States who has studied China's labour problems, Beijing's approach to
labour unrest mixes the occasional carrot with plenty of stick. The
government "puts fingers in dykes, paying off protesters where possible, and
arresting some of the ringleaders where necessary." The New York-based China
Labour Watch, an international human-rights organization, has records of a
number of labour activists who are spending time in prison. These include Hu
Shigen, a professor at the Beijing Languages Institute, who was jailed in
1993 for 20 years for attempting to organize the Free Labour Union of
China--an independent rival to the official All-China Worker's Federation,
which Dai describes as a "party tool."

More broadly, says Blecher, Beijing hopes to see the tensions resolve
themselves "by relying on workers to seek new employment in the labour
market; by continuing to adopt policies that fragment the working class; by
relying on workers' propensity to blame themselves."

Still, if all else fails, there's always brute force: "The police is the
most basic instrument of social security, and right now we are good at
keeping a lid on things," says Huang Jian, head of the Chongqing police
department's public relations operation. At a time of rising unemployment,
the police are recruiting: "We have close to 30,000 officers--we estimate we
need 60,000. We're offering higher pay and benefits to attract new

According to the labour activist Wu, the police are now experienced in
breaking up demonstrations. "Police shove workers off the street, and if
workers are stubborn then police will throw them into vans and drive them to
the countryside. By the time the scattered workers walk back everything is

Will these strategies work forever? Police spokesman Huang admits they may
not: "Worker protests are a national phenomenon," he says, "and there's no
way to address this problem." Labour activists, meanwhile, believe time is
on their side: China's membership of the World Trade Organization will force
markets to open further, placing further pressure on inefficient state-owned
enterprises. "We're optimistic," says the Beijing-based activist. Life will
become more difficult so workers will have to organize. We're waiting for
China's WTO entry."

BACK IN ZHENGZHOU, the workers are beginning to hope that their five-year
battle may not have been in vain. Following the violent clash in July,
workers say the municipal government now seems ready to talk to them about
turning the factory over to its former employees.

"We can manage the factory ourselves," says Zhou, the workers' leader, whose
role in leading the fight landed him in jail for two months last year. "Back
in 1996 we let factory managers just tell us what to do--now we want control
of our fate."

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