The Chinese “Miracle”

The myth that was once widely circulated about China was that it has “decoupled” from dependence on the rest of the world economy. This has been well and truly exploded by the capital crisis which has engulfed the world this year. Despite its phenomenal rate of economic growth, China has demonstrated that it is not immune from the economic virus sweeping the globe. The global collapse in demand has impacted on China’s burgeoning manufacturing sector, leading to factory closures and large scale job losses. GDP growth, which peaked at just under 12% in 2007, is forecast to be less than 9% this year and could drop to around 7.5% in 2009, according to the International Monetary Fund (IMF).

But even these growth figures, which seem unimaginable in the metropolitan economies, barely begin to tell the real story of the Chinese economy. Sure enough, China is now the world’s fourth largest economy, coming slightly behind Germany and just ahead of the UK. However China, with 1.3 billion people, is by far the world’s most populous country and in terms of gross national income per capita, ranks at 132 out 209 countries ⁽¹⁾ at $2,360, lower than Thailand or Angola. Moreover given the huge wealth discrepancy between rich and poor, the average income of a Chinese worker is far lower than that. In Guangdong, the minimum wage, which is the highest in China, is just $128 per month. Chinese Government officials also admit that they need 8% growth simply to prevent unemployment going beyond its present level.

The Impact on the Working Class

Global crisis or no, life for Chinese workers is a desperate struggle for survival, and, in the downturn, the working class is the first to suffer. In the Pearl River Delta in Guangdong, China’s industrial heartland, factory closures have increased by 20% this year leaving mainly migrant workers with several months worth of unpaid salaries. Fearing an upsurge in class struggle, the regional government has established an emergency wage payment fund, but there is a limit to how far these funds will stretch.

At a national level, the central government cut interest rates twice in October and has pledged a substantial cash injection into the ailing economy. The package announced last month will see the government spend around £375bn (about 15% of GDP) on social welfare and infrastructural projects over the next two years. But, by some estimates, the Chinese economy is only running at 50% capacity and it is unlikely that the government measures will stem factory closures or a deflationary spiral of wage cuts. The official unemployment rate of 4% is a gross underestimation, excluding millions of migrant workers who are not even counted. And it is these migrant workers who will be hit first; in Hubei province the authorities estimate that around 1 million workers will be laid off before the Chinese New Year in January and that 100,000 have been laid off already. Migrant workers, as we have reported before, suffer from two forms of discrimination. In the first place they are not regarded as full citizens in the cities to where they have migrated. They are classed as rural workers and, until the last fifteen years or so, were not allowed to travel away from the village or area of their birth. Now they can, but only to undermine wage rates in the towns. In the construction industry 90% of the workers are rural migrants literally sleeping on the job and earning $200 a month (about a third that earned by urban workers). These workers are also the most likely to be ripped off as well as exploited since they move to the next job before receiving pay for the last one. Apparently every migrant worker can report at least one loss of six months pay in such a way. ⁽²⁾

According to reports by the Xinhua and JinYang news agencies, as of 2007 more than 124,000 completed construction projects in China owed 175.6 billion yuan ($24.8 billion US) in unpaid wages to migrant workers. State-owned construction companies accounted for more than $9.2 billion of the total, according to the Ministry of Construction figures. ⁽³⁾

A Fightback?

In recent weeks there has been an upsurge in class struggle against the deteriorating conditions workers find themselves in. In Longnan in Gansu province, 2000 workers rioted against closure of government offices which would lead to higher unemployment. As the numbers on the streets swelled, violent clashes with the police took place. There have also been a series of strikes in several cities by taxi drivers protesting over higher fuel costs, fuel shortages, and the toleration of unlicensed taxis (licence fees are very high). These have often ended with the arrest of striking taxi drivers who attack the vehicles of scabs. In Dongguan on the Pearl River Delta, 500 workers at a toy factory rioted against dismal severance payments made to workers being made redundant. It appears that the protest was started by a group of around 80 migrant workers who mobilised fellow migrants and unemployed workers to storm the factory. This followed a previous protest at another toy factory in the same city in October, where 7000 workers occupied the factory and surrounding roads in protest against non-payment of wages, forcing the government to agree to make good the arrears. Many workers in fact are often unpaid for months. In many cases the factory owners are from Hong Kong or Taiwan. When the firm gets into difficulties they simply run off home (beyond the jurisdiction of the People’s Republic) leaving workers’ wages unpaid. Elsewhere, a riot in North-western China against evictions, was broken up by police using teargas.

It is clear that the authorities are gearing up to violently suppress workers’ protests. On November 20th, a senior state official informed a national conference that an all-out effort was needed to strengthen the police in order to “punish those who endanger our social stability”. One of the problems for the state is that it has no credible unions with which to negotiate. Maoism may have gone, but the unions are still all affiliated to the Communist Party. In theory, China was “socialist” so this meant that workers owned their own enterprises. In practice, this was just the usual cover for state capitalist exploitation. The unions’ role was reduced to handing out birthday presents or arranging how to celebrate national holidays. Similarly, if workers theoretically owned their own enterprises then there was no “need” to strike. Mao had the right to strike enshrined in the constitution in 1975, but it was removed by Deng as part of his “reforms” in 1982. However, in some recent strikes (such as those of the taxi drivers), the government found it had no-one to talk to as representative of the workers, so they tried to encourage the them to form their own association. In any capitalist state this is essential unless it wants to promote outright social war. As we have seen in the advanced capitalist countries, in the face of workers’ anger, unions time and again negotiate with the state to reach an accommodation in the state’s favour.

It appears that at the moment, Chinese workers’ struggles are sporadic and isolated but as the crisis deepens, so does the potential for more unified and co-ordinated action. But this means that workers need to have organisations that are truly independent and representative of their demands. This means strike committees responsible to the mass assemblies of the workers. It means coordination of strikes between one factory and another and it means coordination across all sections of production. As is the case everywhere, workers must develop an awareness that the struggle for a better life must become a struggle against the rule of capital itself. This can only be via a political struggle, not only against the private capitalists of the South-east of China but against the entire bureaucratic apparatus which controls the system. Ultimately, this demands the creation of a political party which can lead the fight, so that that struggle of this or that sector becomes the struggle of all workers. The problems are enormous, given the divisions which the capitalists can play upon between rural and urban workers, but the Chinese working class have an honourable history of struggle going back to Shanghai in 1927 and the current crisis is not going away...

(1) World Bank figures, 2007.

(2) According to research by the University of California, Berkeley as reported in The New York Times, August 14th 2008.

(3) berkely.edu