A sleeping giant stirs in China

July 27, 2010

David Whitehouse explains the backdrop to a labor upsurge in China's auto industry.

WORKERS IN China's booming auto industry have mounted an unprecedented series of strikes in Japanese-owned plants since late May. Out of a dozen strikes so far, all but one have won their main demands--pay raises of 20 to 50 percent--with management settling the most recent strikes at two parts-supply plants on July 21 and 22.

Strikes are nothing new in China, even though the ruling Communist Party (CP) declared them illegal in 1982. Strikes in the southern boom province of Guangdong, where the auto strikes began this spring, have numbered some 10,000 annually for several years running, according to Han Dongfang of the non-profit China Labour Bulletin, writing in the New York Times.

The auto strikes, however, have broken new ground for China's labor movement in several ways. In recent years, strikes of taxi drivers and teachers spread from city to city, but this year's strikes at Honda and Toyota plants represent the first time that workers have targeted different sites in the same industrial supply chains.

Strikers march outside the shut down Honda motor factory in Zhongshan, Guangdong province
Strikers march outside the shut down Honda motor factory in Zhongshan, Guangdong province (Tyrone Siu | Reuters)

Just as important, workers forged their own forms of organization--including, in at least two cases, democratically elected factory councils--to bypass the official CP-approved trade union, whose responses to the strikes ranged from indifferent to hostile.

Lacking a pre-existing organization that they could call their own, workers seem to have waged the recent round of battles with no coordination between different plants. Following the strikes, however, each plant has a new core of rank-and-file leaders that could potentially join up in companywide or industrywide networks to steer future rounds of struggle.

Strikers also took advantage of an unusually permissive stance taken by top CP officials, who see wage increases as a way to boost domestic demand and reduce the Chinese economy's reliance on exports. The drumbeat in the official press about the need to raise living standards, plus the example of the successful strikes themselves, have raised the expectations of China's working class as a whole--and stoked its appetite for struggle.

The auto strikes are the centerpiece for a wider upsurge of workplace action following a year of layoffs, inflation and wage stagnation. The demand to legalize independent workers' organizations, which was raised but not granted in the current wave of strikes, could become a rallying cry as the struggles continue.

JAPANESE AUTO plants represent some of the most advanced technology on China's mainland, but their finely tuned production methods are easily disrupted.

The Japanese pioneered a method known as "just-in-time" production, in which assembly plants keep only small supplies of parts on hand--and order replacement parts to arrive "just in time" from nearby plants. This money-saving production method leaves manufacturers vulnerable to strikes that can shut down a string of factories.

This spring's first auto strike, which began on May 17 at a Honda transmission and engine parts plant, shut down all four of Honda's China assembly plants and several other parts plants before management agreed to raise wages by 33 percent, according to the online China Study Group.

Just-in-time production also requires that plants be situated within quick shipping distance of one another. This makes it easier for workplace action to spread, as Yang Jian pointed out on the industry Web site Automotive News China.

The second strike, which began on June 7 at an exhaust-systems plant, broke out in the same city as the first, Foshan, in Guangdong province. The third began two days later, just 35 miles to the south, at Honda Lock in Xiaolan. Both plants had been shut down by the first strike, and workers took action, the Financial Times reported, after they learned of the first strike's success. The lack of coordination between plants was evident from press reports showing that strikers at the door-lock factory were unaware that the other Honda parts plant had gone on strike two days before.

The proximity of interdependent factories, of course, could facilitate future efforts at coordinated action. China's autoworkers are thus favorably placed to make a breakthrough in independent union organization that could serve as a model for the rest of the working class.

Such possibilities aren't lost on the leadership of the CP, which continued to publicize its support for wage increases, but began in late May to black out Chinese-language reports of the auto strikes in news targeted for the mainland.

Nevertheless, the coverage of the first struggle inspired strikes at five more Chinese plants by June 22, including two Toyota plants in the northern municipality of Tianjin, outside Beijing. After a lull of about two weeks, the ninth and tenth strikes broke out at Honda plants in the south, near where the first strikes began.

As workers take action, they are bypassing the official All-China Federation of Trade Unions (ACFTU). In fact, members of the ACFTU assaulted picketers in the first strike in Foshan on May 31, sending four to the hospital, according to Lu Zhang, writing in Labor Notes. "That was bizarre," one striker told the South China Morning Post about the attack. "I don't know who those people were, and I don't know what they do." The striker added, "Every month, we pay five yuan out of our pockets to the union, but I don't know what for."

A participant in the Honda Lock strike told the Morning Post that his "factory's trade union chairman is also the factory's deputy manager and other 'union representatives' are also senior managers." Even at private companies, trade union staff--including company management--are "civil servants on the government payroll," as the Post pointed out.

Because workplace activists risk imprisonment, not to mention torture, for forming their own ongoing organizations, they have tended to operate through informal networks in periods leading up collective action. When strikes do break out, workers have created temporary forms of organization adapted to the immediate tasks of the struggle.

In the strike at Honda Lock, this process reached a higher expression, as the 1,500 workers elected a factory council. As the New York Times reported on June 10, "The workers here say that employees in each department of the factory held a meeting, discussed who would be their most persuasive representative, and then selected that person to represent them on a factory-wide council of about 20 workers that has held negotiations with management."

The Honda Lock strikers also demanded the freedom to form an independent union. For their audacity--for raising what is, in effect, a political demand--they seem to have faced even more repression than did workers in the other auto strikes. When Honda Lock stonewalled on the workers' wage demands, the Times reporter found that:

there was no sign that any workers were going back into the factory. One worker said that the newly chosen factory council was not holding any negotiations because it could be physically dangerous for all of the representatives to gather in one place with management and the authorities.

Within days, Honda Lock hired scabs to replace the strikers, and one strike leader went into hiding. The strikers returned to work on June 18, apparently forced to accept a pay raise that doesn't keep up with inflation, according to Labor Notes. Workers may rally for another fight, but for now, their struggle marks the only defeat in a string of victories.

In the following week, strikers at a Toyota plant in Guangdong's capital, Guangzhou, also elected their own factory council--and also demanded the right to form a union, according to the South China Morning Post:

The workers elected more than 20 representatives yesterday morning ahead of talks with management in the afternoon. Workers were encouraged to write down their demands and expectations on scraps of paper and hand them to their representatives before the discussion. Their demands included a pay rise of 800 yuan, the establishment of an independent union, air conditioning for their dormitory and a promise that there would be no sackings when the strike was over.

FOR THOSE on the left, the election of a factory council may bring to mind some of the historic high points of workers' struggle, such as the strikes in Italy's auto factories following the First World War. Those actions, however, took place against the backdrop of international struggle that included the Russian and German Revolutions, citywide workers' councils that contended for state power in several countries, and militant political parties that drove the struggle forward at the workplace level.

The real similarity between China's factory councils and these earlier examples is a small but very significant one: Factory councils are responsive formations that grow directly out of the needs of workers in struggle. That is their strength, but is also accounts for their limits. They don't set up infrastructure for struggles over the longer haul, and they don't reach outside individual workplaces. They may, however, serve as precursors for such organizations--real trade unions and even opposition political parties, built from the bottom up.

It's worth noting that very few rank-and-file leaders who built industrial unions in other countries have limited their ambitions to "pure-and-simple trade unionism." Some vision of a transformed society--whether based on socialist, anarchist or social-gospel Christian ideas--has been crucial to shaping the core cadres of activists committed to the life of risk, sacrifice and hard work that is necessary to building workers' combat organizations.

This kind of cadre, or leadership network, is what the CP fears most. According to a Financial Times report:

"It is a new form of strike--a very symbolic event," said Liu Cheng, a professor at Shanghai Normal University and an outside adviser in the drafting of the 2008 labor law. After wages have been held down for long periods, he said, "finally there is this explosion. It is because of workers' growing awareness of labor rights, and more talk and debate about the subject."

In some sections of the ruling Communist Party, such ideas will be interpreted as a considerable threat, given that a wave of copycat strikes could help forge independent and credible groups of organized labor outside the control of the party and its official body, the All-China Federation of Trade Unions.

At the same time, ACFTU affiliates in Guangdong and Guangzhou are striving to bolster their own faltering credibility by sponsoring an alternative to independent unions and bottom-up factory councils.

In collaboration with the provincial government, the union federation is drafting a regulation to establish "legally binding wage negotiation system," China Labour Bulletin reported on July 22. Workers would still be prohibited from forming permanent unions and discouraged from taking strike action, but the legislation would allow workers, "under the leadership of the enterprise or regional union," to "elect representatives to negotiate with management."

WITH STRIKES, riots and demonstrations on the rise in the two decades since the 1989 crackdown against pro-democracy protests in Tiananmen Square, the role of local CPs has generally been like that of the ACFTU. Officials use persuasion and coercion to get the participants to cease their action and accept CP or AFCTU "mediation" to resolve the grievances.

In the current wave of auto strikes, there are signs that local CPs began by responding in the usual way, but eventually changed course to a more permissive attitude as they followed the lead of top CP leaders in Beijing. As the Financial Times noted:

For workers at the transmission factory [the site of the first strike], initial coverage in the local media and sympathetic commentaries from outlets including Xinhua provided both moral support and protection.

In an open letter released on June 3, leaders of the transmission factory strike wrote: "We note yesterday's Xinhua commentary that criticized Honda and pointed out...workers' rights of knowledge, participation, expression and supervision should be expanded."

Auto industry analyst Yang Jian wrote later, "Beijing's sympathy for the strikers leaves [the auto-parts] suppliers no choice but to raise the workers' wages. And this marks a big change in China's labor climate."

As part of its response to the economic crisis of 2008-09, the central government halted provincial and municipal measures to increase minimum wages. At the same time, inflation, particularly in housing costs, further eroded workers living standards. In 2010, the CP has loosened its control over wages, and 20 provinces have already responded by raising their minimums--as they compete for labor resources in China's renewed boom, according to China Labour Bulletin.

Starting pay for most autoworkers is set at the local minimum, which is about $160 per month in the industrial centers of Shanghai, Guangzhou and Shenzhen. As urban prices rise, a worker's whole paycheck--compensation for working 12 hours a day, six days a week--tends to be spent on rent, food and clothing, wrote Han Donfang in the New York Times.

Top party officials, long content to keep workers in such harsh life conditions in order to attract investment, now realize that workers need more spending money to keep business profitable in the next phase of China's growth. "The central government attitude toward raising wages is undoubtedly positive," a Chinese labor law professor told the New York Times, "because it's directly tied to boosting domestic consumption and restructuring the economy."

Many commentators have noted the significance of the CP's tolerance for strikes against Japanese manufacturers, because this stance has allowed the party to pose as the nationalist defender of workers' interests against arrogant and high-paid foreign managers who refuse to learn Chinese.

In fact, the state-controlled joint-venture partner of several Japanese plants in Guangzhou has supported workers' wage demands against Honda and Toyota. Zhang Fangyou, chair of Guangzhou Automobile (GAC), told the Financial Times, "Entry-level workers aren't paid enough. It's a structural problem." The Financial Times report continued:

According to Mr. Zhang, foreign managers often have a poorer understanding of worker grievances and dispute resolution channels than their Chinese counterparts. In at least three instances, GAC has dispatched senior executives to help its Japanese partners resolve their labour disputes.

Lacking support from Chinese officials, including their own joint-venture partners, Japanese managers have been forced into the current string of concessions. Far from adopting a hands-off posture, China's officialdom has maintained the closest possible engagement during the strike wave in order to gain the result that it wants (wage increases) and head off the results it doesn't (independent workers' organizations).

The autoworkers have felt their own strength, however--and they haven't suddenly begun to trust the Communist Party--so there may soon be new rounds of struggle as workers seek to enforce the gains they've won.

The fortunes of Chinese autoworkers could shift dramatically in the next few years if the country's booming domestic market for cars levels off, as many observers expect.

China is now the world's largest market for automobiles, with sales of 13 million last year and 9 million in the first six months of this year, according to China's official news agency Xinhua. Sales jumped 45 percent in 2009 because of rebates initiated in late 2008 as part of China's stimulus program. General Motors now sells more cars in China than it does in the United States.

Car sales declined from May to June of this year, however, and Chinese officials are worried that automakers' plans to expand production capacity may soon outstrip demand. Ge Baoshan, a Communist Party official at Jilin University, pointed out to Xinhua in July that "China's public transportation system is witnessing rapid development. Besides, automobiles are durable consumer goods," so new buyers are unlikely to make further purchases for several years. "Once the consumer's enthusiasm towards automobiles cool down," said Ge, "the overcapacity issue will emerge."

China's top 12 auto manufacturers plan to build up their production capacity to 32.5 million units by 2015, says Xinhua, but the auto industry's own "blue book" predicts that the domestic market will reach only 22 million units by then.

The creation of such a large overcapacity would change the conditions for workplace struggle. Workers have special leverage now because labor is in short supply--and the bosses want to settle strikes quickly because auto sales are booming. Workers' new methods of self-organization will face sharper challenges if auto sales level off and the bosses begin to deal with their overcapacity by laying off workers.

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