The recent workers’ conflicts at Honda and Foxconn show the secret of the “Chinese miracle”.

The result of the return of capitalism in China is that, behind the country’s economic growth rates, there is a huge degradation of working conditions. Most Chinese workers survive with low wages and without basic rights. There is no “harmony”, as President Hu Jintao likes to say. What prevails is injustice and super-exploitation, a situation that transforms China into a powder barrel ready to explode.

The return to capitalism

In December 1978, the Chinese Communist Party (CCP) announced a great change in the national economy. Under the full control of the Party’s dictatorship, Deng Xiaoping’s administration allowed the creation of four economic areas on the Chinese coastal area, from Hong Kong to Shanghai, to be opened to foreign investments. Those regions would be governed by a market-driven economy.

Some years later, the PCCh allowed that state-owned companies could hire workers for a limited period of time. It was the first step towards the deterioration of working conditions, because workers hired under the new law wouldn’t benefit from the social conquests of the revolution. In 1987, almost 8 million people were already working under this kind of labor contract.  

Throughout the years, privatizations of state-owned enterprises (SOE) and the rise of foreign investments changed completely the situation of the country’s workers. At the end of the 1990s, the share of workers in the SOEs was of only 12%, in contrast to 70% in 1985, and 78% in 1979. Between 1990 and 2000, 30 million jobs in the public sector disappeared. Traditional industrialized areas, like those in the north-east, were abandoned and ruined.

Under the rule of the dictatorship of the Communist Party, capitalism was restored in the country. Finally, the regime has put an end to the state monopoly of foreign trade. In November 2001, China decided to join the World Trade Organization (WTO). In doing so, its economy became even more tied to the global market: as China depends a lot on exports, it needs to negotiate international trade agreements.

On the other hand, there is no way for China to become a new imperialist country, which “will compete as an equal with the USA”. The so much celebrated Chinese economic growth is fully subordinated to the interests of imperialist enterprises and dependent on the production of cheap exports. Nearly 60% of the industries in the country are not Chinese. The return of capitalism transformed the country into a platform of exportation where multinationals obtain millions in profits.

Brutal exploitation of work

The restoration transformed China into an extremely unequal country. According to the official agency Xinhua, the richest 10% receive 23 times more than the poorest 10%. And the Gini coefficient (a measurement of uneven distribution of wealth within countries) is 0.48 and it continues to grow [1].

The working day on the shop floor is exhausting, exceeding 12 hours and even, many times, 16 hours. The current Chinese development model relies on low-cost labor of a super-exploited workforce. Low wages and the lack of labor rights are a huge appeal for multinational enterprises. The share of GDP that goes to workers’ wages has been shrinking for 22 years, from 57% in 1983 to just 36.7% in 2005. However, inflation is growing faster than wages, due to a boom in foods and housing prices, reaching 3.1%, according to the National Bureau of Statistics of China. Analysts foresee that it is going to exceed 4% in the last quarter.

The unions are controlled by the government and the ruling party, that is to say that they are always on the side of management. For this reason, any workers struggle that aspires to win is organized outside the unions, in an independent way. Not even the timid “labor contracting law”, approved in 2007, is respected. In the absence of audits, no company is in compliance.

A string of suicides at Foxconn, the world’s biggest electronics contractor, demonstrates all the drama of the workers’ living conditions. The company, a supplier to multinational corporations such as Dell, HP, Nintendo and Apple, registered at least 10 employee suicides because of harsh labor conditions. Workers live in dormitories supplied by the company and they work up to 70 weekly hours. Moreover, Foxconn pay salaries of US$ 132 for an assembly line worker. Its workers, however, organized against the harsh working conditions and were able to win a pay rise of 33%.

The capitalist restoration has meant the destruction of the social conquests obtained through the revolution of 1949. For the workers, it has meant a return to a situation of semi-slavery from which they had liberated themselves during the revolutionary process. Once again, workers are faced with the necessity to fight-back.


[1] This coefficient varies between 0 (full equality) and 1 (full inequality)  

Source: Opinião Socialista n° 407, July 2010