China's unions starting to flex their muscles

Hamish McDonald
May 12, 2007

THE Chinese boom that funded this week's federal budget generosity is evident in the queue of ships anchored off Newcastle waiting weeks to load up coal.

However, rather than getting complacent about that demand for our raw materials and energy, we should look at some of the stresses building up in China's pressure-cooker economy.

Under increasing threats from the Democrat majority in the US Congress, China has been speeding up its stealthy revaluation of the yuan to the point where it has become stronger against the US dollar than Hong Kong's pegged currency.

The manoeuvre has a sound economic rationale, to nudge the economy into higher value-addition, and in the short term to discourage speculative funds going to domestic real estate and the world's most irrational stockmarket bubble.

But it will also further trim the razor-thin profit margins for Chinese factory owners supplying low-end goods to ruthless buyers from Western retail chains like Wal-Mart.

At the same time, the export-oriented factory zones along China's south-eastern coastal sweep have been hit by labour shortages, rising wages, and now strikes.

During these booms it used to be unions in such as Australia, the US and Canada which disrupted shipments to extract more money for workers, while Japanese dockers were kept in line by the yakuza (crime syndicates), and the Chinese by the tame union arm of the Communist Party.

Thanks to Chris Corrigan and the Howard Government, Australia's wharfies have been tamed, but now their Chinese counterparts are starting to show some muscle.

On May 1, the international labour day, about 400 Chinese wharfies at Chiwan, one of the world's biggest container terminals in Shenzhen, just outside Hong Kong, walked off for 24 hours to press for better overtime pay.

In the nearby Macau special enclave, a May Day parade turned into a rampage by workers angry at the frenetic casino construction boom being taken over by illegal mainland labour. Police firing shots in the air to quell them hit a passer-by.

Authorities in Shenzhen raised the local minium wage 20 per cent last year, but are being outbid by provinces in the hinterland closer to the rural sources of a new labour force.

This is making workers in factory zones increasingly bolshie about low and delayed wages, unpaid overtime and poor dormitory conditions.

Angry workers are nearly always the most dangerous threat to authoritarian regimes, and the workers' paradise of the People's Republic is no exception.

In fear of a movement like Poland's Solidarity, independent trade unions are banned and unofficial efforts to organise workers meet with the full force of the security agencies.

To ease the social pressures a new labour law is being drafted and the long-dormant All-China Federation of Trade Unions has been galvanised into battle for the less controversial industrial issues - workplace safety, wages arrears and welfare for migrant workers.

In theory it has forced Wal-Mart to allow staff in its Chinese supermarkets to form unions, something the company blocks in its home operations.

The labour question is one which finds China's foreign interlocutors divided.

One of America's most powerful unions, the United Steelworkers, has just come out in favour of China's new labour law as a step away from the sweatshop, giving unions a bigger role and making employment more secure.

The law has been just as strongly opposed by the American Chamber of Commerce and some other foreign investment lobbies, which say it is a step back to the old communist "iron ricebowl" of a guaranteed lifetime job and workplace social benefits.

So far, we don't know where the Howard Government stands on the emerging labour issue in China.

At home, the Government appears to regard the right to organise in the workplace as dispensable for Australians. Yet labour rights have been included in the annual human rights dialogue it started with Beijing, and were the "theme" of one annual round a couple of years back.

The same conflict is seen with employer and industrial organisations, which tend to applaud the whittling away of trade union power here while lamenting the transfer of manufacturing industries to low-income states like China.