Since May, a number of factories in China have been hit by strikes and other forms of labor disputes, and an end seems to be nowhere in sight. Most of the plants targeted by the strikers are subsidiaries of overseas corporations. Especially hard hit have been the subsidiaries of Japanese companies, including two automakers — Toyota and Honda.
Law enforcement authorities are no longer suppressing the strikers as they did in the past at the request of management. Instead, they are taking a wait-and-see attitude, apparently because the general public overwhelmingly supports the workers’ demands for pay hikes and because the central government appears to have given tacit approval of the strikes.
Not only have these labor disputes played havoc with major manufacturing facilities in many parts of the country, they have also brought to the fore a serious dispute within the Chinese Communist Party as to how to reconcile workers’ demands for higher wages with the need to maintain high economic growth — before the party’s 18th National Congress convenes within two years.
According to Shen Caibin, a Chinese professor who teaches at Tama University in Tokyo, there are two reasons why workers in China have struck plants operated by Japanese firms especially hard. One is the relatively low wages paid at these firms and the other is the slow pace at which responsibilities are delegated to local workers.
Workers at Honda’s auto parts plant in Guangdong Province, for example, are being paid around 1,500 yuan per month, whereas managers dispatched from the parent company receive more than 100,000 yuan and live in luxurious quarters.
Moreover, says professor Shen, Japanese subsidiaries lag far behind their European counterparts in appointing local personnel to management-level positions. Among European-run subsidiaries, more than half of the managerial posts are filled by Chinese, who demonstrate much better capability in handling labor disputes than do managers dispatched from a corporate headquarters.
As the number of migrant workers moving from the farming regions to work at manufacturing factories in big cities swells above 230 million, the disparity between the rich and the poor has been exacerbated, despite President Hu Jintao’s pursuit of the goal of building a “harmonious society.”
This has fed a sense of inequality that has spread rapidly among the populace and resulted in sharply higher rates of crime and suicide. The Chinese government is currently working on its 12th Five-Year Plan (2011-2015), which will be Hu’s final chance to influence the achievement of his goal, since only two years remain in his tenure.
The plan, to be debated by the Chinese Communist Party’s Central Committee in its plenary session in October, reportedly calls for doubling national income while maintaining a relatively high rate of economic growth.
By putting special emphasis on raising wages for lower-income brackets, the plan aims to narrow the gap between the haves and the have-nots. Another key feature of the plan is to reduce reliance on export- oriented manufacturing industries that depend on foreign capital and, instead, to place greater emphasis on promoting high-tech industries and boosting domestic demand.
Executive Vice Premier Wang Qishan, the central figure in drafting the five-year plan, is already facing opposition on some of the specifics. One insider says: “Doubling national income will require an annual economic growth rate of more than 12 percent. But that will only exacerbate the economic disparity. Nor is it an easy task to replace the existing manufacturing industries in the coastal areas with higher value-added, high-tech industries.
“With cutthroat competition among companies and low profit margins, abiding by minimum wage standards as promulgated by local governments could lead to bankruptcies.”
Wang Yang, Hu’s right-hand man who holds the highest Communist Party post in Guangdong Province, tends to support striking workers, saying their demands are legitimate. Prime Minister Wen Jiabao also has said he sympathizes with such workers. There is no doubt that Hu himself is of the same opinion, as both Hu and Wen have attached special importance to improving the livelihood of migrant workers following enactment of the labor contract law.
The harmonious society doctrine promoted by Hu and Wen, however, has met resistance from a Shanghai group that includes President Jiang Zemin and from what is known as the “Crown Prince Party” (under the leadership of Xi Jinpin, a member of the Communist Party’s Politburo Standing Committee).
Members of these groups take the position that maintaining a high economic growth rate is the only way to eradicate unemployment and other social ills and to transform China into a major power.
Although the Crown Prince Party has not made any official statement on labor strikes, its members are known to oppose, for the most part, wage hikes for migrant workers, which they say will only cause a crisis for enterprises and encourage foreign investors to divert their funds to other countries.
Hu and his followers take a completely opposite view. They think it is important to achieve a balance between economic development and social stability. For that reason, they advocate increasing the income of those who have low social status and who live in less developed regions of the country.
They believe that only by working toward that end will social stability be attained, domestic consumption grow and China become less reliant on investments from abroad.
The confrontation between these two schools of thought dates back to 2003 when Hu assumed the presidency, according to a well-informed source who predicts that how the next five-year plan is drawn up could become a good indicator of the final result of the power struggle going on within the Communist Party.
Ultimately, the source says, the most crucial question is which of two powerful aspirants will succeed Hu at the National Congress of the party in 2012 — Xi of the Crown Prince Party or Li Keqiang, incumbent executive vice premier and Hu’s confidant.
This is the bitter political struggle that lies behind the series of labor disputes that began at Honda’s component production plant in May. It is difficult at present to predict whether workers will continue to strike or whether the government will change its policy and begin trying to suppress them.
It appears all but certain, though, that the intraparty ideological battle will grow only more fierce as the time approaches for convening the party’s next National Congress.
This is an abridged translation of an article from the August issue of Sentaku, a monthly magazine covering Japanese political, social and economic scenes.