A Gay-Pride Revolution in Hong Kong

Deena Guzder and Ann Binlot / Hong Kong
NEWSWEEK
Sunday, Dec. 14, 2008

There were no drag queens in sexy ensembles with heavy makeup strutting down the streets in platform heels or buff shirtless sailor boys splayed like starfish on moving floats. But Hong Kong's first official gay-pride parade Saturday was still a colorful gathering; in fact, for a country that rarely acknowledges homosexuality, let alone celebrates it, it was downright revolutionary.

For a few hours, a city that usually seems immune to surprises watched in awe as approximately 1,000 paradegoers stopped traffic, filled the streets and spread their message to "celebrate love." A rainbow-colored dragon bobbed over the heads of carefully coiffed men donning dainty dresses and dancing to "Celebrate Pride," which warbled through a loudspeaker in the center of the city. Men with fiery red-feathered tiaras chanted, "Pride parade! Pride parade! Pride parade!" in Cantonese and English while marching through Hong Kong's congested Hennessy Road waving multicolored pride flags. (See TIME's top 10 pictures of 2008.)

Although Hong Kong has held several small demonstrations against homophobia, this was the first parade solely dedicated to celebrating queer identity. "We came out today to show the world that people in the queer community are normal people too," said Ariel Wong, a 21-year-old student at the Hong Kong Polytechnic University who wore a rainbow Afro wig and distributed stickers with pink hearts on them. The parade was co-organized by Rainbow of Hong Kong, Midnight Blue, Social Movement Resource Centre and the Women Coalition, with support from groups working on myriad issues, including civil rights, HIV/AIDS education and transgender awareness. It represented progress for China's gay community, marking the first large-scale event of its kind in any major Chinese city (only Taipei has hosted similar events). Antonio Licon, a Web designer for Hong Kong Magazine who grew up in Hawaii, said, "I think socially there are a lot of pressures in Hong Kong to conform to expectations and not disappoint parents."

People emerged from shops and restaurants to witness the historic event. While some spectators cheered in support, most looked confused and bewildered. "I never thought I would see this in Hong Kong," said Kevin Li, a salesman who nevertheless believes the younger generation is less homophobic than the older one. "Our society has different values than the West regarding sex because we are more traditional and more Chinese."

Yet it was Victorian colonial laws, not conservative Chinese attitudes, which first criminalized homosexuality. In 1901 British colonial laws threatened homosexuals with life imprisonment for anal intercourse and up to two years imprisonment for any so-called indecent acts involving two men, even if the acts occurred in the privacy of their home. In 1980, after an inspector of the Royal Hong Kong Police Force committed suicide as a group of officers were about to arrest him on suspicion of having engaged in homosexual activities, a debate sparked on legalizing homosexuality. Finally in 1991, after more than a decade of discussion, it was decriminalized.

But even if homosexuality is no longer a crime in Hong Kong, a stigma remains, as do discriminatory statutes with double standards. In 2005, Hong Kong–based civil rights attorney Michael Vidler successfully challenged a law that set the legal age of consent 21 for homosexuals (the age of consent for heterosexuals was 16), with a punishment of up to life in prison for violators. The law was ruled unconstitutional, but it has not been formally repealed.

"There are still archaic ideas of homosexuality as a form of gross indecency," said Vidler, who said he has seen cases of discrimination against homosexuals in the work force and housing market. "Hong Kong says it's a world city, but [it] has protocols in place that show it is still a backward country in regard to homosexuals' rights." Hong Kong lacks any non-discriminatory ordinance, and many locals still regard homosexuality with unease. Eric Herrera, a member of a white-collar gay-rights group called Fruits in Suits, which helped organize the parade, said, "I have no problem walking down the streets arm in arm with my partner of 21 years, but it makes many people very uncomfortable."

Many of the parade participants came from mainland China and Hong Kong's large expatriate community. "I've lived in China for a long time, and I've never marched in a gay-pride parade, so I always had my sister march in Chicago on my behalf," said Scott Wilson, who works in Wanzhou province. Amnesty International's LGBT coordinator in Hong Kong, Medeleine Mok, said, "In mainland China, it's impossible to have a gay-pride march, so this is a very important day that has attracted many people to Hong Kong."

The parade emphasized celebrating diversity and equality but also aired grievances with the Chinese government. Gun Lu of Beijing held a sign protesting censorship of movies and television shows that deal openly with homosexuality. In January 2007, the Broadcasting Authority issued a warning to producers of a show called Gay Lovers for presenting a "pro-gay" view. In March, Hong Kong's legislative council panel unanimously passed a motion demanding that the Broadcasting Authority withdraw its earlier ruling. "Non-heterosexuals rarely appear in the media, and when they do, they are portrayed as effeminate, flamboyant, sissies, perverts or AIDS carriers," said Dr. Ching Yau, an associate professor who teaches courses on media and gender studies at Lingnan University.

Such attitudes were reflected in the fact that, though Pride Parade 2008 turned out to be a success in many ways, planning the event was no easy matter. "While organizing the parade, we encountered many obstacles from the government, the police and a bus company," said Wai-Wai Yeo, a member of the Hong Kong Pride 2008 Organizing Committee. The local company Citybus refused to rent a double-decker to organizers of the city's parade because of concerns about its image. "This was a blatant act of discrimination, especially seeing the fact that this is a legal parade and the Hong Kong police have granted a permit," says Betty Grisoni, co-founder of a lesbian-rights organization called Les Peches, which helped organize the parade. A Citybus spokeswoman said on Dec. 11 that it would not discriminate against any party and that it was a commercial decision.

While significantly smaller in comparison to its counterparts in Berlin, New York City and San Francisco, Pride Parade 2008 set a precedent for what may become an annual event. "You have to start small," said Bill Boyle, a retiree who lives in Hong Kong and Toronto, as he watched the parade. "You want to educate the general population, not only to your presence, but also to the fact that you are just like them. You have the same right to fall in love like everyone else has and you need to have the same legal rights, and those legal rights are not here yet for people who are gay."

Why China Is Too Scared to Spend

Boosting consumption is key to economic recovery. But that will take fixing a disastrous health system.
Mary Hennock
NEWSWEEK
Dec 22, 2008
http://www.newsweek.com/id/174524

This month marks the 30th anniversary of Deng Xiaoping's economic reforms in China. But rather than celebrating, officials are in a panic. The global economic crisis has rammed home the message that China's old export-driven development model won't work forever; last month exports were down for the first time since February 2002, and overall GDP growth has dropped from nearly 12 percent last year to a projected 8 percent in 2009. Economists and party leaders now agree: the only way to keep China humming is to boost domestic consumption. That means getting Chinese people spending. But there's a problem. China's social-security network is broken, badly, and nowhere are the problems worse than in health care. A serious illness can still wipe out a family's savings. As long as that's the case, ordinary citizens will keep sticking large chunks of their income under their mattresses. And while that lasts, consumer demand will lag.

It's not that China doesn't have the money. Just the opposite: Chinese householders currently sit on savings worth $3 trillion, thanks to a savings rate of more than 25 percent, or about 16 percent of GDP—which is higher than all OECD countries, according to the World Bank. In theory, that cash could help China out of its conundrum. "We have a large domestic market. Savings are high, economic reserves are high," Vice Commerce Minister Yi Xiaozhun told a nervous gathering of elite Chinese entrepreneurs on a recent weekend. The government has already tried to allay fears with a stimulus package worth $586 billion, which Beijing will use to counter the effects of factory closures. But it plans to do this largely through infrastructure spending. According to the cabinet-level National Development and Reform Commission (NDRC), some 45 percent of the package will go to projects such as new railways, ports and power stations. Meanwhile, only one percent of the total stimulus spending is pegged for health care, culture and education.

A growing pool of experts argue that that represents a missed opportunity and is unlikely to help China long-term. Huang Ming, a Cornell professor who teaches at Beijing's Cheung Kong Graduate School of Business, sums up a widely held view when he says, "It's in the interest of the government to develop the social safety net fast. It will stimulate consumption. [Chinese] save because they are frightened of getting sick." The costs of illness can be ruinous. A better health-care system would unleash domestic spending and thereby boost employment, especially in retail and services. It could even offset the social unrest Chinese leaders fear will come with slower growth. "If you have nationwide health care, people are less likely to go on the street," says Huang.

Yet tackling China's vast medical crisis is daunting. Even President Hu Jintao acknowledged in 2006 that "medical-service fairness is declining and medical fees are too high for most people to afford." He called for faster development of rural services, a network of city clinics, timely treatment and safe drugs at affordable prices.

But progress has been glacial, centered on pilot studies and exercises more visible to experts than the public. In October 2008, the NDRC issued a road map for reforms. But the document was vague and said little beyond confirming that health-care reform is "an urgent expectation of the majority of Chinese people."

That's putting it mildly. While the 30 years since Deng's reforms have brought scorching growth, in terms of health care China has moved backward. Hu Shanlian, a health economist who has been advising the Chinese government for 17 years, says there's been "great change since the 1960s," when there was "quite a good network for farmers to seek health care," including a broad system of "barefoot doctors" in village clinics as well as decent and affordable hospitals in towns. In the 1980s, this system collapsed when market reforms did away with the communes that funded such facilities. Something similar happened in cities, as state enterprises were privatized or laid off workers, cutting them off from the work-unit-based welfare net. In 1980 only one fifth of health-care costs were paid out of patients' own pockets, but by 2005 that had risen to more than half.

When the Mao-era system was dismantled, barefoot doctors disappeared and Chinese medicine became city- and hospital-based. Hospitals were permitted to charge for tests and drug prescriptions, and the more costly the procedure, the higher the revenue for both hospitals and doctors. The result has been "overprescription and overutilization of services," says Dr. Sarah Barber, who heads the World Health Organization's Health Policy and Systems team in Beijing.

With only a patchy network of primary-care clinics left, patients these days struggle to find the right doctor or diagnosis since they can rarely afford to visit many hospitals.

Hospitals charge fees way beyond the reach of ordinary Chinese. The problem is illustrated by the case of Liu Jiangtao, a 25-year-old party member who fell sick with leukemia in mid-2007. Liu currently lies in Beijing's No. 307 military hospital, where he's been trying to persuade TV and radio stations to help him raise the $58,000 he needs for a bone-marrow transplant. That sum is the equivalent of 40,000 times the annual income of his parents, who grow wheat and flax on the salty margins of the Yellow River. Liu was originally hospitalized in Shandong's Dongying City, but after eight months of ineffectual chemotherapy, his parents in May asked relatives for money to move him to Beijing. "Now most of my relatives don't want to communicate with us," says Liu. Meanwhile, delay in treatment has eroded his chances of survival.

Liu's plight points to another basic problem: the lack of adequate health insurance in China, a supreme irony for a country that's still officially communist (indeed, many capitalist countries in the West provide more comprehensive care for free). Liu has insurance, but it's China's most basic program, the Rural Cooperative Medical Scheme (RCMS). The RCMS was rolled out in the last four years. It costs participants as little as $3 a year and has been extended to 90 percent of China's farmers in record time. But the system is badly flawed. For one thing, it's a pay-first, claim-later setup, which doesn't do much good to patients like Liu who can't come up with huge fees in the first place. For another, most claimants get back only 20 to 30 percent of their costs. Many of China's poorest, sickest or least-educated citizens find the RCMS baffling and can't manage to jump through its procedural hoops.

Employer-based schemes have similar problems. Benefits aren't portable geographically so they don't help China's massive migrant population, and workers who lose their jobs can't take their contributions with them. Among city dwellers, health insurance coverage levels dropped from 45 percent of the long-term, settled population in 1998 to 39 percent in 2003. To tackle this, the government consolidated numerous employment-based deals into a single package better suited to job mobility. It then plugged a key gap for migrants with a new safety-net scheme that covers both urban and rural poor. Yet the overall health-insurance system remains so badly designed that simply adding money, as the government is doing, will solve little. Extra insurance funds simply tend to be soaked up by profit-hungry hospitals.

Still, the government is trying. Total government health spending increased from $143 billion in 2006 to an estimated $219 billion in 2007, according to Hu, the economist. And Hu and Barber say that the government is rolling out multiple new pilot schemes, experimenting with fixing drug prices, drawing up a national recommended drug-purchase list and passing price-label laws to prevent rip-offs. Village medics (of whom China has far too few) are to get guaranteed basic salaries in five poor provinces to stop them from relying on prescribing. Perhaps the most promising experiment is taking place in Chongqing, where rural and urban insurance pools are being combined to create portable, individual insurance, something China's lacked until now.

So far the government has avoided fanfare; it seems to want to avoid any big announcements and to build on the results if they turn out to be positive. That's good research practice, says Barber. "In health systems it's not one fix, so you look at your system and adjust; the key is to monitor what's happening," she says.

Yet this approach may not be politically decisive enough for these troubled times. "What China really needs is structural transformation," says Michael Shen Minggao, a former investment banker who is now chief economist with the highly regarded Caijing magazine. Without it, he argues, the Chinese economy may still manage to grow at 8 percent or more next year, but consumption won't budge. And that spells trouble long-term. Until Chinese start buying, their country's economic prospects over the next 30 years may fall far short of the world-beating growth they've enjoyed for the last 30.

Workers riot in south China over job losses: government

AFP
November 26, 2008

GUANGDONG, China (AFP) — Hundreds of workers sacked from a toy factory in China clashed with police and smashed buildings, authorities said Wednesday, in the latest bout of violent unrest linked to rising unemployment.

The riot occurred Tuesday in Guangdong province, southern China's export heartland where similar protests have flared recently, after about 2,000 workers gathered to demand severance pay, according to the local government.

The workers smashed offices at the factory where they used to work and overturned police cars, with the violence leaving six people injured, the government of Zhongtang township where the unrest occurred said in a statement.

"(Rioters) smashed one police vehicle and four police patrol cars... fought with security guards... and entered factory offices breaking windows and destroying equipment," the statement said.

The riot occurred at the Kaida Toy Factory, a company owned by a Hong Kong firm in Zhongtang that is in the process of laying off workers, the statement said.

A Zhongtang policeman surnamed Huang told AFP that 19 people had been arrested.

"Our investigation is continuing as not all of these people were employees of the Kaida Toy Factory," Huang said, adding that the situation was calm on Wednesday and authorities were looking to ensure there was no more unrest.

The Zhongtang government said that up to 500 workers were responsible for the riot, while 1,500 others "looked on."

The factory has been operating for more than 20 years and employed up to 6,500 workers, according to the government statement.

One worker surnamed Hu told the Guangzhou Daily the factory laid off over 380 workers on Wednesday last week, giving more severance pay to workers who had been employed for more than seven years and less to other workers, it said.

"Many workers thought this was unfair and negotiations between the factory and the workers did not reach a resolution on the issue," the paper quoted Hu as saying, adding more job losses were expected this week.

Southern China has enjoyed an export-driven boom in recent years supplying the world with cheap toys, gadgets and clothes.

But amid the downturn in the global economy, coupled with rising labour costs, expensive raw materials and the appreciation of the Chinese currency, factories have found it difficult to make ends meet.

Up to 7,000 laid-off workers staged a similar protest in Guangdong last month after another Hong Kong-owned toy factory, one of China's biggest, closed down.

China's social security minister, Yin Weimin, last week described the employment situation across the country as "critical", as the nation's police chief warned his deputies that this could lead to unrest.

"(You) should be aware of the challenge brought by the global financial crisis and try your best to maintain social stability," Public Security Minister Meng Jianzhu told his deputies.

China's economy has slowed sharply in recent months amid the global crisis, and the World Bank has forecast growth of 7.5 percent for next year, which would be the nation's slowest expansion in nearly two decades.

However the Zhongtang government maintained that the layoffs at the Kaida toy factory were not directly linked to the global economic downturn, rather an expiration of labour contracts.

Kaida's mainland operations were not immediately available to comment.

China's Agrarian Revolution - Beware of Radical Change

John A. Donaldson & Forrest Q. Zhang
The Straits Times, Singapore
Nov 24, 2008
http://www.straitstimes.com/Review/Others/STIStory_306007.html

Both writers are assistant professors in the School of Social Sciences, Singapore Management University. They recently carried out extensive fieldwork on agricultural land reforms in rural areas of Yunnan and Shandong in China.

A REVOLUTION in China's agriculture is under way. You would know that if you have been reading recent news reports. But this revolution actually started well before the decisions that emerged last month from meetings of the Chinese Communist Party.

Those decisions received a great deal of attention from China watchers. Many anticipated even before the decisions were made that the government would allow tacit privatisation of land or at least permit China's farmers to sell their land usage rights. Others reported that China was allowing farmers for the first time to lease their land to others, which should allow them to secure loans on their land. Many saw the anticipated increase in the scale of agricultural production as a way of modernising the Chinese countryside. They joined a growing chorus urging China to liberalise land ownership for the sake of increasing production and pulling hundreds of millions of peasants into the more prosperous urban economy.

All these views are based on misunderstandings of China's situation. In fact, the reforms that were preliminarily announced last month will not fundamentally alter the collective land ownership system that has been in place for about three decades.

To be sure, party documents have emphasised several issues that the new steps are designed to address, including the minuscule scale of production that occurs on tiny plots of land, as well as the lack of commercialisation of China's agricultural products. Some have concluded from this that China's leadership was considering allowing farmers to sell their land rights. However, the policies that were released by the party heralded no new approach to land ownership. China's central government has re-committed itself to closing the income gap between rural and urban areas, but it has pledged to do so under the current system of land ownership.

Indeed, Chinese farmers have for years been able to transfer land usage rights and increase the scale of production. Agricultural production has already been commercialised and urban capital has already penetrated China's agricultural system. More importantly, these increases in scale occurred within the current system.

Rental markets are already well established throughout much of the countryside, and have been codified into Chinese law since 2002. Strikingly, the 'new' measures that emerged from the recent party conference were word-for-word the same as the old 2002 law. Even as early as in 2001, rural households in many counties in the relatively wealthy coastal province of Zhejiang, for instance, transferred as much as 60 per cent of land to others. The revolution that many China watchers expect did not begin last month - it began years ago.

Furthermore, according to research we conducted last year in the south-western province of Yunnan and Shandong on China's northern coast, many agricultural products are being produced on an impressive scale. Plantations nearing 10,000 mu (667ha) employing thousands of rural workers are already being formed. The view of China's agriculture as based on subsistence agriculture is outdated. China's agriculture is already shifting to large-scale, specialised, commercialised production.

This scaling up is occurring as rural farmers adopt a variety of roles - from commercial and entrepreneurial farmers, to rural workers with varieties of relationships vis-a-vis agribusiness. And because this increase in scale occurred without farmers abandoning their land or their land rights, they have benefited economically. The scaling up has occurred without the tumultuous upheavals that would likely occur if China chooses to privatise land ownership at this point.

Recent media reports appear to be based on an incorrect assumption that allowing farmers to buy and sell their land would benefit them. In contrast, we fear that allowing the sale (as opposed to the rental) of land usage rights, or any moves to otherwise privatise China's land ownership, would likely return China to the days of relatively large land-holdings and massive numbers of landless farmers.

If the current system were changed, it would make it easier for rapacious officials and business people to obtain land from peasants. It will probably not increase the productivity of agriculture, and enhance the efficiency of production only by slashing surplus labour and cutting off millions of farmers from their main source of income. Poor farmers are not likely to obtain much financing by using their meagre plots as collateral. Indeed, such financing would allow banks to foreclose on farmers during inevitable downturns.

China's current land ownership system has proven to be not only adaptable, but also conducive to the development of rural markets and agricultural modernisation. Eliminating land usage rights, or allowing the sale of such rights, will reduce the political power of farmers vis-a-vis other powerful actors, and add to landlessness in China.

Massive riot in northwestern China

John M. Glionna
Los Angels Times
November 18, 2008

Thousands, angered over a plan to raze a city center, burn cars and battle police with rocks, iron bars and axes. A Communist office is overrun and 60 officials are injured.

Reporting from Beijing -- An angry crowd of 2,000 rioted in northwest China's Gansu province over a government plan to demolish a downtown area, torching cars and attacking a local Communist Party office, injuring 60 officials, state-run media reported Tuesday.

At one point, rioters met a surging wall of armed police officers with a hail of rocks, bricks, bottles and flowerpots. The crowd later confronted police with iron bars, axes and hoes as they tried to hijack a fire truck and smashed windows and office equipment in two government buildings.

The violence, one of the most marked instances of social unrest to grip China in recent months, was sparked by government plans to relocate the city of Longnan's administrative center after May's devastating earthquake, according to the Xinhua news agency.

State-run press has reported on numerous pickets and demonstrations that have broken out across China in recent weeks, including a two-day strike by disgruntled taxi drivers in the southwestern Chinese city of Chongqing.

Earlier this month, a crowd of 400 in the southern boomtown of Zhenzhen threw stones and set fire to a police car after officers tried to stop a motorcyclist at a checkpoint. The cyclist fled and was killed when he hit a lamppost.

In June, 30,000 people demonstrated in the southwestern province of Guizhou, setting fire to cars and the local Communist Party building following rumors that officials had tried to cover up the death of a teenage girl.

Activists warn that tensions over the sudden downturn in the Chinese economy could provoke similar public outbursts, even though police have made efforts not to immediately resort to violence in quelling the riots.

"The government's emphasis on maintaining a harmonious society just extenuates the levels to which it is worried about these kinds of threats to social stability," said Joshua Rosenzweig, a Hong Kong manager of research at the Dui Hua Foundation, a human rights group.

"I don't think we're even close to seeing the real impact of the global financial crisis on Chinese society. I'd be surprised if the government wasn't very concerned about the increasing level of social unrest all over China."

Chinese economists say that rising wages throughout China have led many laborers to expect better working conditions and residents to demand more accountable government. "The local government has become the front line of conflict," said Hu Xingdou, an economics professor at the Beijing Institute of Technology.

"But there is no channel to allow people to express their will. They lack the right to speak, the right to organize and unionize to represent their interest, therefore they can only use an irrational way by demonstrating or rioting to solve problems."

But government officials have recently began to forego a decades-old policy of swift repression to meet public demonstrations. Following a two-day strike, Chongqing taxi drivers were able to air their grievances in a three-hour meeting with government officials that was available online across China.

And officials in Zhenzhen moved quickly to counteract claims of police violence following the motorcyclist's death -- promising compensation of nearly $30,000 to the victim's family.

"In these cases, as well as labor and factory strikes, the government policy now seems to involve much less police response," said Rosenzweig. "Fewer labor leaders have been detained and prosecuted for criminal offenses. There's much more emphasis on trying to mediate disputes."

The melee in Longnan began when about 30 angry residents gathered Monday outside the party office, but the crowd soon swelled into the thousands, Xinhua reported.

He Zhouwa, manager of a local machine brick factory, said people were ready to use any means possible to stop the government plan to relocate the city center.

"People are still at the municipal party office compound," he said late Tuesday. "I did not dare to go there, but everyone is talking about this. There were hundreds of petitioners there last night and this morning."

A Longnan city government statement said the protesters, many of whom had come to petition government officials over the loss of their homes and land, were "incited by a few people with ulterior motives."

Realities of China today

Martin Hart-Landsberg
Against the Current
November/December 2008, No. 137
http://www.solidarity-us.org/node/1940

Martin Hart-Landsberg is Professor of Economics and Director of the Political Economy Program at Lewis and Clark College, Portland, Oregon; and Adjunct Researcher at the Institute for Social Sciences, Gyeongsang National University, South Korea. His publications include: Marxist Perspectives on South Korea in the Global Economy (2007), China and Socialism: Market Reforms and Class Struggle (with Paul Burkett, 2005), Understanding Japanese Capitalism (with Paul Burkett, 2005) and Development, Crisis, and Class Struggle: Learning from Japan and East Asia, ( with Paul Burkett, 2000).

Interest in the post-1978 Chinese market reform experience remains high and for an obvious reason: China is widely considered to be one of the most successful developing countries in modern times. The Chinese economy has recorded record rates of growth over an extended time period, in concert with a massive industrial transformation. Adding to the interest is the Chinese government's claim that this success demonstrates both the workability and superiority of "market socialism."

There are those on the left who share this celebratory view of the Chinese experience, believing that it stands as an effective rebuttal to the neoliberal mantra that still dominates economic thinking. Therefore, they encourage other countries to learn from China's gradual, state controlled process of marketization, privatization, and deregulation of economic activity. A small but significant number share the Chinese government's view that China has indeed pioneered a new type of socialism.

Many on the left also believe that China may soon be capable of anchoring an alternative international economic system, thereby offering other countries the opportunity to reduce their dependence on the current U.S. dominated system and pursue their own independent development strategies.

Unfortunately, as argued below, there is no justification for this positive perspective on the Chinese experience. First, regardless of what Chinese leaders say, China is not pioneering a new form of market socialism - rather the reforms have led to the restoration of capitalism. As a result, Chinese internal dynamics are clearly hostile to the creation of any anti-capitalist alternative. Second, the reforms have produced an increasingly exploitative growth process, one that is generating considerable wealth for a small minority at unacceptably high cost for the great majority of Chinese working people.

Finally, China's growth process is now structurally enmeshed in, and dependent upon, the operation of a broader process of regional and international restructuring, one controlled by transnational capital. As a result, China is not only incapable of serving as an anchor for an alternative global economy, its accumulation dynamics actually contribute to the strengthening of existing international structures of power and the global imbalances and tensions they generate.

The stakes are high in this engagement over the nature and significance of the Chinese experience. For example, left support for the Chinese reform experience encourages, consciously or unconsciously, the mistaken belief that socialism can be built through the use of markets and a closer integration with global capitalist accumulation dynamics. At a minimum, this leads to confusion about the nature of socialism, and of capitalism as well.

This is more than a theoretical concern: one finds in many countries - including Cuba, Venezuela, South Africa and Brazil -- advocates for socialism who argue that their respective governments should implement Chinese style market reform policies.

Chinese workers, in growing number, are beginning to challenge Chinese state policies, not just in response to the exploitation they experience but also because of their renewed interest in socialism itself. It is therefore vital that we develop an accurate understanding of the Chinese experience, both to provide support for those seeking socialist renewal in China and to ensure that efforts at social transformation in other countries are not compromised by false understandings of the dangers of markets and capitalist imperatives.

China's structural transformation
In 1978, two years after the death of Mao Zedong, the leadership of the Chinese Communist Party, led by Deng Xiaoping, decided to radically increase the economy's reliance on market forces. The leadership claimed that such a step was necessary to overcome the country's growing economic problems which were alleged to be caused by Mao's overly centralized system of state planning and production.

Political and economic changes were definitely desired by the majority of Chinese. Deng and his followers, however, greatly overstated the severity of existing problems and, more importantly, ignored popular calls for an exploration of other, non-market reform responses.

Once begun, the market reform process quickly became uncontrollable.(¹) Each stage generated new tensions and contradictions that could only be resolved (given the leadership's opposition to worker-community centered alternatives) through a further expansion of market power. The "slippery slope" of market reforms thus led to an eventual privileging of market dynamics over planning, private ownership over public ownership, and foreign enterprises and markets over domestic ones.

Economic transactions are now overwhelmingly shaped by market prices. The share of retail sales made according to market determined prices rose from 3% in 1978 to 96.1% in 2003. For producer goods, the share rose from zero to 87.3% over the same period.(²)

The growing industrial dominance of the private sector is also clear. In 1978, state owned enterprises accounted for all value added in China's industrial sector (defined as mining, utilities, and manufacturing). By 2003, the private sector share was larger than the state sector share: 52.3% to 41.9%.(³) But even this diminished state share overstates the actual "economic weight" of state production.

Recognizing that many state enterprises are now jointly owned by private interests - either through joint venture or stock ownership - the Organization of Economic Cooperation and Development (OECD) classifies state firms as either directly or indirectly controlled, depending on whether the state share of paid-in capital is greater than 50% of the total. In 2003, directly controlled state enterprises accounted for only 22.9% of industrial value added - less than a quarter of the total.

The declining strategic importance of the state sector becomes even clearer if we narrow our focus to manufacturing. The OECD has divided China's manufacturing sector into two groups. The first includes the five industries that continue to be dominated by state production: petroleum processing and coking, smelting and pressing of ferrous metals, smelting and pressing of non-ferrous metals, tobacco processing, and transport equipment.

The second and larger group (which accounts for over 75% of manufacturing value added) is dominated by private enterprise. This group is made up of 23 different manufacturing industries, including food processing, textiles, garments, chemicals, medical and pharmaceuticals, plastics, ordinary machinery, special purpose machinery, electrical equipment, and electronic and telecom equipment. As the OECD explains:

In 1998 the private sector produced the higher share of value added in only 5 out of these 23 . . . manufacturing industries. By 2003, this was true for all 23 of these industries. Moreover, in half of them, private firms produced more than three-quarters of output. Overall in these 23 industries, the private sector employs two-thirds of the labor force, produces two-thirds of these industries' value added and accounts for over 90 percent of their exports.(⁴)

State-owned enterprises do remain important and the Chinese state still exercises control over critical sectors of the economy, but these areas of strength are now largely limited to finance and activities supported by state ownership of natural resources. Thus, in 2006, three state oil companies accounted for half of the earnings of the 160 largest "state owned monopolies and oligopolies." In fact, "Up to 80 percent of the year-on-year increase in profits realized in 2006 by all Chinese enterprises were attributable to . . . monopoly financial groups or monopoly firms in the areas of oil and petrochemicals, electricity, coal and metals."(⁵)

Foreign capital also enjoys a greatly strengthened role in the Chinese economy. The share of foreign manufacturers in China's total manufacturing sales grew from 2.3% in 1990 to 31.3% in 2000.(⁶) Perhaps more revealing, a 2006 government report concluded that foreign capital holds a majority of assets in 21 out of 28 of the country's leading industrial sectors.(⁷)

One consequence of this development is that China's economic growth has become increasingly dependent on foreign produced exports. Foreign firms dominate China's export activity: their share of China's total exports grew from two percent in 1985 to 58% in 2005 (and stands at 88% for high tech exports.(⁸)

Moreover, these exports are increasingly being produced by 100% foreign owned firms. A case in point: the share of computer related exports produced by 100% foreign-owned firms increased from 51 to 75% over the period 1993-2003.(⁹) As a result of these trends, the ratio of exports to GDP has climbed from 16% in 1990 to over 40% in 2006.

In sum, while state planners and enterprises continue to play an important role in China's economy, state power has been used to shape an accumulation process that is now dominated by private (profit-seeking) firms, led by foreign transnational corporations, whose production is largely aimed at markets in other (mostly advanced capitalist) countries.

Regardless of how one might evaluate the performance of the Chinese economy, it is hard to imagine how this development can be viewed as laying the foundation for an alternative to capitalism, at either national or international levels. Rather it points to the conclusion that capitalism itself has been restored in China.

Social consequences of market reform

Many on the left are no longer interested in the debate over whether China is socialist. Rather, they are concerned with whether China's growth and transformation has led to "successful" economic development. For a majority, the answer is an unequivocal "yes." This answer appears largely based on a consideration of a limited but important set of indicators: rates of growth of foreign investment, exports, and GDP.

If we broaden our notion of development, however, to include measures of working-class well-being, the answer tragically changes. The reality is that China's market reform polices have created a growth process underpinned by increasingly harsh working and living conditions for the great majority of Chinese.

Perhaps most surprising is the fact that the country's rapid growth has failed to generate adequate employment opportunities. According to the International Labor Organization (ILO), total urban (regular) manufacturing employment actually declined over the period 1990-2002, from 53.9 million to 37.3 million.(¹⁰) And while there was a small increase in total urban employment, almost all the growth was in irregular employment, meaning casual-wage or self-employment - typically in construction, cleaning and maintenance of premises, retail trade, street vending, repair services or domestic services.

More specifically, while total urban employment over this 13-year period grew by 81.7 million, 80 million of that growth was in irregular employment. As a result, irregular workers now comprise the largest single urban employment category - much as in Africa and Latin America where such an outcome is blamed on stagnant capital accumulation. In addition, the ILO reports declining labor force participation rates and double digit unemployment rates for urban residents.

The reform process has taken an especially heavy toll on state workers. According to Chinese government figures, state-owned enterprises laid off 30 million workers over the period 1998-2004. As of June 2005, 21.8 million of them were struggling to survive on the government's "minimum living allowance" - the basic welfare grant given to all poor urban residents. In June 2005, this allowance was approximately $19 a month.(¹¹)

Of course there has been job growth in the private sector, especially at firms producing for export. But most of the new jobs are low paid with poor working conditions. "Even after doubling between 2002-2005, the average manufacturing wage in China was only 60 US cents an hour, compared with $2.46 an hour in Mexico."(¹²)

A recent report on labor practices in China by Verite Inc., a U.S. company that advises transnational corporations on responsible business practices, found that "systemic problems in payment practices in Chinese export factories consistently rob workers of at least 15% of their pay."(¹³) Workplace safety is an even greater problem. According to official Chinese government sources, about 200 million workers labor under "hazardous" conditions. "Every year there are more than 700,000 serious work-related injuries nation-wide, claiming 130,000 lives."(¹⁴)

One critical but often overlooked explanation for China's manufacturing competitiveness is that approximately 70% of manufacturing work is done by migrants. Over the last 25 years, some 150-200 million Chinese have moved from the countryside to urban areas in search of employment.

Although the great majority of these migrant workers have moved legally, they suffer enormous discrimination. For example, because they remain classified as rural residents under the Chinese registration system, not only must they pay steep fees to register as temporary urban residents, they also have no rights to the public services available to urban born residents (including free or subsidized education, health care, housing and pensions). The same is true for their children, even if they are born in an urban area.

As a consequence migrant workers are easily exploitable. They typically work 11 hours a day, 26 days a month. Most receive no special overtime pay and commonly earn one-quarter to one-half of what urban residents receive.(¹⁵)

The overall effectiveness of Chinese labor policies (which are primarily designed to boost export competitiveness) is well illustrated by recent trends in wages and consumption. Chinese wages as a share of GDP have fallen from approximately 53% of Gross Domestic Product in 1992 to less than 40% in 2006. Private consumption as a percent of GDP has also declined, falling from approximately 47% to 36% over the same period. By comparison, private consumption as a share of GDP is over 50% in Britain, Australia, Italy, Germany, India, Japan, France, and South Korea; it is over 70% in the United States.(¹⁶)

As the Economist states, "the decline in the ratio of consumption to GDP . . . is largely explained by a sharp drop in the share of national income going to households (in the form of wages, government transfers and investment income), while the shares of profits and government revenues have risen." In fact, according to the Economist, "Many countries have seen a fall in the share of labor income in recent years, but nowhere has the drop been as huge as in China."(¹⁷)

A vicious cycle is at work here: the lower the share of income going to workers, the more economic forces reinforce the export orientation of the Chinese economy, which encourages the implementation of new policies to suppress worker standards of living.

To be sure, China's growth and industrial transformation has also generated great wealth - leading to an explosion of inequality and the formation (or solidification) of new class relations. An Asian Development Bank study of 22 East Asian developing countries concluded that China had become the region's second most unequal country, trailing only Nepal. This is not surprising considering that over a roughly ten-year period (from the early 1990s to the early 2000s) China recorded the region's second highest increase in inequality, again trailing only Nepal.(¹⁸)

While the results of the Asian Development Bank study are significant, they do not adequately convey the real concentration of wealth that has accompanied and motivated China's market reform program. According to the Boston Consulting Group, China had 250,000 U.S. dollar millionaire households (excluding the value of primary residence) in 2005, the sixth greatest national total in the world. Although this group made up only 0.4% of China's total households, it held 70% of the country's wealth.(¹⁹)

According to a yearly listing of China's richest people, the number of U.S. dollar billionaires has grown from one in 1999 to 106 in 2007 (more than any other country except the United States).(²⁰) China's nouveau riche have not been shy about spending their money: "LVMH Moët Hennessy Louis Vuitton, the world's largest luxury goods maker, plans to open two to three stores a year in China, where sales are rising 50% annually. Financièr Richemont, the world's second-biggest, expects to quadruple sales in China within five years by selling more Cartier jewelry and Piaget watches."(²¹)

There are clear signs that the Communist Party is becoming concerned that widening income (and consumption) inequalities are adding fuel to growing popular anger over deteriorating employment, health, housing, environmental and retirement conditions. And with good reason: the number of large scale "public order disturbances" has grown from 58,000 in 2003, to 74,000 in 2004, 87,000 in 2005, and an estimated 94,000 in 2006.(²²) Particularly worrisome to the leadership is the increasingly effective and militant strike activity at foreign-owned export factories (despite the fact that strikes remain illegal in China).

As repression has failed to stem the rising tide of protest, the Party has also begun to initiate a number of reform efforts. These are designed to ameliorate the worst excesses generated by China's growth strategy without radically changing its orientation. For example, the central government approved a new Labor Contract Law which came into force on January 1, 2008.(²³) Both the European and U.S. Chambers of Commerce bitterly opposed this effort and intervened heavily during the drafting stage in a successful effort to reduce its scope.

The approved law requires, among other things, that all employers provide their workers with a written contract (something that a majority of workers either do not have or have never seen) that specifies the terms of employment and includes pension and insurance benefits. The new law also requires that companies pay a premium for overtime and weekend work.

While the new law has generated a sharp increase in arbitration cases (most of which involve non-payment of wages and overtime premiums), its impact on employment conditions appears limited (even in the areas it was intended to address).(²⁴) Many companies are circumventing the law by reducing their employment of "regular" workers (some did so before the law went into effect), relying instead on workers provided by labor dispatch companies or increasing their use of subcontracting relationships.

Some companies now pay workers their contracted salaries and respect vacation and overtime standards, but then undermine worker gains by increasing what the same workers must pay for company-provided dormitories and canteen meals. Some foreign-owned companies are threatening to shift production to a different location within or even outside of China if workers press their demands too aggressively.

In addition, the many-layered official dispute resolution process remains slow and costly, making it difficult for workers to force unwilling companies to comply with the higher standards contained in the new law. Finally, and most importantly, the new law still allows local governments, and thus employers, to differentiate between urban born and migrant workers; the latter continue to be denied unemployment and other employment-based social security benefits.

A major reason that many in the leadership of the Communist Party remain unwilling to support fundamental changes in China's current growth strategy, despite its devastating effects on working people, is that they have been among its biggest beneficiaries. Their ability to shape the reform process has enabled them to use state assets for personal gain, place family and friends in lucrative positions of authority in both the state and private sector, and ensure that the rapidly growing capitalist class remains dependent on the Party's good will.

This, in turn, has led to a fusion of party-state-capitalist elites around a shared commitment to continue the advance of a capitalist political economy with "Chinese characteristics."

The results of this development are easy to see. Many of the children of leading party officials (known as the "princelings") were appointed to key positions in "China's most strategic and profitable industries: banking, transportation, power generation, natural resources, media, and weapons. Once in management positions, they get loans from government-controlled banks, acquire foreign partners, and list their companies on Hong Kong or New York stock exchanges to raise more capital. Each step of the way the princelings enrich themselves - not only as major shareholders of the companies, but also from the kickbacks they get by awarding contracts to foreign firms." Not surprisingly, more than 90% of China's richest 20,000 people are reported to be "related to senior government or Communist Party officials."(²⁵)

China's elite has been willing to share the fruits of the country's production with international capital - although struggles over distributional issues are growing sharper as international capital strengthens its position within China - because international capital's participation has been critical to the establishment and continued growth of China's new political economy. China's elite, however, appears determined to ensure that they will be the primary national claimant.

Thus, at the same time that the "Chinese Communist Party has opened up an unprecedented number of sectors for foreign-equity participation . . . the authorities have . . . tightened control over other aspects of the economy. This has resulted in the truncation, if not atrophy, of thousands of [small and medium sized] private firms. These are in danger of being edged out by powerful monopolies and oligopolies that are controlled either by the party-and-state apparatus or by senior cadres and their offspring."(²⁶)

In sum, it appears that those driving China's economic strategy have been remarkably successful in using the reforms to shape an accumulation process responsive to their interests. And consistent with the underlying capitalist nature of this process, their gains have come at ever greater cost to the majority of Chinese working people.

As a result, Chinese leaders must now contend with an explosion of strikes and demonstrations. It remains to be seen whether such actions will threaten future foreign investment and export production, two of the most important pillars upholding China's growth strategy. Regardless of what happens, it is difficult to see on what basis progressives would want to celebrate and promote China's reform experience.

Market reforms and transnational accumulation
Many on the left believe that the combination of China's size and pattern of growth along with the (self-proclaimed) socialist (or at least anti-imperialist) orientation of the leadership of the Chinese Communist Party mean that China will soon be capable of anchoring a new, more progressive international economic order.

This belief tends to be buttressed by the following reasoning: China has maintained (and can be expected to sustain) high rates of growth for decades. Because this growth is highly import dependent, it supports the export production and thus economic growth of China's trading partners (especially in East Asia but also in Latin America and Africa).

Moreover, China's export success has enabled the country to build up its own huge foreign exchange holdings, which the government is increasingly using to help its Latin American and African trading partners finance needed (infrastructure) modernization.

This vision of China as a powerful and positive agent for international change is attractive but flawed. In most cases, it is the result of using a nation-state lens to understand Chinese accumulation dynamics. The reality is that China's economic transformation is not occurring in a vacuum or solely in response to Chinese initiatives.

Rather, East Asia's economies, including that of China, are being linked and collectively reshaped by broader transnational capitalist dynamics, in particular by the establishment and intensification of cross-border production networks organized by transnational corporations. As a result, China's own accumulation dynamics are increasingly being tied to dominant patterns of investment and trade, thereby reinforcing rather than offering an alternative to them.

Most immediately, the expansion of cross-border production networks has led to a significant increase in the trade dependency of all East Asian economies. One indicator of this trend: the region's export/GDP ratio grew from 24% in 1980 to 55% in 2005. By comparison, the world average in 2005 was only 28.5%.(²⁷) Further, a growing share of this activity is now under the control of transnational corporations; for example, they account for 73% of Malaysia's and 86% of Singapore's exports of manufactures.(²⁸)

More significantly, as a consequence of the operation of these networks, a rising share of East Asia's trade in manufactures is now in parts and components. This is illustrated by the changing trade composition of leading Southeast Asian countries (Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam).

The share of parts and components in the group's total exports of manufactures grew from 27.5% in 1992-3 to 40.3% in 2004-5.(²⁹) The import share of parts and components also grew substantially over the same period, from 32.6% to 48.5%. Trends are similar for Taiwan and Korea. For example, the export share of parts and components for Taiwan grew from 21.2% to 43.5%.

In addition, almost all the parts and components being traded by East Asian countries come from the same three industrial categories (with identical national rankings of importance): electronics machinery, office machines and automatic data processing, and telecommunications and sound recording. Moreover, these parts and components are increasingly being traded from one developing East Asian country to another; the intra-regional share of parts and components trade rose from 37.8% in 1992-3 to 55.6% in 2004-5.

In short, East Asian export production (itself a growing share of total national production) is increasingly narrowing not only to parts and components, but also to a select few operations in a select few industries in response to the needs of transnational corporate-controlled production networks.

China was not only pulled into this process of regional restructuring, it has become central to its functioning. In the words of the Asian Development Bank, "the increasing importance of intra-regional trade is attributed mainly to the parts and components trade, with the PRC functioning as an assembly hub for final products in Asian production networks."(³⁰)

China's unique position as the final production platform in this transnational structured regional production system is highlighted by the fact that it is the only country in the region that runs a regional trade deficit in parts and components.

As a consequence of this restructuring, East Asia's overall export activity has shifted away from the United States and the European Union and towards East Asia, and in particular China. On the other hand, China has shifted its export emphasis away from East Asia and towards the United States and the European Union.

Between 1992-3 and 2004-5, the East Asian share of China's final goods exports declined from 49.5% to 26.5%, while the OECD share (excluding Japan and Korea) increased from 29.3% to 50.1%.(³¹) In fact, China is now the region's largest exporter to the United States and the European Union in absolute and relative terms. Thus, the mirror image of China's surplus in trade with the United States and the European Union is its deficit in trade with East Asia.

As a result of this regional restructuring, China has become the first or second most important export market for almost all East Asian nations. This development has, as noted above, encouraged the belief that China's import dependent production will enable East Asian countries (and those in Latin America and Africa that also export to China) to "uncouple" from the U.S.-dominated international economic order.

However, since this trade activity largely involves an intra-regional trade of parts and components culminating in China-based production with final sales largely directed to the United States and the European Union, East Asia's overall dependence on developed capitalist markets has actually grown stronger rather than weaker. According to various estimates cited by the Asian Development Bank, it appears that the percentage of Asian exports consumed within Asia ranges from a high of 22% to a low of only 11%.(³²)

This regional perspective enables us to see more clearly the problematic nature of Chinese growth dynamics (for working people both inside and outside China). The most obvious problem is that China's continued growth (and thus the region's production) is now dependent on the ability of the United States to run ever greater trade deficits. Since it is doubtful that the U.S. economy can continue to sustain such large and growing deficits, it is difficult to see how China (and by extension the East Asian countries that provide China with parts and components) can avoid painful adjustments involving lower rates of growth and a further worsening of majority employment and living conditions.

Chinese growth dynamics remain problematic even if international trade imbalances can be sustained. For example, China's position as final assembly hub within numerous cross-border production chains has significantly weakened Chinese efforts at technological upgrading.

Surveying China's situation five years after the country's 2001 accession to the WTO, the Chinese economist Han Deqiang recalls that he had "argued the greatest damage [of membership] would be to China's capacity to control its industrial and technological development autonomously. I think it's safe to say these last five years have more than proven that true. In China, any industry that wants to develop its own technology or markets has encountered increasingly great barriers."(³³)

More problematic still is the fact that in order to maintain the country's key regional position in the face of competition from other countries seeking to improve their own position within cross-border value chains, the Chinese state has had to ensure that wages are kept low and productivity high.

One consequence of China's success is that transnational corporations throughout East Asia (and elsewhere) have been shifting their production to China to take advantage of its more profitable production conditions. This has led to lower rates of investment and growth throughout the region and the implementation of new labor regimes designed to weaken labor protections. As a result, workers throughout East Asia (and elsewhere) have become pitted against each other in a contest to match the level of labor exploitation achieved in China.(³⁴)

The problems for China's main Latin American and African trade partners are somewhat different but also serious. These countries supply China with primary commodities rather than manufactured parts and components. And China's large and growing need for these commodities has certainly boosted Latin American and African foreign exchange earnings and growth. These gains, however, come at significant long-term cost. Trade agreements with China, sometimes supported by Chinese financial assistance and foreign investment, reinforce existing structural imbalances by further strengthening the dominance of the primary commodity sector.(³⁵)

At the same time, Latin American and African efforts to build up manufacturing (and diversify exports) tend to be undermined by China's own export offensive. For example, close to 95% of all Latin American high technology exports face competition from China-based exporters. These threatened high technology exports represent almost 12% of all Latin American exports.(³⁶) Finally, of course, Latin American and African trade with China can also be expected to suffer if Chinese growth falters.

In sum, the market logic driving China's reform strategy promoted an economic transformation that allowed Chinese economic dynamics to become enmeshed in a broader process of transnational restructuring, one that accelerated the reforms in ways guaranteed to ensure the dominance of capitalist imperatives in China.

As a result, far from opening up new possibilities for working people, China's reform strategy has actually strengthened a transnational accumulation process that is generating serious national and international imbalances and tensions that will eventually require correction at considerable social cost.

Final thoughts
Several conclusions emerge from the above examination of the Chinese experience. First, China's market reform process has led not to a new form of (market) socialism, but rather to the restoration of capitalism (although "with Chinese characteristics"). Concretely, the Chinese growth process has given rise to a new political economy that is hostile to the goals of socialism, the promotion of all-rounded human development, solidaristic relations, cooperative planning and production for community needs, and collective or social ownership of productive assets.

Thus, the Chinese experience stands as a clear warning: socialism cannot be built through the use of markets and a closer integration with global capitalist accumulation dynamics. In fact, the confusion within the left over the nature of the Chinese experience suggests that there has been a loss of clarity about what constitutes socialism and appropriate criteria for evaluating progress towards building it.

Second, China's economic experience reveals much about contemporary capitalism. China is considered a model developer; the country has achieved a sustained and rapid rate of growth, attracted massive inflows of productive capital, and is exporting ever more sophisticated manufactured goods. Yet these accomplishments have not translated into meaningful gains for growing numbers of Chinese workers.

In fact, workers in China face labor and working conditions increasingly similar to those in Latin America and Africa, regions where most countries are considered development failures. Therefore, it appears that the answer to worker problems in Africa, Latin America and elsewhere for that matter, is not to be found in supporting policies designed to achieve "successful" capitalist development, especially those designed to replicate the Chinese experience.

Third, China's growth trajectory has become tied to and dependent upon existing accumulation processes shaped by transnational capitalist dynamics. As a result, China cannot be counted on to assist in the creation of a radically new economic system.

This does not mean that trade with China is to be avoided. It also does not mean that Chinese elites and western (especially U.S.) elites see eye to eye on all geopolitical issues. Capitalist competition is real and differences between these elites can and often does create openings that are helpful for the third world, especially for those countries under threat from the United States.

At the same time, since Chinese elite interests are structurally shaped by capitalist imperatives, there are limits to the types of changes that Chinese leaders can be expected to support. Caution is also in order, given the expected consequences from the imbalances and tensions generated by the above described transnational dynamics.

This critical perspective on the Chinese experience should not be taken as support for those analysts (many of whom write in the United States; some of whom are close to the U.S. labor movement) who view China as the primary cause of most economic problems. Their often repeated claim is that if only the Chinese government were forced to "abide" by the "free-market" rules of acceptable capitalist competition, all would be well in the world economy (and by extension for working people).

An implied assumption is that Chinese workers are enjoying real benefits from their country's "unfair" state interventions, and their employment and income gains are coming at the expense of workers in other countries, especially in the advanced capitalist countries (which are the main market for Chinese exports).

Tragically, this line of argumentation encourages workers outside of China to mistakenly believe that their enemy is China, rather than the system of capitalism that shapes their country's economic relationship to China and pits them against Chinese workers in a destructive competition. In fact, as we saw above, Chinese growth is increasingly dependent on the export activities of transnational corporations, many of which come from the advanced capitalist countries.

Moreover, despite - or in fact because of - their country's rapid growth, Chinese workers, like workers everywhere, are facing hard times. Decent jobs are scarce, social services are disappearing, inequality is growing, and competitive pressures demand ever greater sacrifices.

As noted above, growing numbers of people in China are openly and directly challenging their country's growth strategy. Even more noteworthy, these challenges are now fueling political discussions and debates (many of which are taking place on electronic chat rooms and bulletin boards) about the nature and significance of Mao era experiences and socialism.(³⁷) To this point, farmer and worker participants appear focused on refuting the false claims of ruling elites that the Mao period was both a social and economic disaster by drawing on their own life experiences to illustrate the accomplishments of that period, in particular employment and social security and a sense of national purpose.

This process of political renewal is taking place under very difficult conditions due, most importantly, to the ongoing repression of grassroots organizing and activism by the Communist Party. Additional challenges include tensions between immigrant and urban born state workers over jobs and access to social services; confusion caused by Chinese Community Party claims to be building socialism; and the fact that the strongest resistance to Party policies comes from those who continue to uncritically praise Maoism, despite the fact that Mao generally opposed farmer and worker self-organization and direct participation in political and economic decision-making.

Despite their current limitations, these struggles, discussions and debates represent a promising development, one that we can learn from and hopefully contribute to by finding ways to share our own understandings of socialism and experiences in movement building with Chinese participants. It makes our own efforts to better understand the nature of the Chinese reform experience ever more important.

* While a majority of those on the left are now critical of China’s market reform strategy, a significant number of defenders remain. People want to believe that there are workable alternatives to neoliberalism, and belief in the progressive nature of China’s social transformation is no doubt encouraged by the fact that China continues to be demonized by the U.S. government; China makes loans to, invests in, and trades with Cuba and Venezuela; and the Chinese Communist Party still rules and publicly proclaims its commitment to socialism. More specifically, I have participated in international conferences and meetings where Cuban and Venezuelan economists have supported the Chinese market reform strategy and argued for adoption of similar policies in their own countries. Defenders of the Chinese growth process also continue to argue their position on numerous left internet discussion lists. The journal Critical Asian Studies had no trouble in organizing a roundtable in which several editors of the journal took issue with Paul Burkett and my critique of China’s market reform experience as expressed in our book China and Socialism, Market Reform and Class Struggle (New York: Monthly Review Press, 2005). The criticisms and then our response were published in the journal (Critical Asian Studies, September 2005 and December 2005). In addition, well known scholars such as Giovanni Arrighi, David Schweickart, and Immanuel Wallerstein continue to publish articles and books in which China’s rise as a non-capitalist/socialist power is celebrated. For a recent example of such writings see Giovanni Arrighi, Adam Smith in Beijing: Lineages of the Twenty-First Century, London: Verso, 2007.

Notes

1. For a discussion of the reform process see Martin Hart-Landsberg and Paul Burkett, China and Socialism, Market Reforms and Class Struggle (New York: Monthly Review Press, 2005), especially Chapter 2.

2. OECD, OECD Economic Surveys: China, OECD Economic Surveys, 2005, 29.

3. Data in this and the following paragraph come from Ibid, 133.

4. Ibid, 82.

5. Willy Lam, "China's Elite Economic Double Standard," Asia Times Online, 17 August 2007.

6. UNCTAD, World Investment Report 2002: Transnational Corporations and Export Competitiveness, New York: United Nations, 2002, 17.

7. Eva Cheng, "China: Foreign Capital Controls Three-quarters of Industry," Green Left Weekly, 18 May 2007.

8. John Whalley and Xian Xin, "China's FDI and non-FDI Economies and the Sustainability of Future High Chinese Growth," National Bureau of Economic Research, Working Paper Series, Number 12249, 2006; Tom Miller, "Manufacturing That Doesn't Compute," Asia Times Online, 22 November 2006.

9. Enrique Dussel Peters, Economic Opportunities and Challenges Posed by China for Mexico and Central America, Bonn, Germany: German Development Institute, 2005, 102.

10. Ajit K. Ghose, "Employment in China," International Labor Organization, Employment Analysis Unit, Employment Strategy Papers, 2005.

11. China Labor Bulletin, "Subsistence Living for Millions of Former State Workers, 7 September 2005.

12. John S. McClenahen, "Outsourcing," IndustryWeek.com, 1 July 2006.

13. Craig Simons, "New Labor Movement Afoot in China," Statesmen, 4 February 2007.

14. China Labor Bulletin, "Migrant Workers in China," June 2008.

15. Ibid. In 2005, the central government gave local governments the authority to reform the registration system, including ending distinctions between rural and urban residents. The great majority have refused to make any changes; most local officials are closely allied with local business interests and do not want to jeopardise enterprise (or their own personal) profitability.

16. The Economist, "A Workers' Manifesto for China," 11 October 2007.

17. Ibid.

18. Asian Development Bank, Inequality in Asia, Key Indicators 2007, Special Chapter Highlights, Manila: Asian Development Bank, 2007, 3, 6.

19. Wu Zhong, "China's 'Most Wanted' Millionaires," Asia Times Online, 19 September 2007.

20. Robin Kwong, "China's Billionaires Begin to Add Up," Financial Times, 22 October 2007.

21. Samuel Shen, "For China, A Full Embrace of Luxury, High-end Retailers Take Aim at Mainland's Monied Class," International Herald Tribune, 16 October 2006.

22. Bruce Einhorn, "In China, A Winter of Discontent," BusinessWeek, 30 January 2008.

23. Ariana Eunjung Cha, "New Law Gives Chinese Workers Power, Gives Businesses Nightmares," Washington Post, 14 April 2008.

24. International Trade Union Confederation, "China: Some Steps Forward, but Trade-Related Worker Exploitation Persists," 21 May 2008; Kinglun Ngok, "The Changes of Chinese Labor Policy and Labor Legislation in the Context of Market Transition," International Labor and Working Class History, Spring 2008.

25. Peter Kwong, "The Chinese Face of Neoliberalism," Counterpunch, 7/8, October 2006.

26. Lam, "China's Elite Economic Double Standard."

27. Asian Development Bank, Asian Development Outlook 2007: Growth Amid Change, Hong Kong: Asian Development Bank, 2007, 68.

28. Asian Development Bank, Asian Development Outlook 2006, Hong Kong: Asian Development Bank, 2006, 273.

29. Data in this and the following paragraph come from Prema-chandra Athukorala and Nobuaki Yamashita, "Production Fragmentation in Manufacturing Trade: The Role of East Asia in Global Production Networks," in Filippo di Mauro, Warwick McKibbin and Stephane Dees (eds.), Globalization, Regionalization and Economic Interdependence, Cambridge: Cambridge University Press, forthcoming.

30. Asian Development Bank, Asian Development Outlook 2008, Workers in Asia, Hong Kong: Asian Development Bank, 2008, 22.

31. Prema-chandra Athukorala, "The Rise of China and East Asian Export Performance: Is the Crowding-out Fear Warranted?" Australian National University, Division of Economics, Working Paper No. 2007/10, September 2007.

32. Asian Development Bank, Asian Development Outlook 2007, 70.

33. Stephen Philion, "The Social Costs of Neoliberalism in China, Interview With Economist Han Deqiang," Dollars & Sense, July/August 2007. For a more detailed discussion of the negative consequences of the reforms on China's technological capacities see Martin Hart-Landsberg, "The Chinese Market Reform Experience, A Critical Assessment," forthcoming.

34. Asian Development Bank, Asian Development Outlook 2007, 32-3; Martin Hart-Landsberg and Paul Burkett, "China, Capital Accumulation, and Labor," Monthly Review, May 2007.

35. He Li, "Red Star Over Latin America," NACLA, September-October 2007; Eva Cheng, "Is China Africa's New Imperialist Power?" Green Left Weekly, 2 March 2007.

36. Kevin P. Gallagher and Roberto Porzecanski, "Climbing up the Technology Ladder? High-technology Exports in China and Latin America," Center for Latin American Studies, University of California, Berkeley, Working Paper 20, 2008, 14.

37. For a discussion of this development see Mobo Gao, The Battle for China's Past, Mao and the Cultural Revolution. Ann Arbor, MI: Pluto Press, 2008.

The Role of Trade Unions in China

Carl Finamore
August 25, 2008

The recently-concluded summer Olympics introduced China as a major player on the world stage in spectacular fashion.

No doubt about it, the country made a superbly dramatic entrance.

Of course there were the much-publicized disclosures that some elements of the production were staged - the embarrassing lip-synching episode and the use of pre-recorded fireworks fed to live television broadcasts.

But first-class, stellar performances by Chinese athletes on the field amply demonstrated there was nothing fake about the progress China has made in the last several decades.

A more valid criticism was that the Chinese government’s track record on human rights won’t win any medals. And to be sure, it must be recognized that some of those complaints were made by those with less than genuine motives.

This was the topic of a recent discussion between twenty northern California labor leaders and a visiting high-level Chinese delegation from the Guangzhou Federation of Trade Unions (GZFTU).

The delegation, which is affiliated with the state-controlled All China Federation of Trade Unions (ACFTU), surprised us a bit when they said this was the first visit of top Chinese labor officials with leaders of a AFL-CIO Central Labor Council.

Facing new challenges to organize multi-nationals, our guests emphasized they wanted to rapidly end their isolation from American unions.

GZFTU's Chairman Chen Weiguang began by acknowledging that China‘s unions had to be reformed. “We need to protect the rights and interests of the workers and elect leaders who will stand up for workers,” said Weiguang. “Of course, the bosses within the enterprises want a union chair who will be obedient to the company but we believe the union belongs to the workers, not the bosses.”

Chen speaks from his experience as a major planner of the successful unionization of Wal-Mart in China.

China's “Economic Miracle”

Currently the seventh largest world economy, the country of 1.3 billion is on track to become the third largest by 2015. Its Gross Domestic Product (GDP) has grown at rates that are among the highest for any major country in the 20th century. (US Dept. of Agric., USDA 2004 report)

There are many internal factors contributing to China's economic "miracle" such as a more-skilled workforce and unprecedented capital spending on roads, utilities, buildings, machinery and equipment.

Over time, infrastructure improvements result in big increases in labor productivity and mass production of quality products, something U.S. policy makers do not appreciate. Substantial foreign investment in new technology since the early 1990s has also helped spur productivity.

Before the mid-1990s there were clear differences between state-owned "socialist" factories, which offered lifetime employment, housing, and medical care, and private sector factories, which provided little job security, low wages, and no fringe benefits.

Today, however, competition and persistent government efforts to privatize state-owned firms has led even these enterprises to offer less job security, fewer welfare benefits, and stricter labor conditions. (China Labour Rights Bulletin)

As a result, wages of Chinese workers have remained very low. Experts estimate wages at around 12% of US workers, thus providing China an extremely favorable trade advantage.

For example, the USDA reports that “furniture manufactured in China can enter the U.S. market at 25 to 35 percent of the cost of comparable furniture” made in the United States.

This imbalance is representative of most Chinese exports.

From these statistics, it should be clear that raising the wages and living conditions of Chinese workers is imperative. Solidarity is not just an abstract emotional impulse; it is an economic necessity that unites workers around the world.

Our goal should be to avoid divisive competition between ourselves by establishing uniform international labor standards.

A Conversation with Chinese Labor

Our meeting with the Chinese delegation proved to be a lively and frank exchange. I asked a question about the control of the Communist Party over the official trade unions.

As reported by Paul Burton in the May 28, 2008, Labor, the San Mateo County Central Labor Council newspaper, Chen responded to the question by explaining the history of unions under the Communist Party.

“For a long time China was a 'command economy' and unions were subservient to it. There was no distinction between labor and capital because we were all part of the nation,” Chen said. “The Party worked hard for the development of the working class and to educate workers. Things have changed with the move to a market economy and differentiation in factories between bosses and workers.”

Chen said that over the past 30 years of economic reforms, workers have made great sacrifices and now that capital had become too powerful the Communist Party was rethinking the balance of capital and labor, enacting new labor laws as part of that change.

Apparently some progress is being made.

Burton summarized the meeting by observing that “with the enactment of recent pro-worker labor laws in China, the situation may be changing as workers exercise their rights under these new labor laws.

“The China Labor Bulletin (CLB, online at www.china-labour.org.hk/en/) reported that 'the number of labor dispute cases in Guangzhou for the first two months of 2008 equaled the total number of cases in 2001. More than 60 percent of all cases involved non-payment of salaries and over-time.'"

CLB director Han Dongfang wrote encouragingly that “by developing collective bargaining at the grassroots level, enterprise-level unions will be transformed into labor organizations that genuinely represent the rights and interests of workers.”

Let's wish them well. We all should work toward this common goal in each of our unions. But some would say it is not possible to achieve while the Chinese government retains exclusive control of the unions.

The role of Trade Unions in China

Founded in 1925, ACFTU has around 170 million members. It is the only union legally recognized but its membership is shrinking as privately-owned companies become a larger share of the economy.

The numbers are staggering. In their Feb. 9, 2008, issue, ChinaDaily reports that 200 million were employed by 5.39 million registered private establishments in 2007. This is more than half of all companies in China. These firms alone generated 60 percent of the GDP.

ACFTU is responding to this challenge by mounting a huge organizing campaign in the private sector, especially among the foreign-owned. As a result, the Federation expects it membership to increase to 200 million by its September 2008 Congress. It also hopes to announce successful completion of a “100-day” bold unionization effort begun in June to organize 80% of the Fortune 500 firms.

This new thinking was forced upon Chinese unions after they encountered stiff opposition from notoriously anti union Wal-Mart. Labor officials, normally accustomed to dealing with state enterprises, were shocked when the company actually refused to even meet with union organizers, a tactic commonly employed in America.

ACFTU began a successful grass-roots organizing campaign, a first for the state labor body.

The union was finally recognized in 2006. Chen Weiguang played an important role confronting Wal-Mart as a hostile employer rather than as a friendly joint-venture partner with the government. The latter view has always compromised the union’s ability to represent workers.

For example, the ACFTU official website still clearly reveals its cooperation with management: "Trade unions of the foreign-invested enterprises in China have firmly centered on production and business operation to conduct activities and have given support to enterprises in their operation and management according to law; have educated workers to observe factory rules and regulations and discipline; organized workers to launch labor emulation campaigns; and aroused the enthusiasm of the workers for running the enterprises well, so as to contribute to the sound development of the enterprises."

Yet, soon after the Wal-Mart victory, the ACFTU website announced: “This successful experience in setting up Wal-Mart unions is groundbreaking in that we have discovered a new line of thinking. It not only will influence other foreign and private investors to quickly abide by the law to allow unions to be established, it also brings to trade unionists a new mission. Following the new logic in setting up unions, new adjustments in union work will be needed, be it in methods, in organizational structure, ways of identifying backbone activists, down to how to use union funds….”

We are obviously observing the wavering contradictions of a mass labor organization of millions trying to define for itself a new role and trying to discover for itself a new voice that speaks more sharply to the needs of Chinese workers.

The big question is whether the announced changes in union structure and purpose enacted from “above” will be sufficient to satisfy millions of Chinese workers “below” who so desperately need an organization representing their class interests.

So far, the government is walking a delicate tight rope of enacting reform without relinquishing control.

Fresh off the success of their grand Olympic production, the state retains the stage with the home crowd anxiously awaits their next major performance of reforming the trade unions.

Hundreds of millions of desperate workers still suffering under conditions most observers describe as horribly primitive have so far been relatively quiet.

Chinese officials hope they remain in their seats.

But a “thumbs down” review might end up with a rebellious audience itself taking over the stage.

( Carl Finamore was President (ret), Air Transport Employees, Local Lodge 1781, IAMAW. He can be reached at local1781@yahoo.com. )

A Turning Point for China’s Trade Unions

http://www.clb.org.hk/en/node/100294

(The following unsigned article appears on the English section of the China Labour Bulletin 中國勞工通訊. We have by far failed to find a Chinese version of the article.)

We may have reached a crucial turning point in the history of China’s trade union movement. For the first time since 1949, trade union officials are openly stating that the union should represent the workers and no one else, while new legislation in Shenzhen places collective bargaining – previously a no-go area – at the core of the union’s work.

“The trade union is a matter for the workers themselves,” Chen Weiguang, chairman of the Guangzhou Federation of Trade Unions told a conference on 15 July 2008, adding that the role of enterprise unions must change from “persuading the boss” to “mobilizing the workers.”

Shenzhen’s Implementing Regulations (Shishi Banfa) for the Trade Union Law, enacted on 1 August, further define the union’s new role, creating a “responsible, empowered and battle-ready union” that can protect workers’ rights, according to Zhang Youquan, head of the Shenzhen Federation’s legal department. Zhang told a press conference to announce the new regulations that this was the first time the term “collective bargaining,” (jiti tanpan) as opposed to the previously-used but much weaker concept of “collective consultations” (jiti xieshang) had been applied in China’s local legislation.

As the experience of the labour movement in many other countries has shown, collective bargaining is the most effective way to protect workers’ rights and bolster the role of the trade union. Above all, it is a means of resolving labour disputes through peaceful social dialogue. Such an approach is sorely needed in China today, and China Labour Bulletin Director Han Dongfang congratulated the Shenzhen authorities on this important new initiative:

“After three decades of economic reform, we’ve reached the point when something had to be done. Today in Shenzhen we can see the worst excesses of capitalism, but also the desire of the people for social justice and – with these new regulations – the willingness of the government to move towards capitalism with a human face.”

Han pointed out that although the new legislation was “state-directed” reform, it would still have a positive effect if it enabled workers to engage in genuine collective bargaining. “At present, the most pressing need for the official union is independence from the bosses,” he said.

Significantly, the whole of chapter three of the Implementing Regulations (The Rights and Obligations of Trade Unions) does not contain a single reference to the traditional tasks outlined in the 2001 Trade Union Law, such as helping the enterprise to restore normal production in the event of a work stoppage or slowdown. Rather the regulations make it very clear that during a labour dispute the role of the trade union is to represent workers in negotiations with management. Moreover, for the first time in China, the regulations (Article 36) stipulate that grassroots trade union officials should receive a small monthly subsidy from the municipal federation that will go some way toward lessening union officials’ dependence on the enterprise for their operating funds.

Article 18 (Paragraph 3), Articles 27 to 31 inclusive, Article 44 and Article 45 all stress that collective bargaining is the core responsibility of trade unions and provide clear guidelines on how the process should work. These provisions effectively transform collective bargaining in China from a vague concept into, potentially, a genuine right that can be utilized by ordinary workers to improve their terms and conditions of employment.

Of course, the regulations are far from perfect; they still emphasize the supervision or control (jiandu) of grassroots unions by higher level unions, rather than a system of mutual supervision. Article 11, for example, specifies that workplace union officials will be elected by the union committee only after a list of candidates drawn up by the committee has been approved by the higher-level union. Also, grassroots unions still need the approval of higher level unions before they can officially register, and there is no mechanism by which lower-level officials can supervise or control irresponsible higher-level union officials.

However, the Implementing Regulations – together with the Shenzhen Labour Relations Regulations, due to go into force at the end of September – have effectively opened the door for the Shenzhen Federation of Trade Unions to transform itself into a much more effective representative of workers’ rights and interests.

Han Dongfang said: “We hope the Shenzhen Federation of Trade Unions can take practical steps to create a successful bargaining model that others can follow, thereby making collective bargaining a key part of China’s emerging civil society.”

Han stressed that change will not happen overnight but, step by step, progress is already being made. And in retrospect, 2008 may well turn out to be one of the most important years in the history of China’s trade union movement.

“Earlier this year, we saw the implementation of three new national labour laws, and now we have the introduction of collective bargaining in Shenzhen. This has all come from two factors: the growing determination of Chinese workers to stand up for their rights, and the government’s willingness to respond in a practical and positive manner,” he said.