Chinese Labor Divided

Chinese Labor Divided

China’s recent uptick in labor unrest has given leftists hope that the world’s largest working class is building a labor movement to match its scale. But Chinese workers are still far from having a national voice.

Workers in Shanghai, 2008 (Colin Manuel / Flickr)

In April 2014, thousands of workers went on strike at Yue Yuen Industrial, the world’s largest shoe factory, in Guangdong Province, China, to demand that their pension and social insurance benefits be paid when they learned that their employer had been shirking contributions for years. In 2009, strikes and sit-ins had also broken out at steelworks in Hunan Province and at textile and machine-tool plants in Shaanxi Province. Some of these workers were protesting layoffs, while others were demanding the right to create independent watchdog groups (or perhaps even new unions) to advocate for their interests.

It is tempting to see all these actions as evidence of a growing labor movement in the largest country in the world. There are, after all, over 26 million more workers in China than the combined total in the next three of the world’s most populous countries (India, the United States, and Indonesia). Alas, this massive labor force has never built a unified movement and is not close to having one now.

This is because Chinese workers are sharply split into a variety of segments, most importantly according to the ownership type of the firms in which they work. The shoe factory in Guangdong is a Taiwanese-owned firm that employs young migrants from the countryside and produces mostly for export. The steelworks, textile mills, and machine-tool plants were all state-owned relics of the planned economy whose long-tenured older urban workers made goods mainly for the domestic market. State-sector workers since 1949 have been the Communist Party’s preferred leading class in Chinese society, while migrant workers in the private sector were traditionally viewed as little more than displaced peasants.

The rigid separation of the Chinese working class into these two subsets has long prevented the emergence of any coherent labor movement. But workers’ interests may now slowly be converging across the state and private sectors alike. To understand why this is so and what it means for the future of workers’ politics in China, it is necessary to review the historical roots and composition of the Chinese working class.


A Segregated Workforce 

The historical absence of a coordinated nationwide movement of Chinese workers is due neither to their quiescence nor to effective repression by the regimes that have ruled China since the dawn of industrialization in the late nineteenth century—from the Qing Dynasty to the short-lived Republic to the Communists since 1949. The main cause is the remarkable degree of segmentation of the Chinese labor force across all these periods. Chinese workers have been divided by region, industry, skill level, urban or rural status, and the type of firms at which they work (household, private, state, and foreign-owned). The Communist revolution intensified and hardened these divisions by restricting workers’ mobility both between and within localities through the household registration (hukou) and work unit (danwei) systems. Market reforms since the 1980s have created new sectors and firms alongside older ones, which have stubbornly resisted fading into the past. In China today, two broad categories of workers—private and public—coexist, each with its own distinct political views and social roots. State-sector workers, as fading heroes of the planned economy, feel betrayed by the reform project and abandoned by the Communist Party. Migrant workers in the private sector, coming off the land to seek new opportunities in the market, tend to embrace economic reform but chafe at the grating inequalities they confront because of their rural status.

Workers in the state sector were lionized during the Maoist period (1949–76) and still hold a special place in Communist ideology and historical mythology. Propaganda tales of the martyr Lei Feng, of “iron man” oil workers on the frozen tundra, and countless films, posters, and songs exalting workers’ exploits and leadership helped cement this image. State workers lucky enough to remain on the job have seen their incomes rise and working conditions improve, especially in the aftermath of the 2008 global recession, when massive government stimulus spending was directed to the sector. But today, the once vaunted socialist working class is a mere shell of its former self, having shrunk by more than 50 percent and having lost much of its political clout and social status.

Workers in private firms, especially those that subcontract production for foreign multinationals like Walmart and Apple, emerged as a significant social group during the 1990s. Consisting mostly of rural-to-urban migrants, this new sub-class has only just begun to assert its interests and play a meaningful political role. Strikes like the one at the Yue Yuen shoe factory along with lawsuits, petitions, sit-ins, and wildcat actions, have become commonplace in China’s export-manufacturing hubs. These private workplaces buzz with activity even as state-owned factories—and even entire industrial cities—elsewhere in the country slowly succumb to obsolescence or neglect. Having been built over the first six decades of the twentieth century, most state factories and older industrial centers found themselves painfully out of date and woefully undercapitalized by the century’s end, unable either to invest in new technology or other upgrades, or often even to meet their social and fiscal obligations.

The roots of the differences between private and state-employed workers stretch back over decades. Disparate histories have imbued each group of workers with a distinct class identity and interests that in turn shape their political behavior.


From Disembodied Vanguard to Disemboweled Proletariat

In the 1920s, when Communists first tried to organize coal miners and silk workers, they made little headway. These wage earners spoke different dialects, had been recruited in their native villages by different foremen or gangsters, and had different levels of skill and professional status. They simply did not see themselves as members of the same class. Even if, in Marxist terms, the Chinese working class had come to exist as a class in itself, it was far from becoming a class for itself. The Chinese Communist Party (CCP) was a vanguard without working-class followers. After coming to power in 1949 through a peasant revolution, in which “the villages laid siege to the cities,” the CCP had to call a proletariat into being.

When they seized control in the 1940s of key industrial areas in China’s Northeast, developed in what had been the Japanese puppet state of Manchukuo, CCP leaders quickly moved to establish a new type of organization commonly known as “work-unit socialism” or the danwei system. This system—spearheaded by Gao Gang, who was quickly rising up the CCP ranks as a leading cadre in the northeast from 1945 to 1952—placed workers into factories that served as organizing units (and welfare providers) for all aspects of their lives. In their work units, the industrial working class enjoyed a standard of living far above the average for China at the time, albeit with very limited mobility (it was almost impossible to transfer between units). But, at the beginning, only a tiny fraction of the workforce gained admission.

Splits erupted within the CCP leadership over the optimal strategy for transforming a traditional agrarian society into an industrialized socialist utopia. Evenutally, work-unit socialism won out. Employers took care of workers’ every need, from childcare and education, to health care and relaxation facilities, to pensions and retirement activities. They also maintained files on all workers and collaborated with local authorities to discipline those who stepped out of line (even to the point of detention at labor reeducation camps). Workers were highly connected and united within factories and firms, but they had little communication, let alone solidarity, between enterprises or localities. Nearly all urban dwellers belonged to a work unit, and these units largely defined their lives—under a system of relations often known as the “Iron Rice bowl”—providing comprehensive social benefits as well as exercising social control. Mobility between work units, while not technically prohibited, was usually impossible.

In 1993, more than 95 percent of China’s roughly 140 million workers were employed in the state-owned and urban collective sectors. This system began to unravel in the 1990s. Informal private businesses sprang up, employing more and more young workers and moonlighters from the public sector, and foreign-invested companies and large domestic private firms also began to grow. Economic liberalization and fiscal reforms caused many state-owned work units to falter, laying off millions of workers. Between 1993 and 2009, more than 76 million jobs were lost. Today, less than 50 percent of Chinese workers are employed by the state.

At a CCP Congress in 1997, state firms were ordered to “reduce staff to increase efficiency” and trim their costs, in hopes of being able to compete with private and foreign companies. But this initiative largely failed. As jobs disappeared, very few laid-off workers found new employment and they were forced to turn to small-scale entrepreneurial activities to survive. Upon reaching retirement age, many found that pensions promised to them by their work units had disappeared. The generation born immediately after the 1949 Revolution, whose members grew up during the lean years of the Great Leap Forward and came of age politically during the tumultuous Cultural Revolution, was systematically impoverished. Whole cities and regions fell to economic ruin—leading one worker, quoted in a newspaper, to remark, “with nothing to eat, can this still be called socialism?”

A hard drive factory in Wuxi (Robert Scoble / Flickr)

But the men and women of China’s traditional socialist working class did not go quietly. Throughout the late 1990s and early 2000s, hundreds of thousands of protests and strikes erupted across China, involving millions of laid-off workers. In a few cases, mass riots engulfed cities in days of violence and had to be suppressed by the military. In many localities, protests were so commonplace that hourly radio traffic reports included updates on which intersections were barricaded.

Yet, even at this high tide of activism, acute divisions were evident among workers in the old socialist core. In the Northeast (the paragon of success under the planned economy), most wage earners framed their grievances in classical Maoist terms, while those in Shanghai and elsewhere along the central coast (where welfare benefits for the laid-off were available and new jobs relatively easy to come by) saw their travails as contract disputes. Workers in other regions were more easily frightened into silence as local authorities were far more repressive than in the northeast, and re-employment and welfare were much more precarious than on the central coast. Regional differences in political economy, distinct historical experiences of class formation, and markedly contrasting trajectories of economic reform created distinct class politics in different geographic regions. Workers in the northeast clung more fervently to their status as a leading group in the nation under Maoism, those on the central coast embraced the market and the reform project, while those in other regions were more ambivalent and sometimes frightened or confused.

Today, the state sector is less volatile. Most of the sector’s remaining workers (who still constitute more than 48 percent of all Chinese workers) have either made their peace with the Party or resigned themselves to poverty and despair. The much smaller corps of workers who remain on the job in state enterprises is now composed mostly of young, highly skilled technicians, working in large and profitable firms in sectors like coal, oil, gas, electronics, finance, aerospace, and auto production. The livelihoods of those workers have improved markedly in the last decade, even as their numbers have dwindled relative to the population at large.

Meanwhile, the children of workers laid off fifteen years ago have faced immense struggles entering a weakened labor market, but these have been tempered by much lower expectations and greater mobility, where lifetime jobs are no longer on offer and young job seekers must often travel to distant cities (where they cannot afford decent housing or access many benefits) to find any employment at all.


 The World’s Workshop

In another part of China, a very different proletariat has taken shape more organically. For the past twenty years, the Pearl River Delta, adjacent to Hong Kong and Macau, has been the epicenter of global production networks and contract manufacturing. This teeming megalopolis of nearly 100 million people, which is about the size of New Jersey, produces the lion’s share of China’s consumer goods for export—from laptops to plastic sandals, underwear to raincoats, toilets to garden hoses.

Eavesdropping at a Starbucks café across the street from the Garden Hotel on a Friday night in Guangzhou (capital of Guangdong Province, just over seventy miles from Hong Kong), one can hear textile wholesalers from Pakistan and India haggling over contracts to procure shiploads of denim jeans and silk shirts, toy company representatives from Eastern Europe closing deals for thousands of plastic dolls, and American furniture makers agreeing on prices for patio and bedroom sets. In the alleys near Beijing Road, African cell phone smugglers and informal traders of IT equipment buy and sell thousands of units in a single weekend. Meanwhile, this cornucopia of products is produced mostly in Guangzhou’s satellite cities like Foshan and especially Dongguan.

In the 1980s, Dongguan was a small town of less than 290,000 (of whom only 60,000 were urban residents). Today, it has a population as large as New York City and is one of the largest centers of low- and mid-range export manufacturing in the world. If you are reading this article in North America or Europe, your body is probably in contact with some type of product (shoes, clothing, furniture, an electronic device, etc.) made in Dongguan.

A shoe factory in Dongguan (Fang Hsieh / Flickr)

In the early years of this hive of production in the late 1980s and 1990s, workers had few rights or protections, but rarely complained; their wages and future prospects were vastly superior to the grim rural realities they’d left behind. More recently, however, they have begun to make demands and go on strike in increasing numbers.

According to the China Labour Bulletin, workers in factories throughout the Pearl River Delta went on strike at least 324 times between February 2014–15 (most labor actions go unreported). Private-sector workers in other parts of the country struck nearly as often. Strikes used to focus on relatively simple problems, like managers’ failure to pay wages or year-end bonuses, but now they often revolve around more complex issues like workplace safety, health care and pension benefits, and overtime rules. Migrant workers have become much savvier in recent years and have not hesitated to file lawsuits or to use the media or NGOs to advance their claims. No longer content simply to reap the benefits of relative upward mobility, members of the new working class have mobilized to protect existing rights and fight for new benefits. But workers’ structural position has also shifted in important ways since the early 2000s. Employers cannot rely on the same reserve army of underemployed peasants as they did during the 1990s, while private-sector workers have lost ground since the global recession because jobs have disappeared and world markets have become more competitive.


The Future of Chinese Labor Politics

Although the Chinese working class remains fragmented, the trajectories of its two largest parts have reversed since the 2008 economic crisis. The slide in living standards and job security for what’s left of the old proletariat in the state sector has halted. Meanwhile, the advantage of the new working class, employed by private firms, has worsened compared to rural livelihoods, even as these workers have become bolder and better informed. Both groups have become increasingly assertive as well as independent from the Party. They either shun the leadership of CCP–controlled unions or try to bend them to their interests, while also seeking out new partners among NGOs or even building their own new representative organizations. The shoe factory workers in Dongguan, for example, demanded (and received) support from the official union and labor bureau in pressuring their employer to pay for benefits. Other workers, in auto plants and fast-food restaurants, have sought help from unions and NGOs in pressing for the enforcement of rules governing overtime and workplace safety. Meanwhile, state factory workers, no longer as concerned about losing their jobs, now often strike or protest for better wages, safer working conditions, or more comprehensive contract provisions.

The legal framework governing labor relations has also undergone seismic change that has reshaped the politics of both public- and private-sector workers, and broken down some of the differences between them. Before the 1980s, despite the socialist system (or perhaps because of it), China had no laws that governed labor relations. The first such legislation was enacted in 1986 and 1987; it mandated that every worker had to sign a formal, time-bound labor contract with his or her employer. In theory, this should have ended informal lifetime employment arrangements and promoted market-based labor management, under which managers would have increased powers to hire and fire workers, while workers’ rights and benefits would be protected by explicit contracts. Implementation was spotty, however, especially in the still-dominant state sector.

Then came the 1994 labor law, which effectively terminated the legal basis for the “Iron Rice Bowl.” It forced tens of millions of state-sector wage earners onto the private labor market by annulling the social contract that had bound them to employers for life since the 1950s; it also facilitated roughly half of them being laid off. But for the first time in Chinese history, the law meaningfully defined the hours of a normal working day and guaranteed safe workplaces, social benefits like health care and pensions, and offered mechanisms for resolving labor disputes in the private sector. In 2008 another law protected long-term employees from being dismissed without cause and expanded representation by the official trade union across the private sector.

Gradually these laws and social benefits have helped narrow the differences between workers in the two sectors. Even though the government implements the rules inconsistently, their very existence has led to a greater convergence of the political status and interests of Chinese wage earners in state and private firms.

One result is that workers’ protests across the country now employ similar tactics to seek redress of often identical grievances—more and more workers across all sectors and all types of firms are striking over benefits and contract provisions, rather than petitioning or protesting over layoffs or unpaid wages. This is occurring despite the fact that workers in the globalized private sector have endured layoffs and wage cuts, while their counterparts in what remains of the state sector are doing better. In the wake of the 2008–09 global financial crisis, tens of millions of jobs were lost in the previously booming private sector, while government stimulus and public spending disproportionately benefited the state-owned economy. As the economy has emerged from the crisis and the labor law reforms of the past two decades have taken full effect, the political reforms the CCP has made in support of market reform have made bedfellows of state- and private-sector workers. But national and global economic forces have rewarded what remains of the one group and punished the other.

Paradoxically, the state-driven changes to laws, institutions, and business practices have made the state far less of a player in labor relations. The official union has given ground to NGOs and informal workers’ groups. When disputes occur or protests erupt, the state is much less likely to be a direct party to the actions than in the past. Workers no longer have to negotiate directly with the state over their specific grievances or seek official intervention to wrest concessions from recalcitrant employers. Today, the state is much more inclined to remain aloof while workers and managers settle their disputes in courts or through mediation, even if strikes or protests spill into the streets during the process. The government is receding to the sidelines precisely because of the success of its authoritarian drive to consolidate political control over market institutions.

Whether workers will be able to mobilize collectively across all the boundaries that still divide them is a critical question for Chinese politics and society in the years ahead. The overall volume of workers’ mobilization is up, and their grievances, tactics, and claims are becoming more similar. But nearly all protests and strikes are mounted by small groups in discrete areas of the country. If the convergence of workers’ interests can be matched by a convergence of activism, it is quite possible that a genuine and coherent labor movement could reshape the contours of Chinese politics and society. China’s leaders will need to be mindful of workers’ concerns as they grope their way toward an economic growth model based more on domestic consumption and develop a more sustainable form of authoritarian governance—that is, one that is less dependent on coercive capacity and high-stakes elite competition, and more strongly rooted in state responsiveness and popular legitimacy. But how they respond will depend first and foremost on whether workers can overcome the obstacles that have stymied labor activism in the past. Only then can they hope to give a national voice to the world’s largest working class.

William Hurst is associate professor of political science at Northwestern University. He is the author of The Chinese Worker after Socialism (2009) and co-editor of Laid-off Workers in a Workers’ State: Unemployment with Chinese Characteristics (2009) and Local Governance Innovation in China: Experimentation, Diffusion, and Defiance (2015), in addition to numerous articles and chapters on labor politics, political economy, and contentious politics in China. His ongoing research focuses on the politics of courts and legal institutions in China and Indonesia.