1. The concept of a “social contract” or “social compact” in which workers in socialist states were politically quiescent in exchange for extensive welfare benefits and a lax workplace was developed by Alex Pravda, “East-West Interdependence and the Social Compact in Eastern Europe,” in Morris Bornstein, Zvi Gitelman, and William Zimmerman, eds., East-West Relations and the Future of Eastern Europe (London: Allen and Unwin, 1981), 162–90. See also Valerie Bunce, Subversive Institutions: The Design and Destruction of Socialism and the State (Cambridge: Cambridge University Press, 1999), 33–34.
2. See Bunce (1999), 21–22.
3. “Iron rice bowl” is a term used to describe the system of lifetime employment and social welfare benefits enjoyed by China’s urban working class. These benefits were distributed through the work unit rather than from the state directly.
4. Nicholas Lardy, “Economic Engine? Foreign Trade and Investment in China, The Brookings Review 14:1 (Winter 1996); Yanrui Wu, Foreign Direct Investment and Economic Growth in China (Cheltenham, UK: Edward Elgar; 1999). Lardy found that while contributing greatly to China’s export boom, FIEs did not provide many backward linkages to the domestic economy nor did the presence of FIEs contribute to the reform of SOEs given their still-continuing protection. His FDI data for the article ends in 1994, so the analysis misses the later boom years in FDI and their effects. Yanrui Wu and others find links between FDI and economic growth, but show that the linkage is not a one-way causal relationship between FDI and GDP. See especially Jordan Shan, Gary Tian, and Fiona Sun, “Causality between FDI and Economic Growth,” in Yanrui Wu (1999): 140–56. Yasheng Huang discusses some of the negative effects of China’s dependence on FDI in Selling China: Foreign Direct Investment during the Reform Era (New York: Cambridge University Press, 2003).
5. This argument is promoted by policy analysts, business executives, and academics who argue that greater engagement with the outside world, mainly through trade and economic investment, has a liberalizing effect on Chinese domestic politics. While most treatments of this question readily admit the presence of negative effects, the overwhelming conclusion is that interaction with global capitalism has liberalizing effects on politics and society. For example, Douglas Guthrie, Dragon in a Three-Piece Suit: The Emergence of Capitalism in China (Princeton: Princeton University Press, 1998); and “Transition to a Market Economy: The Transformation of Labor Relations in China’s Global Economy,” paper presented at the Annual Conference of the Association of Asian Studies, Chicago, March 2001; Michael Santoro in Profits and Principles: Global Capitalism and Human Rights in China (Ithaca: Cornell University Press, 2000) addresses the positive and negative effects of MNC investment in China while trying to lay out a way for investment to have “moral integrity.”
6. Anita Chan, Chinese Workers under Assault: The Exploitation of Labor in a Globalizing Economy (New York: M. E. Sharpe, 2001); Greg O’Leary, ed., Adjusting to Capitalism: Chinese Workers and the State (New York: M. E. Sharpe, 1997).
7. This is not the criticism that it may seem to be. China is a large and complicated country; in order to be good and careful, research must be limited. The criticism leveled here is at broad generalizations that have narrow empirical foundations. Guthrie’s positive conclusions on the effects of FDI and marketization in general are drawn from research in Shanghai. Chan’s analysis of labor exploitation looks mainly at industries that are labor-intensive, export-oriented, very cost sensitive, and located in China’s southeastern coastal regions where overseas Chinese investors are dominant. Shanghai, on the other hand, attracts FDI from a more diverse group of investors including Japanese, American, and European investors.
8. Interview, Chinese Enterprise Management Association, March 1997.
9. Interview, Tangshan SOE general manager, July 1999.
10. Interview, Tangshan SOE personnel manager, May 2001.
11. Interview, Hebei rural collective general manager, July 1997.
12. Jung-Dong Park, The Special Economic Zones of China and Their Impact on Its Economic Development (Westport, Conn.: Praeger Publishers, 1997), 5.
13. Interview, Tianjin urban collective, manager, General Affairs Office, March 1997.
14. Interview, Tianjin urban collective, manager, General Affairs Office, July 1997.
15. The political connotation of calling a Communist Party Secretary “just like a landlord” should not be underestimated. Interview, Korean-contracted SOE worker, Tianjin, March 1997.
16. I date large-scale privatization as starting in 1997. In some regions, privatization had already begun.
17. Ronald McKinnon, “Gradual versus Rapid Liberalization in Socialist Economies: The Problems of Macroeconomic Control,” in Michael Bruno and Boris Pleskovic, eds., Proceedings of the World Bank Annual Conference on Development Economics, 1993 (Washington, D.C.: World Bank, 1994); John McMillan and Barry Naughton, “How to Reform a Planned Economy: Lessons from China,” Oxford Review of Economic Policy 8 (Spring 1992). Anders Aslund lists several reasons for why Soviet and Chinese reforms had to differ. He includes the role of FDI, in particular overseas Chinese capital, as crucial to China’s economic success. His analysis, however, is quite different; as he notes, “In a way, overseas Chinese represented an émigré civil society, making up for the lack of one within Chinese itself.” The analysis here presents a much different role for FDI and overseas Chinese capital. Anders Aslund, How Russia Became a Market Economy (Washington, D.C.: Brookings Institution, 1995), 16.
18. Lawrence Lau, Yingyi Qian, and Gerald Roland, “Reform without Losers: An Interpretation of China’s Dual-Track Approach to Transition,” Journal of Political Economy 108 (February 2000).
19. I try to account for why Chinese economic reforms, particularly reforms involving urban workers, have not led to widespread political instability and demands for political liberalization. These demands, had they appeared, may or may not have led to a process of democratization. Therefore, this argument falls short of explaining the failure or success of democratization, but rather focuses on an arguably prior social condition: demands for political change from society.
20. See Kathryn Sikkink, Ideas and Institutions: Developmentalism in Brazil and Argentina (Ithaca: Cornell University Press, 1991). On China’s developmentalist local governments see Marc Blecher and Vivienne Shue, “Into Leather: State-Led Development and the Private Sector in Xinji,” China Quarterly (2001); and their earlier book on the same county, Tethered Deer: Government and Economy in a Chinese County (Stanford, Calif.: Stanford University Press, 1996); and Marc Blecher, “Developmental State, Entrepreneurial State: The Political Economy of Socialist Reform in Xinji Municipality and Guanghan County,” “in Gordon White, ed. The Road to Crisis: The Chinese State in the Era of Economic Reform, (London: Macmillan, 1991), 265–91. See also Jonathan Unger and Anita Chan, “Inheritors of the Boom: Private Enterprises and the Role of the Local Government in a Rural South China Township,” China Journal 42 (July 1999) 45–74.
21. Gordon White and Robert Wade, “Developmental States and Markets in East Asia: An Introduction,” in Gordon White, ed., Developmental States in East Asia (New York: St. Martin’s Press, 1988), p. 1.
22. The East Asian development model has served as an alternative model for Chinese leaders since at least the late 1980s. Its attractiveness lies not only in the economic success of many East Asian economies in the post–World War II era, but also in its rejection of both state socialism and neoliberal capitalism. Like socialism, the East Asian “developmental state” retains the primacy of a strong central state directing economic growth. Moreover, democracy is not a prerequisite of East Asian economic success. Unlike socialism, the East Asian developmental model entails integration into the global economy and has yielded high rates of economic growth for long periods of time. On East Asia see Gordon White ed., Developmental States in East Asia (Basingstoke, UK: Macmillan, 1988). On the application of developmentalism in China see Joseph Fewsmith, China after Tiananmen: The Politics of Transition (New York: Cambridge University Press, 2001), 77.
1. Joseph A. Schumpeter, “Capitalism in the Postwar World (1943),” in Harry F. Dahms, ed. Transformations of Capitalism: Economy, Society, and the State in Modern Times (New York: New York University Press, 2000), 154.
2. See Lau, Qian, and Roland (2000).
3. Works on labor that draw attention to the declining status of urban state-sector workers as well as the abysmal working conditions of migrant and rural workers include Anita Chan, China’s Workers under Assault: The Exploitation of Labor in a Globalizing Economy (New York: M. E. Sharpe, 2001); “Chan Globalization, China’s ‘Free’ (Read Bonded) Labour Market and the Chinese Trade Unions,” Asia Pacific Business Review, special issue on Globalization and Labor Market Regulation (2000); Ching Kwan Lee, “From Organized Dependence to Disorganized Despotism: Changing Labour Regimes in Chinese Factories,” China Quarterly 157 (1999); and Dorothy Solinger, Contesting Citizenship in China: Peasant Migrants, the State, and the Logic of the Market (Berkeley and Los Angeles: University of California Press, 1999).
4. Barry Naughton, Growing Out of the Plan: Chinese Economic Reform, 1978–1993 (New York: Cambridge University Press, 1995), 329.
5. I am dating FDI liberalization from 1979 with the decision to form Special Economic Zones (SEZs). Development of the private sector began in the 1980s, in particular the rise of the “Wenzhou model” which popularized the development of private businesses in coastal Zhejiang. The national development of the private sector, however, occurred after 1992. SOE reform has occurred since the early 1980s; however, most of these reforms were of the “tinkering” variant, to use Kornai’s definition. Significant reform of the SOE sector should be dated from 1992 with limited privatization recognized by the central government in 1997 at the Fifteenth Party Congress. See Barbara Krup and Hans Hendrischke, “China Incorporated: Property Rights, Networks, and the Emergence of a Private Business Sector in China,” Managerial Finance 29:12 (2003). On the later privatization of rural collective industry, see Susan H. Whiting, Power and Wealth in Rural China: The Political Economy of Institutional Change (New York: Cambridge University Press, 2001).
6. Other works have also focused on China’s liberalization to foreign trade and investment as a dynamic process in which domestic and external interests were important in pushing forward reform. They include Jude Howell, China Opens Its Doors: The Politics of Economic Transition (Boulder, Colo.: Lynne Reinner Publishers, 1993); Dali Yang, Beyond Beijing: Liberalization and the Regions in China (New York: Routledge, 1997); and David Zweig, Internationalizing China: Domestic Interests and Global Linkages (Ithaca: Cornell University Press, 2002). Howell’s book also examines the effect on labor politics, but does not explore in detail the effects of openness on domestic firms.
7. Peter Evans, “The Eclipse of the State? Reflections on Stateness in an Era of Globalization,” World Politics 50:1 (1997), 65. The globalization debate is wide-ranging and contradictory. The strand that I question here is, however, one of the most powerful subthemes within the globalization debate and unites both neoliberal proponents of globalization and neo-Marxist critics of global capitalism with the assumption that globalization reduces state power. For a summary of the globalization debates see David Held, Anthony McGrew, David Goldblatt, and Jonathan Perraton, Global Transformations: Politics, Economics, and Culture (Stanford, Calif.: Stanford University Press, 2001), 2–20.
8. Seymour Martin Lipset, “Some Social Requisites of Democracy: Economic Development and Political Legitimacy,” American Political Science Review 53 (March 1959).
9. For a recent review and in-depth analysis of the relationship between democracy and development see Adam Przeworski and Fernando Limongi, “Modernization: Theories and Facts,” World Politics 49 (January 1997); and Adam Przeworski, Michael Alvarez, Jose Antonio Cheibub, and Fernando Limongi, Democracy and Development: Political Institutions and Well-Being in the World, 1950–1990 (New York: Cambridge University Press, 2000). Przeworski et al. find that the causal link posited by modernization theories is not strongly supported by the empirical evidence.
10. Held et al. divide this “hyperglobalist” thesis into neoliberal and radical/neo-Marxist camps. There is of course much disagreement on the normative implications of convergence, particularly the debates on the fate of the social welfare state and the implications of globalization on the environment and labor. David Held, Anthony McGrew, David Goldblatt, and Jonathan Perraton, Global Transformations: Politics, Economics, and Culture (Stanford, Calif.: Stanford University Press, 1999), 3–5.
11. Susan Strange, The Retreat of the State: The Diffusion of Power in the World Economy (Cambridge: Cambridge University Press, 1996).
12. Joel Hellman, “Winners Take All: The Politics of Partial Reform in Post-communist Transitions,” World Politics 50:2 (January 1998), 203–35.
13. I use Yang’s “competitive liberalization” here but the concept is also similar to Zweig’s “segmented deregulation.” It could be argued that Zweig’s definition is more comprehensive because the notion of deregulation focuses attention on the power and rents that accrued to “gatekeepers” of the deregulation process. Despite these differences of emphases, I use these terms in this chapter more or less interchangeably to convey the notion of uneven liberalization across regions. See Zweig (2002); Yang (1997).
14. Recombinant property is defined as “novel forms of interorganizational ownership that blurred the boundaries of public and private, as well as the boundaries of the enterprises themselves.” David Stark and Laszlo Bruszt, Postsocialist Pathways: Transforming Politics and Property in East Central Europe (New York: Cambridge University Press, 1998), 143.
15. SOEs competed increasingly with the nonstate sector generally for profits and market share. I focus here specifically on competition for skilled labor and managerial talent. On competition for labor, especially skilled labor, and the SOE sector’s declining labor monospony, see Margaret Maurer-Fazio, “Labor Reform in China: Crossing the River by Feeling the Stones,” Comparative Economic Studies 37:4 (Winter 1995): 111–23 and Xiao-yuan Dong and Louis Putterman, “China’s State Owned-Enterprises in the first Reform Decade: An Analysis of a Declining Monopsony,” Economics of Planning 35 (2002): 109–39.
16. Gabriella Montinola, Yingyi Qian, and Barry Weingast, “Federalism, Chinese Style: The Political Basis for Economic Success,” World Politics 48:1 (1996), 50–81.
17. See note 13.
18. For variations on this argument, which has become an increasingly important part of an explanation for China’s reform success, see Zweig (2002); Yang (1997); and Montinola, Qian, Weingast (1996).
19. Zweig (2002).
20. Some of the initial consequences emanating from ownership changes were noted by Barry Naughton, “Implications of the State Monopoly over Industry and Its Relaxation,” Modern China 18:1 (January 1992), 14–41. Naughton focuses on the fiscal consequences of the growing nonstate sector. This is an important early article on ownership liberalization.
21. Dorothy Solinger (1999), chaps. 5–6. For estimates of labor mobility and the hiring of migrants, see China in the World Economy: The Domestic Policy Challenges (Paris: OECD, 2002), 551. They find that nonstate urban firms are more than five times more likely to hire migrants than are SOEs.
22. Robert Weller and Jiansheng Li,. “From State-Owned Enterprise to Joint Venture: A Case Study of the Crisis in Urban Social Services,” China Journal 43 (January 2000), 83–99); Feng Chen, “Industrial Restructuring and Workers’ Resistance in China,” Modern China 29:2 (April 2003), 237–62; X. L. Ding, “Illicit Asset-Stripping in Chinese Firms,” China Journal 43 (January 2000).
23. Edward Gu, “Foreign Direct Investment and the Restructuring of Chinese State-Owned Enterprises, 1992–1995: A New Institutionalist Perspective,” China Information 12:3 (1997–98); Shu-Yun Ma, “Foreign Participation in China’s Privatization,” Communist Economies and Economic Transformation 4 (1996); Yasheng Huang, Selling China: Foreign Direct Investment during the Reform Era (New York: Cambridge University Press, 2003), 130.
24. An analysis of the logic of institutional breakdown in socialist states is Valerie Bunce, Subversive Institutions: The Design and the Destruction of Socialism and the State (Cambridge: Cambridge University Press, 1999). See also Andrew Walder, ed., The Waning of the Communist State: Economic Origins of Political Decline in China and Hungary (Berkeley and Los Angeles: University of California, 1995).
25. Shaomin Li, Shuhe Li, and Weiying Zhang, “The Road to Capitalism: Competition and Institutional Change in China,” Journal of Comparative Economics 28 (June 2000): 269–92. This article is a large, quantitative study of firms using China’s industrial census. It does not focus on the particular effects of foreign-invested firms but generally finds that cross-regional competition leads to market-conforming behavior by managers of SOEs and collectives.
26. Articles in the national media as well as more scholarly articles on the problems of reform hammered away at this point of an “unequal playing field” between SOEs and FIEs. These articles focused on the heavy employment burden, the gap in managers’ salaries, and the inability of SOEs to retain skilled workers. “Should one take a yearly salary of hundreds of thousand RMB?” (shubaiwanyuan nianxin gaibugai na) Nanfang Zhoumo, December 20, 1996, 2; “How can SOEs retain people?” (guoqi zenyang liuzhuren) Renmin Ribao, November 19, 1996, 10; (qiangzhanshichang bixu guimo jingying) Zhongguo Gongshang Shibao, April 22, 1997, 7; “Establish a Consciousness of Talent, Perfect the Two Mechanisms,” (shulirencaiyishi jianquan liangge jizhi) Workers Daily, April 8, 1997, 7. The two mechanisms include the collective contract system (to make it more difficult for workers to leave) and the incentive wage system (to improve skilled workers’ wages). “Skilled Workers Call for Policy Help,” (jishugongren huhuan zhengce fuzhu) Workers Daily, December 13, 1996, 3; “Perfect the Adjustment Mechanism for the Distribution of Individual Salaries,” (wanshanqiyegerenshouru fenpei tiaokongjizhi) Zhongguo Gongshang Shibao, May 5, 1997, 3; “The Rights and Interests of Enterprises Must Also Be Protected,” (qiyequanyi yebixu weihu) Jingji Ribao, October 9, 1996.
27. Barry Naughton uses this word, “disarticulation,” to describe the relationship between the foreign-invested sector of the economy and the rest of the Chinese economy. Naughton (1995).
28. These statements are based on the author’s observations while doing field research in firms from 1997 to 2003. In joint ventures, management positions were often filled by former SOE employees (often the partner of the foreign firm), but production positions were almost exclusively filled by young urban residents or young rural migrants. In all of the foreign-invested firms except the Sino-American JVs, migrant workers were used for production positions. In the Japanese JVs, the American WFOE, and the Hong Kong JV migrants made up an increasing part of the workforce (new hires were predominantly migrants). In the Taiwanese companies, all of the production workers were migrants. Woman workers make up the vast majority of the workforce in the electronics industry and other relatively labor-intensive industries. See Ching Kwan Lee, Gender and the South China Miracle: Two Worlds of Factory Women (Berkeley and Los Angeles: University of California Press, 1998), 68–70.
29. In a speech at the National Conference of Labor Dispute Resolution, an SOE manager complained of the inability of SOEs to retain workers as they left in droves for the private and foreign sectors. Chen Quansheng stated, “presently SOE workers fire the enterprise more than SOEs fire workers.” “Speech of Chen Quansheng at the National Conference of Labor Dispute Resolution,” Handling and Research of Labor Disputes, (laodong zhengyi chuli yu yanjiu) (January 1996). Carrie Lee, “Industry Frustrated by Job-Hopping, South China Morning Post, August 9, 1997.
30. Mary Gallagher, “Why Labor Laws Fail to Protect Workers,” China Rights Forum (Summer 1997), 12–15.
31. This schematic depiction of legal convergence is borrowed from an article explaining how to reduce staff in Japanese-invested enterprises in China. In an interview in 1999, one of the authors (a Japanese lawyer representing Japanese-invested enterprises in China) described how important the convergence of labor laws was in determining changes in enterprise behavior. In Hiroaki Tsukamoto et al., “Restructuring FIEs in China and Procedures to Cut Staff (chugoku niokeru gaisho taishi kigyo no resutora oyobi) International Commercial Law Journal (kokusai shoji ho) 27:5 (1999) 1–20; Interview, Japanese labor lawyer, Shanghai, July 1999; interview, Chinese labor lawyer, Shanghai, July 1999.
32. See articles in Gary Jefferson and Inderjit Singh, Enterprise Reform in China: Ownership, Transition, and Performance (New York: Oxford University Press, 1999); World Bank, Bureaucrats in Business: The Economics and Politics of Government Ownership (New York: Oxford University Press, 1995). There still remains considerable debate as to whether state-owned enterprise inefficiency is a result of differences in pure ownership or policy differences, especially political or social obligations of state firms. For the political and policy causes of SOE sector inefficiency see John Waterbury, Exposed to Innumerable Delusions: Public Enterprise and State Power in Egypt, India, Mexico, and Turkey (Cambridge: Cambridge University Press, 1993), 107–34.
33. Problems of the SOE sectors are detailed in Edward Steinfeld, Forging Reform in China: The Fate of State-Owned Industry (Cambridge: Cambridge University Press, 1998) and Jiagui Chen, Research on the Development of China’s State-Owned Enterprise Reform (zhongguo guoyou qiye gaige fazhan yanjiu) (Beijing: Economic Management Press, 2000) On the larger impact of the SOE problem, see Nicholas R. Lardy, China’s Unfinished Economic Revolution (Washington, D.C.: Brookings Institution, 1998.).
34. The debate over public versus private industry, while already apparent in the 1980s, was minimal because of the state’s continuing adherence to the primacy of the state sector and to the continued faith among the leaders that the state sector could be turned around without fundamental changes in property rights. The debate changed in the 1990s as the private sector grew rapidly, FDI inflows surged, and China’s integration into the global trading regime deepened. For a discussion of the intellectual and elite debates that surfaced during this time see Joseph Fewsmith, China since Tiananmen: The Politics of Transition (New York: Cambridge University Press, 2001).
35. Janos Kornai, The Socialist System: The Political Economy of Communism (Princeton: Princeton University Press, 1992), 433.
36. Aslund argues that Russia’s mistake was not in diverging from the Chinese path but from following it too closely when their objective differences (in the labor supply, level of industrialization, length of time under communism, etc.) were so stark. Anders Aslund, How Russia Became a Market Economy (Washington D.C.: Brookings Institution, 1995), 13–17.
37. Anders Aslund, Gorbachev’s Struggle for Economic Reform (London: Pinter Publishers, 1991).
38. On the lack of success in labor reform see Michel Korzec, “Contract Labor, the Right to Work, and New Labor Laws in the People’s Republic of China,” Comparative Economic Studies 30:2 (Summer 1988): 117–49.
39. Xueguang Zhou, “Unorganized Interests and Collective Action in Communist China,” American Sociological Review 58 (February 1993). Zhou argues that under state socialism “state monopoly of the public sphere fosters and reproduces large numbers of individual behaviors with similar claims, patterns, and targets.” Extending this argument to all state socialist countries, it is plausible that exclusive and primary reform of the state sector would intensify the reactions of urban workers affected by such reforms, leading to greater likelihood of mobilization and resistance.
40. Akos Rona-Tas, “The Second Economy as a Subversive Force,” in Andrew Walder, ed., The Waning of the Communist State: economic origins of political decline in China and Hungary (Berkeley and Los Angeles: University of California Press, 1995), 79.
41. Ibid., 78.
42. Hungary’s reforms in the early 1980s led to the gradual loss of control over enterprises as managers grew more powerful and, with the help of the growing private economy, spun off state assets into privately controlled commercial entities. Roman Frydman, Andrzej Rapaczynski, and Joel Turkewitz, “Transition to a Private Property Regime in the Czech Republic and Hungary,” in Wing Thye Woo, Stephen Parker, and Jeffrey Sachs, eds., Economies in Transition: Comparing Asia and Eastern Europe (Cambridge: MIT Press, 1997), 53.
43. Ibid, 51.
44. For example, Barrett McCormick and Jonathan Unger, eds., China after Socialism: In the Footsteps of Eastern Europe or East Asia (New York: M. E. Sharpe, 1996).
45. The top ten firms in Korea accounted for 63.5 percent of country’s GDP in 1987, showing the very large dominance of the chaebols within the Korean economy. In Taiwan, however, the ten largest firms, four of which were state-owned, made up only 14.3 percent of GDP. Most of Taiwan’s growth came from the small-to-medium, ethnically Taiwanese private firms. Gary Gereffi, “Big Business and the State,” in Gary Gereffi and Donald Wyman, eds., Manufacturing Miracles: Paths of Industrialization in Latin America and East Asia (Princeton: Princeton University Press, 1990), 92–96.
46. Yun Tae Kim, “Neoliberalism and the Decline of the Developmental State,” Journal of Contemporary Asia 29:4 (1999).
47. On the development of the private economy see Ross Garnaut, Ligang Song, Yang Yao, Xiaolu Wang, Private Enterprise in China (Canberra: Asia Pacific Press; Beijing: China Center for Economic Research, 2001); Zhang Houyi, Ming Lizhi, Liang Zhuanyun, eds., Bluebook of Private Enterprises, No. 4, 2002 (zhongguo siying qiye fazhan baogao) Beijing: Social Sciences Documentation Publishing House, 2002. In comparison to foreign enterprises in China, see Yasheng Huang, Selling China (2002).
48. Tun-Jen Cheng, “Political Regimes and Development Strategies: Korea and Taiwan,” in Gereffi and Wyman (1990), 142.
49. Gereffi (1990), 98.
50. Yin-Wah Chu, “Labor and Democratization in South Korea and Taiwan,” Journal of Contemporary Asia 28:2 (1998).
51. Sejin Pak, “Two Forces of Democratization in Korea,” Journal of Contemporary Asia 28:1 (1998).
52. Tun-Jen Cheng, “Democratizing the Quasi-Leninist Regime in Taiwan,” World Politics 41 (July 1989). Cheng writes on the social character of the political opposition in Taiwan, “This new political opposition is essentially a middle-class movement, the consequence of rapid economic development. . . . Many of its members are social-science trained intellectuals with professional skills and legal expertise. Moreover, they are socially connected to small and medium businesses.” Cheng, 474. (emphasis added.)
53. Karl Fields, “Strong States and Business Organization in Korea and Taiwan,” in Sylvia Maxfield and Ben Schneider, eds., Business and the State in Developing Countries, (Ithaca: Cornell University Press, 1997), 146.
54. On the problem of private entrepreneurs’ access to credit see Kellee Tsai, Back-Alley Banking: Private Entrepreneurs in China (Ithaca: Cornell University Press, 2002). On other problems facing the private sector see Yasheng Huang, Selling China: Foreign Direct Investment during the Reform Era (New York: Cambridge University Press, 2003); Zhangg Houyi, Ming Lizhi, and Liang Zhuanyun, eds., Bluebook of Private Enterprises, No. 4, 2002 (zhongguo siying qiye fazhan baogao) (Beijing: Social Sciences Documentation Publishing House, 2002).
55. On the Three Represents, see James Kynge, “China’s Capitalists Get a Party Invitation,” Financial Times, August 16, 2002; Robert J. Saiget, “Chinese Leader under Fire over Capitalists in Communist Party,” Agence France Presse, August 14, 2001. See also Willy Wo-Lap Lam, “China’s Struggle for ‘Democracy’ ” www.cnn.com/world; Accessed August 7, 2001.
56. See, for example, James Kynge. “China’s Capitalists Get a Party Invitation,” Financial Times, August 16, 2002.
57. For in-depth analysis of the relatively benign political attitudes and behaviors of China’s private entrepreneurs see Bruce Dickson, Red Capitalists in China: The Party, Private Entrepreneurs, and Prospects for Political Change (New York: Cambridge University Press, 2003).
58. I am not weighing the relative benefits and disadvantages of continued authoritarianism. In fact, I am overlooking the costs of continued authoritarianism (political repression, human rights violations, arbitrary punishment, torture, and lack of freedom of speech and religion, etc.) The focus here is on what may in fact be happening below the surface of continued political authoritarianism.
59. See Kevin O’Brien, “Rightful Resistance.” World Politics 49:1 (1996): 31–55 and essays by Isabelle Thireau and Mary E. Gallagher in Neil J. Diamant, Stanley Lubman, and Kevin O’Brien, eds., Engaging the Law in China: State, Society, and Possibilities for Justice (Palo Alto, Calif.: Stanford University Press, 2005). See also Ching Kwan Lee, “From the Specter of Mao to the Spirit of the Law: Labor Insurgency in China.” Theory and Society 31:2 (April 2002): 189–228.
60. Many scholars of China’s legal development have noted the reliance on foreign laws for the creation of China’s domestic laws. Ann Seidman, Robert Seidman, and Janice Payne, Legislative Drafting for Market Reform: Some Lessons from China (New York: St. Martin’s Press, 1997).
61. Ann Kent, “China, International Organizations and Regimes: The ILO as a Case Study in Organizational Learning, Pacific Affairs 70:4 (Winter 1997–98), 517–33; Margaret Pearson, “The Major Multilateral Economic Institutions Engage China,” in Alastair Iain Johnston and Robert S. Ross, eds., Engaging China: The management of an emerging power (London and New York: Routledge, 1999), 207–34.
62. The Chinese and Soviet reforms both used decentralization and limited marketization as key early reforms. However, Soviet reforms were concentrated in the existing industrial and bureaucratic sectors while Chinese reforms tended to implement the more daring reforms in new sectors, including the foreign-invested sector, or in the rural economy. Reforms that were at first on the margins of the Chinese economy grew in importance over time as they unleashed new competitive pressures on the socialist core. On the Soviet economy and some comparisons with China, see Ed A. Hewett, Reforming the Soviet Economy (Washington, D.C.: The Brookings Institution, 1988); “Economic Reform in the USSR, Eastern Europe, and China: The Politics of Economics,” American Economic Review 79:2 (May 1989); Marshall I. Goldman and Merle Goldman, “Soviet and Chinese Economic Reform,” Foreign Affairs 66:3 (1988); Janine Ludlam, “Reform and the Redefinition of the Social Contract under Gorbachev,” World Politics 43:2 (January 1991). See also Joseph E. Stiglitz, “Whither Reform? Ten Years of the Transition.” Keynote address, World Bank Annual Bank Conference on Development Economics, Washington, D.C., April 28–30, 1999.
1. Mainland researchers used this phrase to criticize the large-scale acquisitions of state firms by foreign investors, in particular a Hong Kong investment company. China Strategy Investment Corporation (HK) bought out SOEs and then listed the new companies on foreign stock exchanges, thus the critical phrase “taking the motherland public” (bazuguo shangshijizi), but public in another nation’s stock exchange. It aptly demonstrates how in the later stages of reform, foreign acquisition of SOEs has become a major facet of China’s privatization. Liu Lisheng et al., eds., Foreign Capital’s Acquisition of State-Owned Enterprises: Analysis and Countermeasures (waizi binggou guoyou qiye: shizheng fenxi yu duice yanjiu.) (Beijing: Zhongguo Jingji Chubanshe, 1997), 328.
2. Global Development Finance: Analysis and Summary Tables, 1999 (Washington, D.C.: International Bank for Reconstruction and Development/World Bank, 2000), 51.
3. Jiang Xiaojuan, “China’s Foreign Direct Investment: Its Contribution to Growth, Structural Upgrading, and Competitiveness,” Social Sciences in China 24:2 (Summer 2003).
4. Yasheng Huang, “Internal and External Reforms: Experiences and Lessons from China, Part I,” www.chinaonline.com, date accessed September 22, 2000.
5. Huang writes that “the extent of China’s dependency on FDI is in fact extraordinarily high already. . . . Not only is the absolute size of FDI large, its relative size measured by FDI/capital formation ratio surpassed that of many countries in the world.” Ibid.
6. Stark and Bruszt (1998).
7. Huang (2000), 1.
8. “Raking It In: China Ranks as World’s Fourth Largest FDI Receiver in 1999,” www.chinaonline.com, October 10, 2000; “Foreign Investment in China,” U.S.China Business Council, May 2003, www.uschina.org/china-statistics.html, date accessed August 28, 2004.
9. China’s high tariffs have begun to fall due to its accession to the World Trade Organization in December, 2001. FDI inflows are, however, expected to rise as barriers to foreign investment in many sectors are also being dismantled.
10. The importance of separating the two components is demonstrated well in Yasheng Huang, FDI in China: An Asian Perspective (Singapore and Hong Kong: Chinese University Press, 1998).
11. Reports of abuse, abysmal working conditions, and horrific accidents appeared in both the domestic and foreign press. “Several Existing Problems in FIEs” (sanziqiyemuqian cunzai de jige wenti) Development Research Centre of the State Council, PRC, November 7, 1992, 1–13; Wang Hongyi, “Dream of the City: An Examination of the Violation of Workers’ Rights in Some FIEs” (weicheng zhimeng: bufen sanziqiyeqinfan zhigongquanyitoushi) Chinese Worker (zhongguo gongren) 5 (1995), 18–27; “Workers in Foreign-Invested Enterprises,” China Labor Bulletin (March 1996).
12. Margaret Pearson, Joint Ventures in the Peoples Republic of China. (Princeton: Princeton University Press, 1991).
13. Huang (1998), 30; The lack of sufficient legal protection for patents is one reason for the reluctance to transfer technology to Chinese partners. See Tang Zhongshun, “Transfer of Patented Technology to China,” in Richard Robinson, ed., Foreign Capital and Technology in China, (New York: Praeger Press, 1987), 75–82.
14. For example, Chen Chunlai’s summary and analysis of FDI policy evolution argues that the SEZs should be viewed as a “pioneering effort” for the later coastal development strategy, implicitly assuming that SEZs were a planned preparatory stage for much greater liberalization. Chen (1997), 8. The argument presented here argues instead the CDS policy innovation was a result of failures in the SEZ policy and pressure from other regions to extend the preferential policies.
15. These works include Susan Shirk, The Political Logic of Economic Reform in China (Berkeley and Los Angeles: University of California, 1993); Barry Naughton, Growing Out of the Plan: Chinese Economic Reform, 1978–1993 (New York: Cambridge University Press, 1995); and Dali Yang, Beyond Beijing: Liberalization and the Regions in China (New York: Routledge, 1997).
16. On the role of ethnic Chinese social networks in China’s FDI liberalization see Hongying Wang, Weak State, Strong Networks: The Institutional Dynamics of Foreign Investment in China (Hong Kong: Oxford University Press, 2001).
17. Naughton’s Growing out of the Plan is the best example of this line of argument, covering both urban and rural phenomena. Its publication in 1995 causes Naughton to just miss the FDI boom and subsequent domestic reforms, although he does briefly note the increasing importance of the foreign sector. Barry Naughton (1995), 302–04. See also Kate Xiao Zhou, How the Farmers Changed China: Power of the People (Boulder, Colo.: Westview Press, 1996).
18. Yasheng Huang, Selling China: Foreign Direct Investment during the Reform Era (New York: Cambridge University Press, 2003).
19. Huang (1998), 29.
20. Ibid, 26.
21. Samuel Ho and Ralph Huenemann China’s Open Door Policy: The Quest for Foreign Technology and Capital (Vancouver: University of British Columbia Press, 1984); and Pearson (1991).
22. In 1961 half of the Hong Kong workforce was employed in manufacturing; by 1997 this figure had fallen to 15 percent. In neighboring Guangdong Province, by 1998, 5 million Chinese were working in Hong Kong invested factories. “The Ever-Spreading Tentacles of Hong Kong,” Economist, June 20, 1998, S15. See also Barry Naughton, ed., The China Circle: Economics and Technology in the PRC, Taiwan, and Hong Kong (Washington, D.C.: Brookings Institution Press, 1997). For general accounts of trends in FDI from overseas Chinese see articles in Sumner Croix, Michael Plummer, and Keun Lee, eds., Emerging Patterns of East Asian Investment in China: From Korea, Taiwan, and Hong Kong (New York: M. E. Sharpe, 1995); Nomura Research Institute Staff The New Wave of Foreign Direct Investment in Asia (Singapore: Institute of Southeast Asian Studies and Nomura Research Institute, 1995).
23. Wei Yuming, “Absorbing Foreign Investment,” in The Open Policy at Work (Beijing: Beijing Review Publications, 1985), 41.
24. Ibid.
25. For an overall analysis of the Special Economic Zone policy, see Jung-Dong Park, The Special Economic Zones of China and Their Impact on Its Economic Development (Westport, Conn.: Praeger Publishers, 1997).
26. Sino-Foreign Equity Joint Venture Law, adopted at the Second Session of the Fifth National People’s Congress on July 1, 1979, and revised on April 4, 1990. Herald Translation Services, Chinalaw Web http://www.qis.net/chinalaw, date accessed August 28, 2004.
27. Barry Naughton (1995), 11.
28. Ibid.
29. These characteristics are reviewed in chapter 4. In general state firms were bureaucratic, had lax labor discipline, and were not oriented to pursue productivity and efficiency.
30. Barry Naughton, “Economic Policy Reform in the PRC and Taiwan,” in The China Circle: Economics and Technology in the PRC, Taiwan, and Hong Kong (Washington, D.C.: Brookings Institution Press, 1997), 93.
31. Jamie P. Horsley, “Chinese Labor,” China Business Review (May-June 1984), 16–25.
32. Barry Naughton (1997), 97.
33. Chen Chunlai, “The Evolution and Main Features of China’s Foreign Direct Investment Policies,” Chinese Economies Research Centre, University of Adelaide, Working Paper Series 97:15 (December 1997).
34. Susan Shirk, The Political Logic of Economic Reform in China (Berkeley and Los Angeles: University of California Press, 1993), 50.
35. “Wholly Foreign Owned Enterprise Law of the People’s Republic of China.” Adopted at the Fourth Session of the Sixth National People’s Congress, promulgated by order No. 39 of the President of the People’s Republic of China and effective as of April 12, 1986. www.qis.net/chinalaw/prclaw16.htm, date accessed August 28, 2004.
36. Naughton (1997), 100.
37. “Provisions of the State Council Concerning the Encouragement of Investments by Compatriots from Taiwan.” Adopted by the Tenth Executive Meeting of the State Council on June 25, 1988 promulgated by Decree no. 7 of the State Council of the People’s Republic of China on July 3, 1988, www.qis.net/chinalaw/prclaw13, date accessed August 28, 2004. “Provisions of the State Council Concerning the Encouragement of Investments by Overseas Chinese and Compatriots from Hong Kong and Macao.” Promulgated by Decree no. 64 of the State Council of the People’s Republic of China on August 19, 1990. www.qis.net/chinalaw/prclaw17, date accessed August 28, 2004.
38. Naughton (1997), 100.
39. Shirk (1993), 48.
40. Dali Yang notes that by the end of 1991 China had only 111 development zones, including 27 approved by the central government. But by the end of September 1992, there were 1,951 development zones. A later report estimated that including development zones set up at the township level by 1993, there were 8,700 zones nationwide. Yang (1997), 56.
41. Ibid. For an account of the competition that now occurs between the established SEZs on the coast and the new development zones of the inland regions, see “Shenzhen Stays Ahead: Small Economic Zones in Guangdong Pose Competitive Threat to Shenzhen, China.” China Economic Review 8:7 (July 1998), 17–19.
42. For statistical trends see U.S.-China Business Council Website, which regularly publishes updated information on FDI trends, http://www.uschina.org/statistics/03-01.html, date accessed August 28, 2004. “Wholly Foreign-Invested Enterprises Make Up 39% of Direct Foreign Investment into China,” www.chinaonline.com/issues/econ_news, June 1, 2000, date accessed August 28, 2004, Edward Paley, “Mushrooming WFOEs Prove a Marriage of Convenience,” South China Morning Post, June 21, 1993: 2; “Multinationals in China: Going It Alone,” Economist, April 19, 1997, 64.
43. Wilfried Vanhonacker (1997),”Entering China: An Unconventional Approach,” Harvard Business Review, March–April 1997, 130.
44. Interview, deputy personnel manager, Taiwanese WFOE, Shanghai, July, 1997. Interview, Manager, Taiwanese WFOE, Shanghai, July 1997. Two Sino-Japanese general managers also supported this view with their preference for a partner that was not in manufacturing. Interview, general manager, Sino-Japanese JV, Tianjin, July 1997. Interview, personnel manager, Sino-Japanese JV, Shanghai, July 1997, July 1999.
45. Interview, deputy personnel manager, Taiwanese WFOE, Shanghai, July 1997. Interview, Manager, Taiwanese WFOE, July 1997.
46. Ibid.
47. Interview with associate professor of sociology, Beijing Academy of Social Sciences, July 1999.
48. Interview, HR manager, Sino-American JV, Shanghai, October 2003.
49. Trend noted in Paul Delisle, “Salary and Benefit Reforms Prove New Employer Challenge,” South China Morning Post, April 15, 1994, 2; “Multinationals in China: Going It Alone,” Economist, April 19, 1997, 64. For the logistics of converting a JV to a WFOE see Daniel C. K. Chow, “Reorganization and Conversion of a Joint Venture into a Wholly Foreign-Owned Enterprise in the People’s Republic of China,” Tulane Law Review (December 1998). The guiding regulations include “Several Regulations Regarding the Change of Ownership Interest of the Investors in Foreign Investment Enterprises,” promulgated May 28, 1997 by the Ministry of Foreign Trade and Economic Cooperation and State Administration for Industry and Commerce. http://www.qis.net.chinalaw/prclaw40.htm, date accessed August 28, 2004.
50. Kimberly Silver, “Lessons Learned,” China Business Review (May–June 1998), 22.
51. Dong Dong Zhang, “Negotiating for a Liberal Economic Regime: The Case of Japanese FDI in China,” Pacific Review 11:1 (1998): 51–78.
52. Zhu Rongji gave a speech at the Congress later excerpted in the domestic media. Zhu Rongji, “Cut Staff, Increase Profits, Distribute the Laid Off Workers, Standardize Bankruptcy, Encourage Mergers” (jianyuan zengxiao, xiagangfenliu, guifanpochan, gulijianbing). Reprinted in Jingji Guanli Wenzhai, March, 1997, 6–7; Kathy Chen, “Chinese President Rachets Up Reforms,” Wall Street Journal, April 7, 1997, A11.
53. If fully implemented this would have affected over 100,000 small and medium-sized state enterprises. Jean-Francois Huchet, “The 15th Congress and the Reform of Ownership: A Decisive Stage for Chinese State Enterprises,” China Perspectives, 14 (November–December 1997), 17. Lin and Zhu found that by the summer of 1998 the state retained predominant ownership in over half of the over 40,000 industrial enterprises that were surveyed. Yi-min Lin and Tian Zhu, “Ownership Restructuring in Chinese State Industry: An Analysis of Evidence on Initial Organizational Changes,” China Quarterly (June 2001).
54. Edward Gu, “Foreign Direct Investment and the Restructuring of Chinese State-Owned Enterprises (1992–1995): A New Institutionalist Perspective,” China Information 12:3 (1997/98), 47.
55. Ibid, 18.
56. Ibid; Shu-yan Ma, “Foreign Participation in China’s Privatization,” Communist Economies and Economic Transformation 4 (1996); X. L. Ding, “Informal Privatization through Internationalization: The Rise of Nomenklatura Capitalism in China’s Offshore Businesses,” British Journal of Political Science 30 (2000), 121–46.
57. Kathy Chen, “Orient Express: China’s Businesses Push for Faster Economic Reform,” Wall Street Journal, October, 16, 1997.
58. A few examples include Dongshui Su et al., eds., Research on China’s Foreign-Invested Enterprises (Zhongguo Sanzi Qiye Yanjiu) (Shanghai: Fudan University Press, 1997); Haitao Zhang et al., eds. Will Foreign Capital Swallow Up China? Where Should National Industry Go? (Waizi Nengfou Tunbing Zhongguo: Minzuqiye ying xiang hechuqu) (Beijing: Qiye Guanli Chuban She, 1997); and Liu Lisheng, et al., (1997).
59. “The U.S.-China Business Council: Forecast ’98,” The United States-China Business Council, January 29, 1998.
60. The term “greenfield” refers to production facilities, usually within development zones, that are built from scratch on land previously used for agricultural production. Greenfield development avoids using outdated or dilapidated factories and equipment and has been the favored choice of most investors, especially large companies from the West and Japan. James Harding, “End of the China Goldrush,” Financial Times, March 25, 1999, 15.
61. Kathy Wilhelm, “Out of Business,” Far Eastern Economic Review, February 18, 1999, 10–11.
62. Ibid., 11. Similar figures also quoted in Joe Studwell, “Workers Wary over Chinese Buyout Program,” Journal of Commerce, October 21, 1997, 4A.
63. “China: Fuzhou Forges Ahead,” China Daily, May 23, 1999, 7. Source: World Reporter—Asia Intelligence Wire.
64. Liu Lisheng et al. (1997), 51.
65. Michael M. Hickman and Julie Bloch Mendelsohn, “China’s Laws Now Give Investors More Options,” National Law Journal, March 2, 1998, C14. They argue that “a foreign investor wishing to invest in China without these start-up costs may find an acquisition more attractive. An acquisition may also be attractive from the standpoint of a struggling Chinese state-owned enterprise, or SOE. It may enable the SOE to avoid a situation in which its best assets are invested in a new joint venture, leaving it with idle assets and unprofitable holdings.”
66. A multiagency government document in 2002 allows the transfer of state-owned shares and legal person shares to foreign investors. This rescinds a 1995 ban on foreign M&A that was prompted in part by China Strategy’s acquisition of a large number of SOEs. “Foreign Investment in China,” U.S.-China Business Council, May 2003, www.uschina.org, date accessed August 28, 2004.
67. Shu-Yun Ma, “Foreign Participation in China’s Privatization,” Communist Economies and Economic Transformation 8:4 (1996), 539.
68. Gu cites an internal report by an investigation team of the State Planning Commission. That this report was published only internally shows the sensitive political nature of such reform as well as it increases the likelihood that the statistical data is accurate. Gu (1998), 49. Similar figures are given by Liu Lisheng et al. (1997), 51.
69. “China Ranked No. 2 in Absorbing FDI during 1979–99,” www.chinaonline.com, October 11, 2000. A report by UNCTAD also pointed to the trend of FDI in the form of M&As, even in developing countries. World Investment Report: Cross-Border Mergers and Acquisitions and Development (New York: United Nations Publications, 2000).
70. “Foreign Investment in China.”
71. Li Yonghai, “How Could We Reform State-Owned Enterprises by Simply ‘Selling Them Off?’ ” Renmin Luntan, December 15, 1998, 8–11. FBIS-CHI-99-009, January 9, 1999, wnc.fedworld.gov/cgi-bin, date accessed September 27, 1999; Wang Xin and Zhou Chunfa, “State Assets Are Important Economic Basis of Socialist System,” Qiushi, August 16, 1999: 25–27. FBIS-CHI-1999-0915, wnc.fedworld.gov/cgi-bin, date accessed September 27, 1999.
72. Zhang Haitao (1997).
73. Ibid, 135.
74. The conservative critique of the “release the small” policy was published in the journal Dangdai Sichao (Contemporary trends). Wang Mingcai, “Across the Board Sales Are Not the Best Way to Reform Small and Medium-Sized Enterprises,” Contemporary Trends (April 1997) in BBC Worldwide Monitoring, June 28, 1997.
75. Philip Pan, “China Accelerates Privatization, Continuing Shift from Doctrine,” Washington Post, November 12, 2003, A14. An “international merger and acquisition summit” was held in November 2003 to further encourage foreign investors to participate in M&A activity in China; see www.masummit.org.
76. Under the joint venture law, the foreign partner cannot be legally bound to absorb workers from the Chinese partner, although they often agree to hire some workers as part of the negotiation process. The domestic regulations guiding M&A activity, however, do specify that the acquiring company continue to implement the labor contracts of the employees from the acquired or merged entity. A new regulation in April 2003 finally stipulated that foreign M&As should also provide for worker settlement. See relevant laws and regulations as explained in Dong Baohua, ed., Legal Information for Older Workers, Two Hundred Questions (Shanghai: Shanghai Jiaotong University Publishing, 2003).
77. Sheng Hong, Chinese Enterprise Mergers Series, no. 8, “Enterprises’ Special Characteristics: Difficulties and Opportunities (qiyetecheng, kunnan yu jihui),” China Business Times, May 22, 1997, 2.
78. Adam Aston, “State-Owned Enterprises Fail to Attract Foreign Investors,” Journal of Commerce, October 1, 1998, 1C.
79. Liu Lisheng et al. (1997), 102–3.
80. Ibid.
81. These examples are taken from the appendix Ibid. This appendix supplies detailed case studies of GJVs all over China and involving a variety of investors, including American, French, Filipino, and Japanese firms.
82. “Over 100,000 workers demonstrate in Mianyang City . . .” Human Rights in China Press Report, July 16, 1997.
83. For example see Tong Xin, “Unemployment Crisis: Its Significance for the Chinese Working Class,” Social Sciences in China 24:4 (Winter 2003).
84. Liu Lisheng et al. (1997), 335.
85. Shu-yun Ma (1996), 532.
86. “Number of Shareholding Companies Exceeds 230,000,” New China News Agency (Xinhua), BBC Worldwide Monitoring, August 27, 1999.
87. “Regulations of the State Council on Domestic Listing of Foreign-Oriented Stocks by Share-holding Companies,” promulgated by the State Council on December 25, 1995. http://chinalawinfo.com, date accessed August 28, 2004.
88. Ma (1996).
89. See also Carl E. Walter and Fraser J. T. Howe, Privatizing China: The Stock Markets and Their Role in Coparate Reform (Singapore: John Wiley and Sons, 2003), 199–200.
90. Ma (1996).
91. See “China’s Laws Now Give Investors More Options” and “China May Sell Over 15% of SOE Shares,” China Business Times (zhonghua gongshang shibao), www.chinaonline.com, September 13, 1999, date accessed August 28, 2004.
92. Lu Ning, “Shanghai Looks Abroad to Market State Assets,” Business Times (Singapore), September 22, 1998, 8.
93. Anthony Neoh, the then chief adviser to the China Securities Regulatory Commission (and former chairman of the Hong Kong Securities and Futures Commission) announced in September 2000 that the A-share market would be open to foreigners in 2003. In a speech at Princeton University in the spring of 2000, Neoh explained that the opening of the A-share market would create a more competitive environment for inefficient state firms. “The only way to shake the SOEs out of their problems is to make them compete. The SOE sector will be treated the same as other companies in the marketplace.” Lester J. Gesteland, “A-Share Market to Open to Foreigners by ’03, CSRC’s Neoh says,” Chinaonline, September 19, 2000, www.chinaonline.com, date accessed August 28, 2004. See also Ma (1996), 534.
94. Joe Leahy and Richard McGregor, “China Takes a ‘Giant Step’ Towards Unified Stock Market: Restrictions Eased on Locals Buying Shares Reserved for Overseas Investors,” Financial Times, February 20, 2001, A1.
95. Ma (1996), 534.
96. Ching-Ching Ni, “Chinese Abuzz over New Stock Rules,” Los Angeles Times, February 28, 2001, C1.
97. “China to Allow Overseas Investors Access to Stocks: Reform Following WTO Entry Could Draw Foreign Capital into A Shares and Stabilise Volatile Markets,” Financial Times, November 6, 2001, 29.
98. Chen, “Chinese President Rachets Up Reforms,” April 7, 1997.
99. Ian Johnson, “Entrepreneurs Now Get Some Respect, to Their Surprise,” Wall Street Journal, October 16, 1997.
100. “New Law to Fuel Privatization,” Laws and Regulations of China, www.ccpit.org, date accessed April 7, 2000.
101. Gene Linn, “China’s Sanction of Private Sector Opens Doors for Investment, Trade,” Journal of Commerce, May 12, 1999, 7A.
102. “State-Owned Firms to Exit Shenzhen,” Journal of Commerce, July 12, 1999, 6.
103. Shirk (1993).
104. Yang (1997).
105. China restricts FDI in several sectors, most recently, the restrictions on foreign-invested internet firms have been criticized. See The New York Times, November 15, 1999, C1.
106. Naughton (1995).
107. Gu (1996).
108. Mark O’Neill, “New Law ‘Not Enough for Private Sector,’ ” South China Morning Post, March 4, 1999, 9.
109. This term is used by Gu (1996).
110. For an example of this debate within academic circles in China see Haitao Zhang (1997) 55–61. Zhang is dismayed at the state of China’s national industry and offers comparisons to the West and “even” Korea. On China’s automobile industry, he writes, “Shanghai Dazhong (JV with Volkswagon), First Auto’s Audi, Beijing Jeep, Tianjin Xiali (JV with Daihatsu). . . . Does China still have its own independent auto factory? For a long time now, China’s passenger car industry has become just one big assembly plant for Western car companies!”
111. Interview with Wang Zhongyu, the minister of State Economic and Trade Commission by Ban Yue Tan journal; “Economy Minister Outlines Focus of State Enterprise Reform for 1997,” British Broadcasting Corporation, FE/2909 S1/1, May 3, 1997.
112. Silver (May–June 1998).
113. Philippe Chevalerais, “Investment Strategies in China,” China Perspectives (September–October 1997), 64–65.
114. Global Development Finance, 47.
1. Capitalist labor practices are defined as measures that commodify labor power and marketize the labor relationship (making it amenable to monetization and exchange). In addition, capitalist labor relations are founded on a hierarchical relationship between employer and employee. This hierarchical relationship entails various modes of control, although there is a wide range of practices among capitalist systems (and indeed between firms within one system) to illicit consent and compliance in the workplace.
2. Jonathan Unger and Anita Chan, “Corporatism in China,” in Barrett McCormack and Jonathan Unger, eds., China after Socialism: In the Footsteps of Eastern Europe or East Asia, (Armonk, New York: M. E. Sharpe, 1996), 119.
3. Dorothy J. Solinger, “The Chinese Work Unit and Transient Labor in the Transition from Socialism,” Modern China 21:2 (April 1995): 155–83. For other evidence of converging practices see Anita Chan “Globalization, China’s ‘Free’ (Read Bonded) Labour Market and the Chinese Trade Unions,” Asia Pacific Business Review, special issue on Globalization and Labor Market Deregulation, 2000; and Minghua Zhao and Theo Nichols, “Management Control of Labour in State-Owned Enterprises: Cases from the Textile Industry,” China Journal 36 (July 1996), 1–21.
4. See in particular the edited volumes by Suzanne Berger and Ronald Dore, eds., National Diversity and Global Capitalism (Ithaca: Cornell University Press, 1996); Colin Crouch and Wolfgang Streeck, Political Economy of Modern Capitalism: Mapping Convergence and Diversity (London: Sage Publications, 1997); and Peter Hall and David Soskice, Varieties of Capitalism: The Institutional Foundations of Comparative Advantage (New York: Oxford University Press, 2001).
5. For a summary of these debates see David Held, Anthony McGrew, David Goldblatt, and Jonathan Perraton, Global Transformations: Politics, Economics, and Culture (Stanford, Calif.: Stanford University Press, 1999), 278–81. See also Dani Rodrik, Has Globalization Gone Too Far? (Washington, D.C.: Institute for International Economics, 1997).
6. China has actively examined both German and Japanese labor practices as possible models for its own legislation. These models are not socialist per se, but rather mitigate some of the perceived excesses of free-market capitalism although in different ways. In implementation, however, China’s labor policies do not have the intended effects. This is the case for the collective contract system, which is discussed below.
7. Evidence of these effects has also been found in developed countries. For example, Brady and Wallace find inward FDI has negative impacts on U.S. labor and note that “the U.S. states are locked in a ‘second war between the states’ in which states compete to provide a favorable business climate for the location of business within their borders.” David Brady and Michael Wallace, “Spatialization, Foreign Direct Investment, and Labor Outcomes in the American States, 1978–1996,” Social Forces 79:1 (September 2000) 93.
8. David Zweig Internationalizing China: Domestic Interests and Global Linkages (Ithaca: Cornell University Press, 2002).
9. In an article maligning the inflexibility of the Indian investment environment, the Financial Times recently compared China and India. Labor flexibility figures prominently in these analyses. It cited a Global Competitiveness Report that listed China twenty-third out of seventy-five countries in ease of firing workers. India was listed in seventy-third place. Edward Luce and Martin Wolf, “India’s Slowing Growth: Why a Hobbled Economy Cannot Meet the Country’s Needs,” Financial Times, April 4, 2003, 15. In their annual report on foreign investment in China, the U.S.-China Business Council also noted in 2002, “in vying for investment, localities are looking for ways to minimize business costs for potential investors. Shanghai and Shenzhen have been particularly aggressive on this front.” “Foreign Investment in China,” U.S.-China Business Council, May 2003, www.uschinaorg/china-statistics.html foreign-direct-investment (accessed August 21, 2004).
10. For example, in the development zone in Tianjin municipality, one can find that advanced human resource practices of American multinationals coexist with foreign-invested factories that are run like “boot camps.” This was reported by a TEDA official, I was not permitted to visit these “boot camps.” Interview, TEDA Public Relations Department official, May 1997. In Jiangsu, a Taiwanese manager in a Taiwanese WFOE defined the company’s labor practices as “militaristic.” Interview, Kunshan, Taiwan WFOE, May 2001.
11. For the important roles played by subcontracting to SOEs and exporting to foreign markets for TVE growth and survival see Zweig (2002), 120–25. Flemming Christiansen analyzes how the ability of SOEs to subcontract to TVEs allowed internal labor reforms to be delayed even while expanding production capacity. “ ‘Market Transition’ in China: The Case of the Jiangsu Labor Market, 1978–1990,” Modern China 18:1 (January 1992), 72–93.
12. Andrew Walder. “Wage Reform and the Web of Factory Interests.” China Quarterly 109 (March 1987); and “Factory and Manager in the Era of Reform.” China Quarterly 118 (June 1989).
13. In 1996 still only a little more than half of China’s workforce were employed using labor contracts. In 1997, however, with the renewed impetus to resolve the problems of SOEs, the transformation to the labor contract system was declared complete. It is highly likely that the implementation of this policy was haphazard and slapdash. The transition to labor contracts was needed in order to supply a legal basis for the massive layoffs in SOEs that were beginning to take place.
14. Interview, SOE manager, Tangshan, July 1997. SOE managers seemed extremely sensitive to the negative feelings conjured up by the introduction of labor contracts among state-sector workers.
15. Ibid.
16. On the debate over the Chinese adoption of Soviet style one-man management see Stephen Andors, China’s Industrial Revolution: Politics, Planning, and Management, 1949 to the Present (New York: Pantheon Books, 1977).
17. Xiaobo Lu and Elizabeth Perry, eds., Danwei: The Changing Chinese Workplace in Historical and Comparative Perspective (New York: M. E. Sharpe, 1997). See also Mark Frazier, The Making of the Chinese Industrial Workplace: State, Revolution, and Labor Management. (New York: Cambridge University Press, 2002). Joshua H. Howard, Workers at War: Labor in China’s Arsenals, 1937–1953 (Palo Alto, Calif.: Stanford University Press, 2004).
18. Mayfair Mei-hui Yang, “Between State and Society: The Construction of Corporateness in a Chinese Socialist Factory,” Australian Journal of Chinese Affairs 22 (July 1989), 31–60.
19. This point is made by Valerie Bunce in Subversive Institutions: The Design and the Destruction of Socialism and the State (New York: Cambridge University Press, 1999); and in the Chinese context by Xueguang Zhou, “Unorganized Interests and Collective Action in Communist China,” American Sociological Review 58 (February 1993), 54–73. The degree of social homogenization is probably somewhat exaggerated. In fact, divisions and conflict in Chinese society existed under socialism. Even if there is some hyperbole to this argument, it is true that many urban citizens seem to remember the past that way i.e., divisions were fewer, people were poor but were “poor together,” inequality and corruption were much less common or better hidden.
20. The seminal work on organized dependence and authority relations in Chinese state-owned enterprises is Andrew Walder, Communist Neo-Traditionalism: Work and Authority in Chinese Industry (Berkeley and Los Angeles: University of California Press, 1986).
21. See especially Brantly Womack, “Transfigured Community: Neo-traditionalism and Work-Unit Socialism in China,” China Quarterly 126 (June 1991): 313–32; Walder’s response in the same issue; and Walder, “Factory and Manager in the Era of Reform,” China Quarterly 118 (June 1989).
22. You Ji, China’s Enterprise Reform: Changing State/Society Relations after Mao (New York: Routledge Press, 1998).
23. Lee Lai To, Trade Unions in China, 1949 to the Present (Singapore: National University of Singapore Press, 1986).
24. This ending date is chosen as a rough division between partial reform and more comprehensive total reform. Some changes began to occur in certain coastal localities in 1992. The “hold the big, release the small” (zhuada, fangxiao) policy was first announced in 1994. This policy indicated the state’s willingness to let most small-to-medium enterprises go; that is, to be privatized in various ways. At the Fifteenth Party Congress in 1997, this SOE reform policy was reiterated and strengthened. Since then, former Premier Zhu Rongji made SOE reform a central concern during his term in office, openly stating that the large majority of state firms will be privatized. “Turning SOEs around Will Take Privatization, Shareholding Restructuring, Zhu says,” www.chinaonline.com, July 3, 2000, date accessed August 28, 2004.
25. The official policy during this period was expressed with the baffling slogan “The manager is the center [zhongxin] and the party secretary is the core [hexin].” Susan Shirk reported that in “1990–91 economic officials could not keep a straight face when they repeated to me the new official formula for the division of roles.” Shirk, The Political Logic of Economic Reform in China (Berkeley and Los Angeles: University of California Press, 1993), 46.
26. You Ji (1998), 52.
27. Ellen Salem, “Managers Rule, OK?” Far Eastern Economic Review (January 28, 1988), 69.
28. You Ji (1998), 52. See also Andors (1977).
29. Interview, State Owned Enterprise manager, Tianjin, March 1997.
30. A 1996 survey published in China Business Times found that 66.1 percent of enterprise managers were concurrently serving as the firm’s Communist Party secretary. “Establish Effective Mechanisms of Incentives and Constraints as Quickly as Possible,” (jinkuai jianli youxiao jili yu yueshujizhi) China Business Times (gongshangshibao), April 22, 1997, 2.
31. Liu Zhiqiang, “Strengthen and Improve the Political Leadership of the Party in Enterprises” (jiaqiang he gaishan dang dui qiye de zhengzhilingdao). Theoretical Trends (lilun dongtai) (January 25, 1997), 2.
32. Feng Tongqing and Zhao Minghua, “Workers and Trade Unions,” Chinese Sociology and Anthropology 28 (Spring 1996), 18. See also “Who Will Supervise the SOE Boss?” (sheilaijiandu guoqi laoban?), China Women’s News (April 25, 1997), 2; “Chinese Trade Union: Protecting Rights According to Law Is Difficult” (zhongguo gonghui: yifa weiquanhaojiannan), Guangdong Labor Daily (July 29, 1996).
33. The irony stems from the fact that management autonomy, while a part of economic restructuring, is also an intensely political act. There is a tendency for authoritarian regimes to tolerate profound economic changes while delaying badly needed political reform because it poses a more overt, immediate threat to their rule. For China this runs the risk of delaying political reform until a point of crisis, when economic reform has widened the wealth and income gap to intolerable levels.
34. Naughton found that even by the early 1990s the changes in the external environment, especially the expansion of the nonstate sector, were putting pressure on state firms. Barry Naughton, “Implications of the State Monopoly over Industry and Its Relaxation,” Modern China 18:1 (January 1992), 14–41. Naughton focuses on the fiscal consequences of the growing nonstate sector.
35. Walder (1986).
36. Managers were officially granted the right to make personnel decisions, including hiring and firing decisions, in 1992. Malcolm Warner, “China’s Labour-Management System Reforms: Breaking the Three Old Irons (1978–1999),” Asia Pacific Journal of Management 18 (2001), 315–34. In practice the right to fire or lay off workers was limited due to the fear that widespread layoffs would lead to political instability. These rights of managerial autonomy expanded more quickly after the 1997 decision by the central government to speed up reform of the state sector.
37. In a 1992 survey of 100 enterprises by the Chinese Trade Union Institute, labor mobility from SOEs to FIEs rose 10.4 percent for skilled workers, 8.9 percent for workers, and 7.1 percent for managers over the year before. Feng Tongqing, “Internal Relations and Structure of Chinese Workers under Market Reform” (zouxiang shichangjingjide zhongguo qiye zhigongneibuguanxi he jiegou) Chinese Social Sciences 3 (May 1993), 103. Economist Barry Naughton found that “labor mobility has been creeping up steadily in China throughout the reform period and has become significant during the 1990s.” Barry Naughton “Danwei: The Economic Foundations of a Unique Institution,” in Lu and Perry (1997), 184.
38. You Ji, (1998), 141. He quotes official statistics that state 20–25 percent of the urban workforce was engaged in moonlighting in 1991. Despite the state’s official disapproval of moonlighting, the moonlighting trend has only increased. In a study that did not break workers down by ownership or break down moonlighting income (rental income vs. personal business income), it was found in 2000 that urban Chinese now get half their income from moonlighting, up from 32.5 percent from 1990. “High Income for Moonlighters and Migrants,” China Staff (June 2000).
39. It is difficult to find data on the extent of these practices. There are some indications, however, that they are quite common. According to statistics kept by the Hangzhou Employment Management Bureau in 1997 over three-quarters of laid-off workers already had “relatively stable employment” in the nonstate sector. They did not resign their posts from SOEs in order to keep their benefits and subsidies. However, it is possible that these statistics capture primarily workers who had the skills or experience to find work and thus left their firms before the extensive layoffs that began in 1997. It is unlikely that such a high percentage of laid-off workers now find work in the nonstate sector, although this may vary considerably by region. “Why Laid-off Workers Rely on Both Sides,” (xiagangzhe wei he xihuan ‘guakaoliangtou), Economic Life Daily, June 6, 1997. Also, many of the new labor disputes involving enterprises under restructuring are disputes involving employees who have long left the danwei but have continued to draw benefits. Once the enterprise has restructured, the labor contracts of these employees are no longer in effect, the employees are fired, and their benefits are withdrawn. Many workers have sued the company over the loss of formal employment and benefits. Li Juexin, “Perspective on Difficult Topics in Labor Relations, (laodong guanxi moca redian toushi)” Handling and Research of Labor Disputes (laodong zhengyi chuliyuyanjiu) (September 1998), 9–11; Hu Yimin, “Several Problems That Should Be Carefully Resolved When Dismissing Employees” (qiyecituizhigong yingdang zhuyi jiejue de jige wenti). Handling and Research of Labor Disputes (August 1998) 12–14. The government finally issued a regulation forbidding the continuation of “tingxin, liuzhi” (stop salary, keep post) in 1995, ordering that workers either return to their original danwei and sign a labor contract or resign their posts. “Stop Salary, Keep Post: Unable to Defend Oneself,” (tingxin liuzhi, zishennanbao) China Market Economic News, (November 23, 1996), 3.
40. Interview, State Enterprise personnel manager, Tangshan, May 2001.
41. Warner (2001). Warner quotes the popular expression “hetonggong gan, gudinggong kan” (contract workers work, permanent workers look) to express the common belief that contract workers worked harder than workers who retained lifetime employment.
42. “Chinese Ministers Discuss Enterprise Reform and Labor Problems.” March 26, 1998 ChinaOnline, www.chinaonline.com/issues/social_political/NewsArchive/cs-protected/1998/March/sp_artll.asp, date accessed August 28, 2004.
43. Andrew Walder, “Factory and Manager in the Era of Reform,” China Quarterly 118 (June 1989), 252.
44. There have been several high profile “tiaocao” (job-hopping) cases that involved skilled managers or workers leaving SOEs for foreign companies. One case that allegedly drew the interest of former premier Li Peng was a case involving a Beijing cement company and LaFarge, a large French multinational. The dispute was finally settled in a court settlement with LaFarge agreeing to pay the SOE for economic losses and the training it provided to the manager. Jiang Junlu, “To Stay or Go: Legal Analysis of Employee Resignation in Mainland China,” (zouyuhailiu: zhongguodalu guyuan cizhide falufenxi) (June 2000), Unpublished paper.
45. You Ji (1998); Wenfang Tang and William Parish Chinese Urban Life under Reform: The Changing Social Contract (New York: Cambridge University Press, 2000), 128–62.
46. Articles in the national media as well as more scholarly articles on the problems of reform hammered away at this point of an “unequal playing field” between SOEs and FIEs. These articles focused on the heavy employment burden, the gap in managers’ salaries, and the inability of SOEs to retain skilled workers. “Should one take a yearly salary of hundreds of thousand RMB?” (shubaiwanyuan nianxin gaibugai na) Nanfang Zhoumo, December 20, 1996, 2; “How Can SOEs Retain People?” (guoqi zenyang liuzhuren) Renmin Ribao, November 19, 1996, 10; (qiangzhanshichang bixu guimo jingying) Zhongguo Gongshang Shibao, April 22, 1997, 7; “Establish a Consciousness of Talent, Perfect the Two Mechanisms” (shulirencaiyishi jianquan liangge jizhi) Workers Daily, April 8, 1997, 7. The two mechanisms include the collective contract system (to make it more difficult for workers to leave) and the incentive wage system (to improve skilled workers’ wages). “Skilled Workers Call for Policy Help,” (jishugongren huhuan zhengce fuzhu) Workers Daily, December 13, 1996, 3; “Perfect the Adjustment Mechanism for the Distribution of Individual Salaries,” (wanshanqiyegerenshouru fenpei tiaokongjizhi) Zhongguo Gongshang Shibao, May 5, 1997, 3; “The Rights and Interests of Enterprises Must Also Be Protected” (qiyequanyi yebixu weihu) Jingji Ribao, October 9, 1996.
47. Mary E. Gallagher and Junlu Jiang, “China’s Labor Legislation: Introduction and Analysis,” Chinese Law and Government (November–December 2002), 9.
48. This is often achieved by classifying migrants differently as “labor service workers” (laowugong), which denies them the right to a labor contract (laodong hetong).
49. See Lee Lai To (1986).
50. The trade union chairman said that pushing short contracts on older workers leads to “unstable thinking” and then to “unstable production.” Interview, Trade Union chairman, Tangshan SOE, July, 1999. The different treatment for older workers is the typical “old workers, old system, new workers, new system.”
51. This designation means that the worker draws a salary without bonus and generally waits at home or finds a temporary job in the private sector while waiting for a job assignment within the company.
52. On the use of apprenticeship labor in SOEs during the 1950s see Frazier (2002) 198–99.
53. Zhu Shaolu, “Implementation of the ‘Rely on the Working Class Policy’ Requires Legalization” (luoshi ‘yikao’ fangzhen yao fazhihua), Workers’ Daily, December 26, 1996, 6.
54. These tiaocao (job-hopping) disputes have increased rapidly according to interviews with labor lawyers and firm managers. The problem of retaining skilled staff is a major concern for SOE managers. As one said in a speech on labor disputes, “Presently SOE workers fire the enterprise more than SOEs fire workers.” “Speech of Chen Quansheng at the National Conference of Labor Dispute Resolution,” Handling and Research of Labor Disputes (laodongzhenghi chuli yu yanjiu) (January 1996). Some articles criticizing the job-hopping trend: “Job-hopping: Don’t Take Secrets with You,” (tiaocao: beidaizou mimi) China Youth Daily, November 22, 1996, 4; Wang Jiayuan, “Taking Technology: Job-hopping Hits the Law’s Gate,” (dai jishu: tiaocao zhuang famen) Legal Daily, October 28, 1996: 2; “Kaifeng Job-Hopping Dispute: One Case Carefully Settled,” (kaifeng tiaocao zhengyi yi an shen shen jie) China Youth Daily, November 20, 1996, 2; Carrie Lee, “Industry Frustrated by Job-Hopping,” South China Morning Post, August 9, 1997.
55. Interview, former FIE worker, Shanghai, August 2004.
56. Dai Weikang, Li Qi, and Chang Kai, “Multi-level Analysis of Mainland China’s Collective Contract System,” (dui zhongguo neidi jitihetong zhidu de jige cengmian de fenxi), paper presented at The Impact of WTO Membership on Chinese Workers and The Response of the International Trade Union Movement Conference, City University of Hong Kong, Hong Kong, November 29–30, 2003.
57. Interview, labor law professor, Shanghai, December 13, 2002. Disputes with three or more workers are classified as “collective disputes.” Collective contract disputes should theoretically be first handled by labor arbitration.
58. A quote by Li Qi in his (2003) presentation.
59. Interview, Kobe City, Japan representative, Tianjin, May 1997; Sino-Japanese JV, personnel manager, July 1999.
60. Peter Sheldon and Ernest Ruan, “Employer Combination among Overseas Multinational Organizations in the PRC: Structuring Local Labour Markets in Response to Skill Shortages,” School of Industrial Relations and Organizational Behavior, University of New South Wales, unpublished paper.
61. Chinese labor officials, labor dispute arbitrators, and some judges now openly advocate that the state should recognize the existence of labor relations even in the absence of a written contract. This allows the courts and the state to hear disputes related to employment while a more formalistic reliance on a written contract shuts out many workers from the dispute resolution process. The state’s recognition of labor relations in the absence of a labor contract is also a sign that many workers are employed “at will” with very little job security. See Guo Wenlong, “Research on Real Labor Relations,” Shanghai Shenpan Shixian, September 2002, 12–15; interview, labor lawyer, October 10, 2003.
62. Interview, Sino-Japanese JV, Shanghai, human resource manager, May 1997, May 1999; interview, deputy general manager, November 2003.
63. Interview, SOE personnel manager, May 2001.
64. The practice of “buying out years of service” (maiduan gongling) reportedly began in China’s northeastern “rust belt” as a way to rid enterprises once and for all of the employment and welfare burdens of employees. In most places workers are paid one month salary for every year worked. This practice is used especially for workers who have long years of tenure prior to the implementation of the labor contract system. The practice remains somewhat controversial; as one Shanghai labor official remarked, “Of course we all do this but we can’t really talk about it as ‘buying out someone’s labor.’ ” (interview, Shanghai Labor Bureau, December 2002). In late 2003, the Tangshan SOE, which had long resisted using the practice as a way to get rid of unneeded workers, claimed it would begin buying out service in the following year. Interview, SOE personnel manager, November 2003.
65. Local government officials may, however, have key roles in these practices by allowing them to occur and receiving kickbacks for their silence. A clerk in a Tianjin Sino-Korean joint venture reported in 1997 that she spent much of her time “sending cigarettes and wine” to officials responsible for labor and environmental regulation as a way to ensure protection from inspections and fines. Interview, Korean-contracted SOE worker, March 1997.
66. For a slightly more optimistic analysis of the trade union organization see Feng Chen, “Between the State and Labor: The Conflict of Chinese Trade Unions’ Double Identity in the Market Reform,” China Quarterly, December 2003. Chen may be more optimistic because his analysis focuses on the local level trade union organization, while here it is the firm-level organization that is the major focus. The local level organization is less influenced by the power of management.
67. Anita Chan, “Revolution or Corporatism? Workers and Trade Unions in Post-Mao China,” Australian Journal of Chinese Affairs (January 1993), 31–61; Jude Howell, “The Impact of China’s Open Policy on Labour,” Labour, Capital, and Society (November 1990), 288–322; Jeanne Wilson, “Labour Policy in China: Reform and Retrogression,” Problems of Communism 39 (September–October 1990), 44–65; Gordon White, “Chinese Trade Unions in the Transition from Socialism: Towards Corporatism or Civil Society?” British Journal of Industrial Relations (September 1996), 433–57.
68. See Wing-yue Leung, Smashing the Iron Rice Pot: Workers and Unions in China’s Market Socialism (Hong Kong: Asia Monitor Resource Center, 1988), 19–21.
69. Ibid, 33.
70. In a survey of SOE workers in 1993, 46.5 percent believed that “the union doesn’t play a large role.” Other statements included in the report on workers’ attitudes reveal a cynical view of their position in the factory, “Now in reality it is the boss who has the final say.” And on the union, “The union is part of the administration, we have no confidence in the union.” “A report on the Status of the National Working Class,” (guanyu quanguo gongren jieji duiwu zhuangkuang de diaocha baogao) Trade Union Work Report (gonghui gongzuo tongxun) (1993), 31.
71. Tongqing Feng and Zhao Minghua (1996).
72. Japanese managers, for example, tend to emphasize the “cultural bridge” role that unions in their firms play rather than a more distinct role as an organization to represent workers’ interests. Class is deemphasized in what seems to be an intentional attempt to represent labor strife as cultural misunderstanding. Interview, Sino-Japanese JV, general manager, Tianjin, July 1997; Interview, Sino-Japanese JV, human resource manager, Shanghai, May 1997; Interview, Sino-Japanese JV, deputy manager, Shanghai, November 2003.
73. For example, according to the National Labor Law, the trade union must be notified of layoffs in advance, but it has no ability to stop layoffs.
74. White (1996).
75. Pearson, Joint Ventures in the People’s Republic of China (Princeton: Princeton University Press, 1991), 185–86.
76. Attempts by labor activists to educate and organize workers in these regions were quickly stopped and the activists imprisoned. Annual Survey of Violations of Trade Union Rights, 1995, International Confederation of Free Trade Unions, 79.
77. “China Warns of Surge in Strikes in Joint Ventures,” Agence France Presse (September 28, 1993); Willy Wo-Lap Lam, “China Heading off Labour Unrest,” South China Morning Post (July 5, 1993), 8.
78. Lau (1996) 58. For a discussion of the unionization process, see Anita Chan, “Labour Relations in Foreign-Funded Ventures, Chinese Trade Unions and the Prospects for Collective Bargaining,” in O’Leary (1997).
79. Anne Stevenson-Yang, “Unions and Contracts,” China Business Review (January–February, 1996).
80. “Research Survey on Shenzhen’s Shekou District Union Work,” Guangdong Central Union Investigative Bureau (1993), unpublished report.
81. In a survey of 102 Japanese-invested enterprises in China, 74.7 percent of the enterprises had established unions, which is substantially higher than estimates for unionization of overseas Chinese-invested enterprises. Yasumuro Kenichi, ed., China’s Labor-Capital Relations and on the Ground Management (Chugoku no roshikankei to genchi keiei). (Tokyo: Hakutoshobo, 1999), 105.
82. Interview, human resources manager, Sino-Japanese JV, Shanghai, May 1997.
83. The Japanese general manager was equally unhappy with the requirement to set up a union and the many other examples of “government interference.” Yet the union chairman maintained his position and continued to serve into 1999. Interview, general manager, Sino-Japanese JV, Tianjin, July 1997, July 1999; interview, human resources manager/union chairman, Sino-Japanese JV, Tianjin, July 1997 and July 1999.
84. Interview, TEDA Administrative Committee, July 1999. In October 2003, TEDA’s offices in Shanghai were still comparing the welfare and salary requirements of areas in Shanghai and Jiangsu in order to stem the loss of investment from TEDA to those areas. Interview, TEDA Shanghai Development Office, October 2003.
85. It is perhaps significant that there was complete consensus in all interviews about the quality of labor relations in different FIEs. Western firms were rated the highest, Japanese were next, overseas Chinese were second to last, and Koreans came in dead last, usually with comments on the barbarism or militarism of Korean managers.
86. Kiyoshi Kasahara, “Labor Relations a Big Job for Changing China,” Nikkei Weekly, October 20, 1997: 17
87. Interview, lawyer, Shanghai, July 1997; interview, lawyer, Shanghai, July 1999; Interview, lawyer, Shanghai, July 1999.
88. Dalian EDZ Labor Arbitration Committee and Labor Bureau, “Discussion of Several Problems of Collective Work Stoppages” (guanyu jiti tinggong ruoganwenti de tantao), Handling and Research of Labor Disputes (April 1997), 13–14. Regulations also reprinted in Yasumuro Kenichi, ed., Labor Management Relations in China and On-Site Management (Chugoku no roshikankei to genchi keiei) (Tokyo: Hakutoshobo, 1999), 38.
89. “Discussion of Several Problems of Collective Work Stoppages” (1997), 14.
90. “Multinational Companies in China: Winners and Losers,” Economist Intelligence Unit, 1997.
91. Ibid.
92. Interview, Japanese lawyer, Shanghai, July 1997, July 1999; interview Chinese labor lawyer, Beijing, July 1997, July 1999.
93. Anne Stevenson-Yang, “Unions and Contracts,” China Business Review (January–February, 1996), 12. See also Chan (1997).
94. Interview, human resource manager, American WFOE, Beijing, July 1997.
95. One large MNC in footwear now plays an active role in administering union elections in its subcontracted plants, motivated at least in part by consumer pressure in its home markets for better labor conditions in China. This creates a somewhat ironic situation in which a multinational corporation creates a more independent union than is normally realized in China merely through its more assiduous implementation of Chinese labor legislation. (Trade union officials are usually appointed by Communist Party officials or by management.) Alison Maitlind, “Sewing a Seam of Worker Democracy in China,” Financial Times, December 12, 2002; Toward Sustainable Code Compliance: Worker Representation in China, Reebok International Ltd., November 2002 (report issued by Reebok on its union elections in China.)
96. “Investigation on Labor Relations in Public Enterprises Experimentally Run by the People and Countermeasures” (Dui shixing gongyou minying qiye laodong guanxi de diaocha ji duice), Handling and Research of Labor Disputes (March 1996). The article notes that these types of enterprise have a high rate of labor disputes.
97. “Cannot Be above the Law” (bunenglingjia faluzhishang), Workers’ Daily, March 3, 1997; “Chinese Trade Unions: Protecting Rights According to the Law Is Difficult,” (zhongguo gonghui: yifa weiquanhaojiannan) Guangdong Labor Daily, July 29, 1996.
98. “Ningxia Industrial Union Work is Weakened” (ningxia chanye gonghui gongzuo shou xueruo”), Workers Daily, March 24, 1997, 5.
99. Unions in coastal Zhejiang Province also report staff reductions and union consolidation. “Warning: Union Cadre Ranks Shrink” (jingyti: gonghui ganbu duiwu zai weisuo), Baokan Wenzhai, April 14, 1997, 1; “Who Will Protect Union Property of Bankrupt Enterprises?” (pochan qiye gonghui zichan sheilai baohu), Workers’ Daily, March 30, 1997; Small SOEs Restructure, What Should the Union Do?” (guoyou xiaoqiye gaizhi, gonghui zenmaban), Workers’ Daily, March 24, 1997; “Who Will Protect the Rights of Union Cadres?” (sheilai weihu gonghui ganbu liyi), Jizhai (July 1995).
100. “Industrial Basic-Level Unions Are According to Law Qualified as Social Organization with Legal Personhood” (chanye jiceng gonghui yifa juyou shehuituanti ren zige), Workers Daily, June 5, 1997, 1.
101. “Those That Withhold Union Dues Are Ordered to Pay” (dui tuoqian gonghui jingfeizhe xiadazhifuling), Workers Daily, May 21, 1997, 1.
102. Wang Min, “Problems Facing the Handling of Labor Disputes in SOEs and Countermeasures” (guoyou qiye laodongzhengyi chuli gongzuo mianlin de wenti ji duice), Handling and Research of Labor Disputes, (June 1997), 5; Interviews with Chinese labor lawyers, Beijing, May, June 1997, July 1999; Also Hong Shou Fang, “Union Chairman, What Is Your Duty?” (gonghui zhuxi, nide zhize shi shenme?), Handling and Research of Labor Disputes (May 1996), 26.
103. Yasumuro Kenichi, ed., (1999), 56.
104. Chan (1997), 140.
105. Ibid.
106. Interview, Sino-Japanese JV, Tianjin, July 1997, July 1999; interview, Sino-Japanese JV, Shanghai May 1997, July 1999.
107. In a survey of workers in Zhuhai, Guangdong Province, 80 percent of workers polled believe that the union’s role “leaves much to be desired” (bujinrenyi) and 62 percent that “after SOEs reform the union is not essential, (we’d) be as well without it.” Cheng Zhong, “Analysis of a Survey of Zhuhai Workers’ Thinking and Attitude” (zhuhai qiye zhigong sixiang xiangtai de diaocha fenxi), Gongyun Luntan (December 1996).
108. “The Role of the Union Representative in Protecting Rights during Collective Bargaining: Problems and Countermeasures” (gonghui daibiao zaijitixieshang tanpanzhong weiquanzuoyong fahuide nandian yu duice), Handling and Research of Labor Disputes (November 1996), 15.
109. Xiang Derong, “Stock-Holding Companies’ Board of Directors: Existing Problems and Suggestions” (gufenzhi qiye dongshihui cunzai de wenti he jianyi), Union Theory and Practice (August 1, 1995), 10.
110. Shenyang City Union Investigative Office, “The Experimental Modern Enterprise System in Shenyang: Union Problems and Countermeasures” (shenyang Shi xiandaihua qiyezhidu shidianzhong gonghui cunzai de wenti ji duice) Union Theory and Practice (August 1, 1995), 31.
111. Xiang (1995). The central union ideally prefers that the union chairman be a full-time elected position with the right to serve and vote on the board of directors.
112. Interview, trade union chairman, SOE, Tangshan, April 1997.
113. Interview, human resource staff member, American WFOE, Tianjin, November 2003.
114. Sino-American JC, general manager, December 2002, Shanghai.
115. Interview, deputy general manager, Sino-Japanese JV, November 2003.
116. “Workers in Foreign-Invested Enterprises,” China Labor Bulletin (March 1996).
117. Interview with human resource manager, Taiwanese WFOE, Shanghai, July 1997.
118. The manager indicated that he wished they were a “national joint-venture” as they could then take advantage of preferential policies for FDI. His joint venture with a Beijing university did not earn the company the preferential policies awarded foreign firms. Interview, rural collective, general manager, Tianjin, July 1997.
119. Interview, rural collective, general manager, Tianjin, July 1997.
120. Interview, urban collective, General Affairs office manager, Tianjin, March, 1997.
121. This is not to say that the other firms had no labor disputes, only that the disputes were less incendiary. Disputes in other factories included salary and benefits disputes (Sino-Japanese JV, Tianjin), disputes about health insurance for the children of employees (Taiwanese WFOE, Shanghai), termination (Sino-American JV, Shanghai), and worker compensation (SOE, Tangshan). Health insurance for children is not required by Chinese law but it has become increasingly an issue for companies that employ large numbers of women of child-bearing age.
122. Ethnographic research in overseas Chinese-invested enterprises has also uncovered paternalistic, militaristic, and exploitative authority relations. You-Tien Hsing, Making Capitalism in China: The Taiwan Connection (New York: Oxford University Press, 1998); Anita Chan (2000); Ching-Kwan Lee “From Organized to Disorganized Despotism: Changing Labor Regimes in Chinese Factories,” China Quarterly 157 (1999).
123. Interview, Taiwanese WFOE, department manager, Kunshan, May 2001.
124. Interview, Taiwanese WFOE, department manager, Kunshan, May 2001.
125. In December 2002, three clerical employees were interviewed without management’s presence. Interviews, Taiwanese WFOE, Kunshan, December 2002.
126. Some analysts of Asian FDI into China divide the flows into two periods. The first period during the 1980s was one of “passive delocalisation” (beidongxing chuzou), with firms reacting to higher wages at home. The second period, which began in the 1990s, is called “active delocalisation” (zhudong chuji), with firms out to grab up Chinese domestic consumer markets. Firms with more activist plans in China’s domestic market also paid greater attention to human resource problems. Philippe Chevalerias, “Investment Strategies in China,” China Perspectives 13 (September–October 1997), 64.
127. Interview, human resources manager, Taiwanese WFOE, Shanghai, May 1997.
128. Interview, human resources manager, Taiwanese WFOE, Shanghai, May 1997.
129. Akira Hagiwara, “Foreign Investment and Worker-Management Relations in China—The Experience of Taiwanese Firms,” Asian Economic Review (August 1996), 54.
130. Recent news articles regarding Taiwanese investment in Nicaragua cites strikingly similar examples of Taiwanese investor’s aversion to unions, particularly to unions that have a historical connection to communism. The reports also cite similar despotic tactics, such as militaristic punishment, beatings, and various schemes to fragment the workforce. Noah Adams, “All Things Considered,” National Public Radio, August 18, 2000.
131. Interview, rural collective general manager, July 1997. See also Zhao and Nichols (1996) and Chan (1999).
132. Stephen Crowley and David Ost, eds., Workers after Workers’ States : Labor and Politics in Postcommunist Eastern Europe (Lanham, Md.: Rowman and Littlefield, 2001).
1. “Use legal weapons to protect your own rights” (yong falu wuqi weihu zishen quanyi), quoted in “The Awakening of Workers’ Rights Consciousness” (laodongzhe quanyi yishi de suxing), Workers Daily, January 2, 1997, 6. Chinese reports of labor unrest are generally circumspect, but allude to large-scale collective disputes and strikes that threaten social stability. External reports are more detailed. Human Rights in China reported that 100,000 workers went on strike in Mianyang, Sichuan, after their factories were declared bankrupt and their unemployment funds embezzled by the managers. Twenty thousand miners went on strike in April 2000 to protest the redundancy funds distributed after the mines began to close. “Over 100,000 workers demonstrate in Mianyang City . . .” Human Rights in China Press Report, July 16, 1997; “Huge Mine Protest in China as Angry Laid-off Workers Vent Anger,” April 7, 2000, www.insidechina.com/news; John Pomfret, “Miners’ Riot a Symbol of China’s New Discontent,” Washington Post, April 5, 2000, Al. On the large protests in Liaoning Province in the spring of 2002 see “Paying the Price: Worker Unrest in Northeast China,” Human Rights Watch: China 14:6 (August 2002).
2. These figures are the most conservative measures of disputes, only including disputes that reached the local arbitration level and leaving out disputes that were mediated by the enterprises themselves. Inclusion of mediated disputes and informally negotiated disputes would bring the total in 1999 from 120,191 to 171,669. China Statistical Yearbook (zhongguo tongjinianjian), various years (Beijing: China Statistical Publishing House); (zhongguo laodong tongji nianjian), various years (Beijing: China Statistical Publishing House).
3. People’s Republic of China National Labor Law (zhonghuarenmingongheguo laodongfa) was adopted at the Eighth Meeting of the Standing Committee of the Eighth National People’s Congress on July 5, 1994, and went into effect on January 1, 1995.
4. Guo Chengdu, “Fujian Province FIEs’ Labor Disputes: Special Characteristics and Countermeasures,” (fujianshengsanziqiye laozijiufendetedianjiduice), Research and Suggestions (1995); Lin Zhengong and Chen Yulin, “Special Characteristics of and Countermeasures for Slowdowns and Strikes in Foreign-Invested Enterprises,” (sanzi qiyegongren daigong bagongde tedian he duice) China Labor Science 5 (1993), 33–35; Lu Hong, “From Disorder to Order: Analysis of Special Characteristics of Contemporary Labor Disputes,” (cong wuxu dao youxu: xianjieduan laodongzhengyi tezheng fenxi) Journal of Guangzhou Normal University (Social Science Edition) 20:6 (1998).
5. Interview, Ministry of Labor official, December 12, 2002. For example, see “Where There Is Conflict, They Are There,” (You maodun de difang jiuyou tamen de shenying), Xinmin Evening News, October 7, 2003, p. 12.
6. Stanley Lubman, Bird in a Cage: Legal Reform in China after Mao (Stanford, Calif.: Stanford University Press, 1999) Pitman Potter, “Foreign Investment Law in the People’s Republic of China: Dilemmas of State Control,” China Quarterly (March 1995), 155–85; Karen Turner et al. eds. The Limits of the Rule of Law in China (Seattle: University of Washington Press, 2000); Franz Michael, “Law: A Tool of Power,” in Yuan-li Wu et al., eds., Human Rights in the People’s Republic of China (Boulder, Colo.: Westview Press, 1988). Randall Peerenboom is more optimistic about China’s development of the rule of law in China’s Long March toward the Rule of Law (New York: Cambridge University Press, 2002).
7. The concept of “mutual empowerment” was developed in Joel Migdal, Atul Kohli, and Vivienne Shue, eds., State Power and Social Forces: Domination and Transformation in the Third World (New York: Cambridge University Press, 1994). Xu Wang argues that rural elections also have mutually empowered peasants and the state apparatus. Xu Wang, “Mutual Empowerment of State and Peasantry: Grassroots Development in Rural China,” World Development, 25 (1997), 1431–42.
8. Quoted in Albert H. Y. Chen, “Toward a Legal Enlightenment: Discussions in Contemporary China on the Rule of Law,” UCLA Pacific Basin Law Journal 17:125 (Fall 1999 / Spring 2000), 127.
9. Peerenboom (2002), 239.
10. Zhenmin Wang, “The Developing Rule of Law in China,” Harvard Asia Quarterly (Autumn 2000).
11. Ching Kwan Lee, “From the Specter of Mao to the Spirit of the Law: Labor Insurgency in China,” Theory and Society 31 (April 2002), 218.
12. Robert Seidman, Ann Seidman, and Janice Payne, eds. Legislative Drafting for Market Reform: Some Lessons from China (New York: St Martin’s Press: 1997).
13. Here China may be learning from some of its Southeast Asian neighbors. Singapore and Malaysia have both used legal institutions to suppress dissent and to control opposition parties, often by bankrupting opposition leaders or parties through costly suits.
14. Alan Hunt, Mindie Lazarus-Black and Susan Hirsch, Contested States: Law, Hegemony, and Resistance (New York: Routledge, 1994).
15. Ibid.
16. William Alford, “Double-Edged Swords Cut Both Ways: Law and Legitimacy in the People’s Republic of China,” in Tu Wei-ming, ed., China in Transformation (Cambridge: Harvard University Press), 45–69.
17. See Ronald C. Keith and Zhiqiu Lin, Law and Justice in China’s New Marketplace (New York Palgrave, 2002); Hilary K. Josephs, “Labor Law in a ‘Socialist Market Economy’: The Case of China,” Columbia Journal of Transnational Law 33:559 (1995).
18. Margaret Pearson, Joint Ventures in the People’s Republic of China (Princeton: Princeton University Press, 1991), 105.
19. Pitman B. Potter, “Foreign Investment Law in the People’s Republic of China: Dilemmas of State Control,” China Quarterly (March 1995), 155–85. Potter also finds that due to declining central state capacity and ineffective implementation, the state is not very successful in controlling foreign capital or local governments for that matter.
20. Pearson (1991), 63.
21. “Sino-Foreign Equity Joint Venture Law,” adopted at the Fifth National People’s Congress on July 1, 1979, and revised at the Third Session of the Seventh National People’s Congress, April 4, 1990; “Provisions of the People’s Republic of China for Labor Management in Chinese-Foreign Joint Ventures,” promulgated by the State Council on and effective as of July 26, 1980. English and Chinese versions of these laws and regulations can be found at www.qis.net/chinalaw/prclaw. Last accessed September 6, 2000.
22. Article 2 of the provisions reads, “The employment dismissal, and resignation of the staff and workers of joint ventures, and their production and work tasks, wages and awards and punishments, work schedules and holidays and paid leaves of absence, labor insurance and welfare benefits, labor protection, labor discipline and other matters shall be prescribed through the signing of labor contracts.”
23. Gordon White, “The Politics of Economic Reform in Chinese Industry: The Introduction of the Labour Contract System,” China Quarterly 111 (September 1987), 367.
24. “Labour Law of the People’s Republic of China” (zhonghuarenmingongheguo laodongfa) China Law and Practice (August 29, 1994), 21–40.
25. Andrew Walder, Communist Neo-traditionalism: Work and Authority in Chinese Industry. (Berkeley and Los Angeles: University of California Press, 1986). For a criticism and revision of Walder see Brantly Womack, “Transfigured Community: Neo-traditionalism and Work-Unit Socialism in China,” China Quarterly (July 1991), 324–32.
26. White (1987); Pat Howard, “Rice Bowls and Job Security: The Urban Contract Labour System,” Australian Journal of Chinese Affairs 25 (January 1991), 93–114.
27. Chen (1997) 8. Chen Chunlai “The Evolution and Main Features of China’s Foreign Direct Investment Policies, Working Paper 97/15, Chinese Economies Research Centre, University of Adelaide, (December 1997).
28. Cycles of reform are discussed in Richard Baum, Burying Mao (Princeton: Princeton University Press, 1994).
29. Howard (1991), 95–96.
30. Dorothy Solinger traces the restrictions on rural migration to urban areas over time. She finds that by the early 1960s, stringent measures were in place to control the flow of rural labor and to consolidate a dualistic pattern of employment. Contesting Citizenship: Peasant Migrants, the State, and the Logic of the Market (Berkeley and Los Angeles: University of California Press, 1999), 35–36.
31. Elizabeth Perry and Li Xun, Proletarian Power: Shanghai in the Cultural Revolution (Boulder, Colo.: Westview Press, 1997).
32. Howard (1991), 96.
33. White (1987), 369–73.
34. Ibid, 381.
35. “Temporary Implementing Regulations for Labor Contracts in State-Run Enterprises” (guoyingqiye shixinglaodonghetongzhi zhexingguiding), in Chunhua Dai, Labor Contracts (laodong hetong) (Beijing: China Politics and Law University Press, 1997), 446.
36. Andrew Walder, “Wage Reform and the Web of Factory Interests,” China Quarterly 109 (March 1987), 40.
37. Michel Korzec, Labour and the Failure of Reform in China (New York: St. Martin’s Press, 1992); Gordon White, “State and Market in China’s Labour Reforms, Journal of Development Studies 24 (July 1988), 180–202.
38. White (1987), 387.
39. Interview, general manager, Sino-HK JV, Tangshan, July 1997 and July 1999.
40. The boom in FDI from China’s Asian neighbors happens shortly after the democratization processes in Taiwan and South Korea. Some foreign enterprise managers specifically mentioned problems related to rising wages and rising unionization among their plants in other places as reasons leading to the decision to open up production locations in the PRC. Interview, Taiwanese WFOE personnel manager, Shanghai, May 1997. Another threatened that his factory would move to Vietnam if similar problems arose in China. Interview, Taiwanese WFOE, general manager, Shanghai, May 1997.
41. Li Xingwen, “How to Interpret and Resolve Labor Problems in FIEs” (ruhe kandai he jiejue sanziqiyezhong de laogongwenti), Theoretical Trends (lilundongtai), June 20, 1994; “Several Existing Problems in FIEs” (sanziqiye muqian cunzai de jige wenti), Report of the Development Centre of the State Council, PRC (November 7, 1992); “Report on Chinese Private Enterprise Employment and Labor Relations” (zhongguo siyingqiye guyongjilaodongguanxi baogao) in Social Class and Social Stratum in China’s New Era (zhongguo xinshiqi jiejijieceng baogao) (Liaoning: Liaoning People’s Publishing House, 1995), 292–333.
42. A study by the Economist Intelligence Unit on foreign firms in China found that human resource problems were on the top of a list of problems for investors. “Multinational Companies in China: Winners and Losers.” Economist Intelligence Unit, 1997; Keith Goodall and Willem Burgers, “Frequent Fliers: Strong Retention Programs Are the Key to Curbing Chinese Manager Turnover,” China Business Review, May–June 1998, 50–52; Philippe Chevalerais, “Investing in China: What Taiwan’s Businessmen Think,” China Perspectives 11 (May–June 1997), 42–43; Kimberly Silver, “Lessons Learned,” China Business Review, (May–June 1988), 20–35; Jamie Horsley, “The Chinese Workforce,” China Business Review (May–June 1988), 50–55; Jamie Horsley, “Chinese Labor,” China Business Review (May–June 1984), 16–25.
43. Interview, American WFOE manager, Shanghai, May 1997. This manager complained that after years of frustration in trying to let workers go, the company now just paid some workers to stay home.
44. Some local governments grew more intolerant of migrant hiring as the problem of laid-off workers from the SOE enterprises worsened in the 1990s. Many localities set quotas for the use of migrant labor. “Why Foreign Enterprises’ Private Hiring Is Repeatedly Forbidden But Difficult to Stop” (waiqi sizhao yuanhe lujinnanzhi), Workers Daily, May 15, 1997: 5. Josephine Ma, “FIEs Face New Rules on Labour,” South China Morning Post, February 28, 1997, 4Business.
45. See chapter 4 for more information on how local governments can intervene in the labor market for migrant workers. In doing so, the local government has more control over migrant labor flows and greater opportunities to collect taxes and fees for migrant employment.
46. Kathy Chen, “China’s Brightest Minds Leave State Jobs for Money, Fulfillment in the Private Sector,” Asian Wall Street Journal, January 31, 1994, 3; Carrie Lee, “Industry Frustrated by Job-Hopping,” South China Morning Post, August 9, 1994, 4.
47. “When Contracts Come to Term, What Should be Done?” (hetong daoqi yinggai ruhe) Beijing Youth News, March 9, 1997, 8.
48. In practice, discriminatory treatment toward rural migrants has continued unabated. Some local labor regulations specifically do not include migrant workers in their protections. The National Labor Law laid out a principle of equal treatment that has yet to be realized.
49. Both these attributes are highlighted in Chinese analysis of the law. For example see, Chang Kai, Labour Relations, Labourers, Labour Rights, (laodong guanxi, laodong zhe, laoquan) (Beijing: China Labor Press, 1995); and Junlu Jiang “Labor Dispute Handling: A System to Guarantee the Implementation of the Labor Law” (laodong zhengyichuli: laodongfa shixingdebaozhangzhidu), Workers Daily, March 21, 1995. Foreign lawyers in China also paid attention to these aspects. Hiroaki Tsukamoto et al., “Restructuring FIEs in China and Procedures to Cut Staff” (chugoku niokeru gaisho taishi kigyonoresutora oyobi) International Commercial Law Journal (kokusai shoji ho) 27:5 (1999).
50. For analysis of the collective contract system see Malcolm Warner and Ng Sek Hong, “The Ongoing Evolution of Chinese Industrial Relations: The Negotiation of Collective Contracts in the Shenzhen Special Economic Zone,” China Information (Spring 1998), 1–20. Dai Weikang, Li Qi, and Chang Kai. “Multi-level Analysis of Mainland China’s Collective Contract System” (dui zhongguo neidi jitihetong zhidu de jige cengmian de fenxi), paper presented at the Impact of WTO Membership on Chinese Workers and the Response of the International Trade Union Movement Conference, City University of Hong Kong, Hong Kong, November 29–30, 2003.
51. Zhang Zuoji, “Labor Legislation in China” (zhongguo laodong lifa), Papers of the 4th Lawasia Labour Law Conference (yataifaxie disiju laodongfa taolun huiwen), 1994, 2.
52. “Workers’ Rights Become an Issue,” Financial Times, Business Law Brief, May 1993.
53. “Workers Strike at Japanese Plant in Zhuhai,” FBIS-CHI-93-095, May 19, 1993.
54. “Labor-Management Dispute Continues in Factory,” FBIS-CHI-93-099, May 25, 1993.
55. The original report was published by Beijing Youth Daily.
56. “China Warns of Surge in Strikes in Joint Ventures,” Agence France Presse, September 28, 1993; Willy Wo-Lap Lam, “China Heading off Labour Unrest,” South China Morning Post, July 5, 1993, 8.
57. Copycat strikes were mentioned by managers of firms in Shanghai and Tianjin as well as by lawyers in Shanghai and Beijing. Interview, general manager Sino-Japanese JV, Tianjin; interview, human resources manager, Sino-Japanese JV, Shanghai, July 1997; interview, Chinese lawyer, Sino-Japanese law firm, Shanghai, May 1997.
58. Jiang Junlu, “The Symbol of Workers’ Protection,” (laodongzhe de hushenfu) Legal Daily, December 10, 1994, 1; Cao Min, “Industrial Disputes Framework Established,” China Daily, July 25, 1997, 2; “The Labor Law: The Constitution of Workers,” (laodong fa: laodongzhe de daxianfa) China Economic Times, July 17, 1997, 4.
59. SOE managers adversely affected by foreign and TVE firm practices called it “disorderly competition” (luanjingzheng). The most annoying practices cited were hiring of migrants and abusive labor practices, the evasion of any social welfare burden, and slash-and-burn pricing tactics.
60. “Management Facing the Market,” (mianxiang shichang de guanli) China Business Times, March 20, 1997, 7; Ellen Salem (1988), 69; Minghua Zhao and Theo Nichols, “Management Control of Labour in State-Owned Enterprises: Cases from the Textile Industry,” China Journal 36 (July 1996), 1–21.
61. Many articles in the late 1990s focused on the issue of “unequal competition” between state firms and their nonstate counterparts. Issues that were often raised included unfair welfare and pension burdens of SOEs, inability to offer competitive salaries for skilled staff in order to compete with foreign firms, and requests from local governments for SOEs to hire unemployed workers. For example, Gong Yibing and Long Lixin, “SOEs: Faced with a Difficult Challenge,” (guoqi: mianlin kunjingde tiaozhan) Chinese Worker (zhongguo gongren), 4–7; “Skilled Workers Call for Helpful Policies” (jishu gongren huhuanzhengce fuzhu) Workers Daily, December 13, 1996, 3; “SOE Welfare Burdens Hinder Profitability,” China Staff, www.asialaw.com/cs/prcnews/mar00/soe.htm, accessed August 2, 2000.
62. “China’s Labour Legislation to Go Faster in 1997,” China Economic News, no. 5 (February 3, 1997), 7–8. The delay in supplementary legislation was raised at the annual meeting of the Labor Law Study Association, November 19–20, 2003, Beijing. Many labor law experts have pushed for faster passage of these laws as well as revisions of the 1994 labor law, but this has been resisted by the Ministry of Labor.
63. A considerable number of labor law experts in China believe that the law is so distant from reality that it has become impossible to implement. For example, the law limits overtime to thirty-six hours per month, while some factories in China’s coastal development zones run twelve-hour shifts with one day off per week, which equals about 136 hours of overtime per month.
64. “China’s Labor Legislation to Go Faster.” This bureaucratic wrangling was confirmed in interviews with a labor lawyer in May 2001. Interview, labor lawyer, Beijing, May 2001.
65. The Labor Law was caught in a dispute between the Trade Union, the Ministry of Labor, and various bureaucratic bodies who supported greater enterprise autonomy for state firms. The trade union wanted more of a say in enterprise management through the democratic management system in state firms, while state managers wanted to limit trade union interference in management issues. The AFCTU lost on this issue; the democratic management clause in the Labor Law is very weak. The AFCTU was successful in making the labor law inclusive of all workers and in limiting the legal work week to forty-four hours. Interviews, labor lawyers, Beijing, May 1997, July 1997, July 1999; Murray Scot Tanner, The Politics of Lawmaking in Post-Mao China (Oxford: Oxford University Press, 1999), 176.
66. While by no means a controversial point in western labor relations, this recognition that workers are in a weak position vis-à-vis management and capital is a significant reversal of the idea long propagated by the state that Chinese workers are the ruling class and the masters of the factory. Some analysis has openly described the conflict between the workers’ real position within the factory and their position in socialist society as “masters” (zhurenweng). Chang Kai, Labour Relations, Labourers, Labour Rights, (laodong guanxi, laodong zhe, laoquan) (Beijing: China Labor Press, 1995), 19–20.
67. Jiang Junlu, “The Handling of Labor Disputes: The Guarantor of the Implementation of the Labor Law” (laodong zhengyi chuli laodongfa shishi de baozhang zhidu), Workers Daily, March 21, 1995, 1.
68. Ibid.
69. This process is described in Guo Jun et al., eds. Manual on the Labor Law and Labor Disputes (laodongfa yu laodong zhengyi shiyong shouce) (Beijing: China Procuratorial Publishing House, 1994), 109–20.
70. Lin Feng, “Labour Dispute Resolution,” Employment Report 2:2, 48–56.
71. Shoichi Ito, “Changes in Labour Markets, Labour Law, and Industrial Relations in Modern China.” Paper presented at 1996 Asian Regional Conference on Industrial Relations, 12.
72. The 2001 revised Trade Union Law offers a slightly strengthened union responsibility to workers. Article 6 now reads, “The basic responsibility of the trade union is to safeguard the legal rights of workers. In addition to safeguarding the overall interests of the people of the whole nation, the union should represent and safeguard the legal rights of workers.” The first sentence was not in the 1992 Trade Union Law. Article 6 also goes into greater detail specifying how the trade union should achieve its duties: through equal consultation and the collective contract system. Article 6, Trade Union Law of the People’s Republic of China, October 27, 2001, and April 3, 1992. Mary E. Gallagher and Junlu Jiang, “China’s Labor Legislation,” Chinese Law and Government 35:6 (Nov.–Dec. 2002).
73. Ibid; Shen Pik-Kwan, “Labour Disputes in China,” Change, Newsletter of the Hong Kong Christian Industrial Committee (October 1996).
74. The Ministry of Labor translates zhongcai caijue as “arbitration lawsuit” but I have used arbitral judgment to indicate that this process results in a written judgment, including who was at fault and the amount for compensation.
75. Interviews, labor lawyers, Beijing, March 1997 and May 1997. Labor statistics from China Statistical Yearbooks, 1994–1998 (zhongguo tongji nianjian) (Beijing: China Statistical Publishing House); and China Labor Statistical Yearbook (zhongguo laodong tongjinianjian) (Beijing: China Statistical Publishing). Also Ito (1996).
76. “People’s Court, Procuratorate Present Work Reports to NPC Session,” March 11, 2002, BBC Monitoring International Reports. www.lexisnexus.com, date accessed October 12, 2002.
77. Interviews, former Ministry of Labor research, Beijing, December 11, 2002; labor lawyer, Shanghai, December 14, 2002; Tianjin Labor Bureau official, November 20, 2003.
78. The fees required for arbitration and litigation are part of an ongoing debate about access to these procedures. Company representatives and labor officials tend to believe the fees are too low, encouraging frivolous suits. Legal aid advocates and workers believe that these fees are already onerous for poorly paid workers, particularly given the increased need for legal representation due to the complexity of many issues and the use of legal representation by companies. Interview, Tianjin Labor Bureau, November 2003; Interview, Shanghai Higher Court judge, November 2003; interview, Sino-American JV, human resources manager, Shanghai, October 2003; interview, legal aid center employee, Shanghai, October 2003.
79. Jiang Junlu, “Clarify the Position of the Labor Law- Strengthen the Feasibility of the Laws and Regulations (jinyibu mingque laodongfa diwei zengqiang faluguidingde kexingxing), China Labor Newspaper (zhongguo laodongbao), July 6, 1995.
80. The Labor Dispute Arbitration Bureau in Tianjin Economic Development Area also reported that the vast majority of workers preferred arbitration to firm-level mediation. Many workers find a new job first then leave the original company to file suit. This practice protects the worker from extralegal punishment at the hands of management, a common problem for workers involved in disputes with their employer. Interview, TEDA Labor Arbitration Bureau staff member, Tianjin, July 1999. For extralegal punishment, see “Workers Report Problems Only to Have Their Bonuses Deducted,” (zhigongfanying wenti jingbei kouchu jiangjin), Workers Daily; Zhang Xifeng, “Managers Still Choose to Harm Workers’ Rights This Way” (jingli geng xuan zeneng sunhai zhigong quanyi), Workers Daily, February 3, 1997, 5.
81. Various types of legal aid centers have risen up during the 1990s in many Chinese cities. Many of these centers target specific groups, for example, women, workers, and the poor. There are also many workers’ hot lines in larger cities that address workers’ questions about the Labor Law and other regulations. The Shanghai Trade Union’s Labor Law Supervisory Committee set up a hotline and letter box. It received over six hundred responses in the first two weeks of operation. “Going Forward, Protection Is Difficult” (jubuweinan), Workers Daily, May 26, 1997; Lan Yan, “Discovered through Filing Suits for Workers” (cong weizhigong daguanci suoxiangdaode), Workers Daily, January 2, 1997: 6; Jiang Junlu, “So Workers May Strive for More Rights” (weilaodongzhe zhengqu gengduo de quanli), Workers Daily, December 28, 1995.
82. This comparison includes only the labor disputes that reached the arbitration level. Both Taiwan and the PRC have mechanisms to resolve labor disputes through firm-level mediation, but these disputes are not included for either country. In this way we can compare across two relatively similar processes.
83. These themes are discussed in Randall Peerenboom (2002), 27–43; Tsungfu Chen, “The Rule of Law in Taiwan: Culture, Ideology, and Social Change,” in C. Stephen Hsu, ed., Understanding China’s Legal System: Essays in Honor of Jerome A. Cohen (New York: New York University Press, 2003), 374–410; Hugh T. Scogin, Jr., “Civil ‘Law’ in Traditional China: History and Theory,” in Kathryn Bernhardt and Philip C. C. Huang, eds., Civil Law in Qing and Republican China (Stanford, Calif.: Stanford University Press, 1994), 13–41.
84. Sean Cooney, “The New Taiwan and the Old Labour Law: Authoritarian Legislation in a Democratized Society,” Comparative Labor Law Journal (Fall 1996).
85. Ibid, 5.
86. Interviews, labor lawyers, Beijing, May 1997 and July 1997.
87. Cooney (1996), 7.
88. Ibid., 13.
89. There were 81,524 disputes in urban enterprises and reportedly 153.9 million employees in urban enterprises. China Statistical Yearbook, 1999.
90. This is not to ignore problems in China’s development of these external institutions. Some of these are discussed in Mary E. Gallagher, “Use the Law as Your Weapon: Institutional Change and Legal Mobilization in China,” in Neil Diamant, Stanley Lubman, Kevin O’Brien, eds., Engaging Chinese Law (Stanford, Calif.: Stanford University Press, 2005).
91. Some of these events are detailed by Elizabeth J. Perry, “Labor’s Battle for Political Space: The Role of Worker Associations in Contemporary China,” in Deborah Davis, Richard Kraus, Barry Naughton, and Elizabeth J. Perry, eds., Urban Spaces in Contemporary China (Cambridge: Cambridge University Press, 1995).
92. Dalian Labor Bureau, “Exploration of Problems Related to Collective Work Stoppages,” (guanyu jiti tinggong ruogan wenti de tansuo) Laodong zhengyi chuli yu yanjiu 4 (1997), 13–14.
93. These trends are drawn from the national statistics published by the Chinese government, but interviews at the local level indicated that these trends are also apparent at the local development zone or city level. For example, in the TEDA, the Labor Arbitration Bureau reported a yearly 20 percent increase in the number of disputes, reaching 386 in 1998. The increase in 1999 looked to be significantly higher, with over 515 disputes reported in the first six months. Collective disputes are also increasing. There is also the same general tendency for workers to bypass mediation. The bureau also reported that disputes are most frequent in Taiwanese firms, somewhat frequent in Japanese firms, and rare in American firms. Interview, TEDA Labor Arbitration Bureau staff member, July 1999.
94. The Labor Ministry reported that even though FIEs make up less than 10 percent of all urban firms, over 40 percent of all collective disputes occurred in FIEs in 1994. “Report on the Handling of Labor Disputes in 1994,” Handling and Research of Labor Disputes (April 1995), 4.
95. “Discussion of the Problems in China’s Legislation of Strikes” (guanyu zhongguo de bagonglifa wenti tantao), Handling of Labor Disputes (July 1999), 12. The author notes that collective disputes have increased nearly 900 percent since 1993.
96. China Labor Statistical Yearbook, 1996–1998 (Beijing: China Statistical Publishing House).
97. Interview, Taiwanese WFOE, sales manager, Jiangsu, May 2001; interview, Taiwanese WFOE, clerical workers, Jiangsu, December 2002. See also Chan (2001); Lee (1999).
98. China Statistical Yearbook, 1996–1998.
99. Information about collective disputes is taken from China Statistical Yearbook, 2002.
100. Interview, former Ministry of Labor researcher, December 11, 2002.
101. Mary E. Gallagher, “Providing Legal Clarity: Law and the Shaping of Workers’ Grievances.” Paper prepared for presentation at the “Reassessing Unrest in China” Conference, December 11–12, 2003, Arlington, Virginia.
102. For the connection between restructuring and a marked rise in disputes see Hu Yimin, “Several Problems to be Resolved in Enterprises’ Termination of Employees” (qiyecituizhigong yingdangzhuyi jiejue de jige wenti), Handling and Research of Labor Disputes (August 1998), 12–14.
103. Li Juexin, “Perspective on Difficult Topics in Labor Relations” (laodong guanci moca redian toushi) Handling and Research of Labor Disputes, (September 1998), 9.
104. Wu Zhaomin, “Discussion of the Implementation of the Three-Sided Principle in the PRC” (lun sanfang yuanze zai zhongguo de guanche), Handling and Research of Labor Disputes (September 1996), 23; “The Role of Protecting Rights by Union Representatives: Problems and Countermeasures,” Handling and Research of Labor Disputes (November 1996), 15–16.
105. Data for the years 1987–93 are taken from Ito (1996). He cites China’s Labour and Personnel Management Almanac Editorial Division, The Labour and Personnel Management Almanac of China (1949/10–1987) (Beijing: Laodong Renshi Chubanshe, 1989); and Tang Shu-reng and Xi Longsheng, eds., The Complete Business Works of Labour Law (Beijing: China Workers Publishing House, 1994).
106. The 1997 proportion of mediated disputes to total disputes was the lowest rate ever. The Ministry of Labor points out that this failure of mediation has much to do with the lack of mediation committees at most foreign, private, and rural enterprises. Fujian Province with its large proportion of nonstate industry, has sought to remedy this problem with the formation of a “floating” meditation committee that can travel to nonstate enterprises and mediate disputes. “Analysis of the Handling of Labor Disputes in 1997” (yijiujiuqinian laodongzhengyi chuliqingkuangfenxi), Handling and Research of Labor Disputes, (April 1998), 10–14; “Advancement in Local Handling of Labor Disputes” (gedi laodongzhengyi chuligongzuozai qianjin), Handling and Research of Labor Disputes (June 1998), 9–14.
107. Problems in the Adjustment of Labor Relations Research Group of the Ministry of Labor, “China’s Current Work on the Adjustment of Labor Relations (guanyu woguo xianjieduan laodongguanxi diaozheng gongzuode), China Labor Science, March 20–23, 1994, 13–16.
108. The chain reaction quality (liansuoxing) of labor disputes is discussed in Jiang Junlu, “Two Poles Collide,” Legal Daily (Fazhi Ribao), February 18, 1995.
109. Interview, TEDA labor bureau, November 20, 2003.
110. China Statistical Yearbook, various years.
111. Jiang Junlu, “To Stay or Go: Legal Analysis of Mainland Employee Resignation” (zouyuhailiu: zhongguodalu guyongcizhidefalu fenxi), unpublished paper, June 2000; Cao Min, “China: Law Helps Protect Workers’ Rights, China Daily, October 11, 1996.
112. China Statistical Yearbook, 1996–98.
113. By 2000 Shenzhen’s People Court had awarded the highest workers’ compensation award. The case involved a worker whose arm was severed in an industrial accident while he was working for a private/foreign company in Dongguan, Guangdong Province. The award for 1.3 million RMB was a great deal higher than the arbitrated award of 115,000 RMB. The case attracted attention for its innovative use of existing laws and regulations to gain a higher award for the worker. Chan Kawai, “The Highest Compensation for Industrial Accident in China,” Change (July 2000), monthly newsletter of the Hong Kong Christian Industrial Committee.
114. For a discussion of general rights consciousness see Xia Yong, ed., Toward an Age of Rights (zouxiang quanli de shidai), (Beijing: Chinese Politics and Law University Press, 1995).
115. Chang Kai, Labour Relations, Labourers, Labour Rights, (laodong guanxi, laodong zhe, laoquan) (Beijing: China Labor Press, 1995), 454.
116. A grafted joint venture (jiajiehezi) is a venture between a foreign investor and an existing SOE that usually entails the division of the SOE into profitable and unprofitable halves. Older, more expensive, and less-skilled workers are often left behind in the unprofitable enterprises (which may then go bankrupt), while managers and younger workers will move to the new company.
117. On the large scale strikes in the Northeast in 2002 see “Paying the Price: Worker Unrest in Northeast China,” Human Rights Watch: China 14:6 (August 2002). See also Michael Sheridan, “China Hit by Wave of Worker Unrest,” Times Newspapers Limited, October 19, 1997; One report detailed how a “reformist” woman factory head was killed by disgruntled workers, in Wang Jiying, “Can She Become a Martyr?” (ta neng chengwei lieshi ma), China Womens’ News, November s, 1994. In Tianjin the police (Public Security Bureau) announced new measures to protect the areas surrounding factories, many of which were inundated with laid-off workers seeking partial wages. “Tianjin PSB Preserves Factory Safety,” (Tianjin gongan quebao qiye anquan), Legal Daily, July 7, 1997; James Flanigan, “China’s Reform: Peril, Promise in the Heartland,” Los Angeles Times, October 26, 1997, D1. This story details the violent protests that shook an inland province, Sichuan, when an enterprise declared bankruptcy to avoid paying wages and pensions. Managers then quickly restructured the factory and sought out foreign partners.
118. As early as 1994 the Ministry of Labor was publishing reports suggesting legislation be passed on strikes and factory lockouts. By 1999 these suggestions were more detailed and openly supportive of the legalization of strikes. (See below.) Problems in the Adjustment of Labor Relations Research Group of the Ministry of Labor, “China’s Current Work on the Adjustment of Labor Relations (guanyu woguo xianjieduan laodongguanxi diaozheng gongzuode), China Labor Science, March 20–23, 1994, 15.
119. You Quanrong, “Exploration of Several Problems in the Guarantee of Citizen Rights under a Market Economy” (shichangjingjitiaojianxia gongminquanli jiqibaozhangjigewentitantao), Legal Science (falu kexue), 3 (1994), 10–14; Shi Tanjing, “Discussion of the Problems in China’s Legislation of Strikes,” (guanyu zhongguo de bagonglifa wenti tantao), Handling of Labor Disputes (July 1999), 12–16; Chang Kai, “China’s Strike Legislation,” paper presented at the Trade Union Law Research Seminar, Shanghai Normal University, November 11, 2003; Xiao Dechun, “Reflections on Legislation Regarding China’s Strike Phenomenon,” (guanyu woguo bagong xianxiang de lifa sikao), Research on Finance and Economic Problems 1:182 (1999).
120. Nearly all of the reasons given to legalize strikes are associated either with the presence of foreign capital on Chinese soil or the need to converge with international practices regarding the right to strike. You Quanrong, “Exploration of Several Problems in the Guarantee of Citizen Rights under a Market Economy” (shichangjingji tiaojianxia gongminquanli jiqibaozhang jigewentitantao), Legal Science (falu kexue) 3 (1994), 10–14.
121. Ibid, 12. The writer avoids the term “foreign capitalist” (waiguo zibenjia) with its pre-revolutionary connotation of exploitation and uses the more bland term “foreign businessperson” (waishang).
122. The Chinese is “shangjibumen zuozhu baqiye maigeiwaishang.”
123. There was some speculation in the Hong Kong media prior to the 2001 revision of the Trade Union Law that the right to strike would be reinstated. The 2001 Trade Union Law, however, does not grant a legal right to strike. The only article (27) to mention work actions stipulates, “In the event of a work stoppage or go-slow measures at an enterprise or institution, the trade union shall, on behalf of the workers, enter into consultation with the enterprise, institution, or other interested parties, reflect the views and demands of the workers, and put forward ideas for a solution.” This is a slightly more “pro-worker” clause than that of the 1992 Trade Union Law. “Labor law to be revised, allowing workers to strike,” Chinaonline, October 4, 2001. www.chinaonline.com:80/issues/social_political/newsarchives. Date accessed October 9, 2001.
124. Interview, Legislation Department, Administrative Commission, TEDA, May 1997 and July 1999.
125. This perception is widely shared by labor researchers in China and foreign investors themselves. Interview, Japanese labor lawyer, Shanghai, July 1999; interview, former Ministry of Labor researcher, December 2002.
126. Zhao Minghua and Theo Nichols, “Management Control of Labor in State-Owned Enterprises: Cases from the Textile Industry,” China Journal 36 (1996): 1–21. See also Paul Bowles and Gordon White, “Labour Systems in Transitional Economies: An Analysis of China’s Township and Village Enterprises,” International Review of Comparative Public Policy 10 (1998): 245–272.
127. The relatively low rate of labor disputes in SOEs is discussed in greater detail in Mary E. Gallagher, “Use the Law as Your Weapon: Institutional Change and Legal Mobilization in China,” in Neil Diamant, Stanley Lubman, Kevin O’Brien, eds., Engaging Chinese Law (Stanford, Calif.: Stanford University Press, 2005).
128. Interview, trade union manager, Sino-Japanese JV, Tianjin, July 1997.
129. Interviews, American WFOE, Tianjin, May 1997; Sino-American JV, Shanghai, December 2002; Sino-Japanese JV, Tianjin, July 1997, Sino-Japanese JV, Shanghai, May 1997, July 1999, Sino-Japanese JV, Shanghai, November 2003.
130. Interview, Beijing, November 18, 2003; Ray Cheung, “Scholar Warns against Japan-Bashing; Free Speech could be Hijacked by Ultra-nationalists, Says Top Academic,” South China Morning Post, January 9, 2004, 8; Robert Marquand, “Japan’s War Past Sparks Chinese Rage,” Christian Science Monitor, November 13, 2003, A1; Ching Cheong, “Chinese Public Speaks Up on Japan Ties,” Straits Times (Singapore), November 24, 2003.
131. The exact nature and severity of the SOE problem is open to debate. Given the decline in recent years in this sector’s size and contributions to output its employment some even wonder if there still is an “SOE problem.” Research has found that restructured or privatized SOEs do perform better. However, given that the government’s policy since 1997 has been to “grasp” the large SOEs, keeping ownership in the state’s control, it is still worrisome that certain problems have not yet been solved, including improving corporate governance, including the selection of managers, and producing globally competitive firms. On these issues see Thomas Rawski, “Is China’s State Enterprise Problem Still Important?” Paper prepared for presentation at China’s SOE Reform and Privatization Workshop, University of Tokyo, June 25, 2000; Ross Garnaut, Ligang Song, and Yang Yao, “SOE Restructuring in China,” credpr.stanford.edu/events/Chinamirror2004/Garnaut _Song_Yao2004.pdf, date accessed August 28, 2004; Weiying Zhang, “China’s SOE Reform: A Corporate Governance Perspective,” www.gsm.pku.edu/cn/wuan1/Englishpapers/SIEREF,rtf, date accessed August 28, 2004; and Peter Nolan and Jin Zhang, “The Challenge of Globalization for Large Chinese Firms,” World Development 30:12 (2002).
1. Robert Gilpin, “The Multinational Corporations and International Production,” in Harry F. Dahms, ed., Transformations of Capitalism: Economy, Society, and the State in Modern Times (New York: New York University Press, 2000), 364.
2. Chinese Academy of Social Sciences, Institute for Industrial Economics, China’s Industrial Development Report, 2003 (zhongguo gongye fazhan baogao) (Beijing: Economic Management Publishing, 2003). See in particular chapter 34 on SOEs in manufacturing, (525–38). Nolan and Wang argue that large SOEs have improved considerably over time often through “institutional innovations” that involved the strategic use of foreign investment and global integration. Peter Nolan and Wang Xiaoqiang, “Beyond Privatization: Institutional Innovation and Growth in China’s Large State-Owned Enterprises,” World Development 27:11 (1999). Nolan and Zhang in a later article find many of the traditional problems persisting in SOEs and threatening their ability to compete globally. Peter Nolan and Jin Zhang, “The Challenge of Globalization for Large Chinese Firms,” World Development 30:12 (2002).
3. On the foreign sector’s contribution to the economy see Jiang Xiaojuan, “China’s Foreign Direct Investment: Its Contribution to Growth, Structural Upgrading, and Competitiveness,” Social Sciences in China 24:2 (Summer 2003). On the development of the private sector see Lan Shiyong, “China’s Private Enterprises, 1992–2001,” in Zhang Houyi, Ming Lizhi, Liang Zhuanyun, eds., Bluebook of Private Enteprises, No. 4, 2002 (zhongguo siyingqiye fazhan baogao) (Beijing: Social Sciences Documentation Publishing House, 2002).
4. On the debate in China over industrial policy and the creation of “national champions” from large SOEs see Peter Nolan, China and the Global Economy (New York: Palgrave Press, 2001).
5. This is not to assert that the Chinese state at present does not have burdens that are related to SOEs. In fact the burdens (obligations to pensioners, state-directed bank funds to keep failing firms afloat, among others) are themselves the cause of the state’s change of orientation toward developmentalism and away from socialism. These are the burdens of the past.
6. For example see Marc Blecher and Vivienne Shue, “Into Leather: State-Led Development and the Private Sector in Xinji,” China Quarterly 166 (June 2001); and Jonathan Unger and Anita Chan, “Inheritors of the Boom: Private Enterprises and the Role of the Local Government in a Rural South China Township,” China Journal 42 (July 1999): 45–74.
7. China’s private sector has developed more quickly since the late 1990s. This later development of the private sector does not contradict the argument here that China’s private sector development in relative terms came much later than opening to FDI. Even in 2002 familiar problems continue to dog the development of private industry, including government discrimination, lack of capital and bank credit, and difficulties in expanding in scale or across regions. Some of this is recounted in Yasheng Huang Selling China: Direct Foreign Investment during the Reform Era (New York: Cambridge University Press, 2003). See also Bluebook on China’s Private Industry, no. 4, 2002.
8. Yu Shu’e, “Thoughts on How to Speed Up Development of the Private Economy,” (dui jiakuai geti siying jingji fazhan de sikao) Yanhai Jingji 8 (2002); Li Min and Niu Ping, “Research on Measures to Develop Heilongjiang’s Private Economy after WTO Accession” (rushihou Heilongjiangsheng geti siying jingji fazhan duice yanjiu), zhongguo dangzheng ganbu luntan 4 (2003); An Hui, “Thoughts on the Promotion of the development of Dalian’s Private Economy,” (tuijin dalian geti siying jingji fazhan de sikao) Guoji Jingmao 5 (2002).
9. Yasheng Huang “Internal and External Reform, Parts I and II” September 20, 2000. www.chinaonline.com.
10. Nicholas R. Lardy, China’s Unfinished Economic Revolution (Washington, D.C.: Brookings Institution Press, 1998).
11. This is a very brief synopsis of the various reform measures undertaken in the 1980s. They are examined in greater detail in chapter 4. The main point is that none of these reforms touched on the ownership structure of the enterprise. The contract-management system has gradually grown closer to ownership reform as contract lengths have lengthened and managers have been given greater control over the enterprise. Although in the end losses of the enterprise are the responsibility of the state, not of the contracted management. Stockholding experiments as well, while nominally changing the structure of the enterprise, generally left the state as the majority stockholder and kept those state stocks as nontransferable. See chapter 3 for changes in the 1990s that have made securitization more akin to privatization.
12. Edward Steinfeld, Forging Reform in China (New York: Cambridge University Press, 1998), 22.
13. One notable exception is Haier.
14. Interview, general manager, Tangshan SOE, July 1999; interview, general affairs office manager, urban collective, July 1997.
15. These comparisons ranged from comparisons between Chinese and foreign-invested firms as well as Chinese firms versus foreign multinationals, particularly those from the United States and Japan. For example Li Chengyou, “A Breakthrough Is Needed in Property Rights Reform” (chanquanzhidu gaige yingyou tupo), China Business Times, March 31, 1997, 2. The author, Li Chengyou, is a Guangdong representative in the National People’s Congress and the general manager of a large state-owned conglomerate in Shenzhen. In this speech he presses for deeper reform and justifies it with comparisons to the automotive, electronic, and steel industries of the United States and Japan. Two government researchers interviewed in a separate article in Workers Daily also placed reform in the context of an “attack” from imports and foreign capital. “The economy’s growth rate is fast, why is unemployment increasingly severe? Overproduction is the background, structural adjustment is the main cause” (jingjigaosuzengchang, weiheshiye yujia yansu? zongliang guoshengshibeijing, jiegou diaozhengshi zhuyin), Workers Daily, July 17, 1997, 2.
16. I am not arguing that empirically speaking SOEs had more unfair disadvantages than nonstate firms. In fact SOEs still received ample advantages. Their markets were often protected by bureaucratic fiat, they received bank credit denied to other more efficient sectors, they were bailed out by the government time and time again while nonstate firms went bankrupt, and they had better institutionalized connections with government officials. (Of course from an economic perspective some of these advantages are in truth disadvantages because they strengthen the soft budget constraint and make it hard for an SOE to be good.) The debate about what was wrong with SOEs in the 1990s focused on the disadvantages of SOEs vis-à-vis other sectors. Often this argument was put forward by reformists who wanted to reform SOEs more totally, remove the soft budget constraint, and in letting them fail, allow the best to survive. It was also put forward by managers of SOEs, some who wanted more rational management and some who needed a scapegoat for their own ineptitude, corruption, or bad luck.
17. On national champions see Nolan (2001). On the adoption of piece rates and mimetic processes of adaptation see Lisa A. Keister, “Adapting to Radical Change: Strategy and Environment in Piece-Rate Adoption during China’s Transition,” Organization Science 13:5 (September–October 2002), 459–74. See also Douglas Guthrie, Dragon in a Three-Piece Suit: The Emergence of Capitalism in China (Princeton: Princeton University Press, 1998). On the adoption of wage systems from foreign enterprises see “On the Adoption of ‘Secret Wages’ in Some Shanghai SOEs” (guanyu shanghaishi bufen guoyouqiye shixing gongzi baomi fangfa), Inside Labor (Laonei) 17 (November 1994).
18. Guthrie (1998), 3.
19. Jiang Zemin’s report to the Fifteenth National Communist Party Congress, quoted in “On Reemployment of Laid-Off SOE Workers,” FBIS-CHI-98-267, wnc.fedworld.gov. Date accessed November 5, 1998.
20. Dennis Woodward, “Reforming China’s State-Owned Enterprises,” in Zhang Yuezhou et al., eds., Chinese Economy toward the 21st Century (Sydney: University of Sydney, 1999), 193.
21. Joseph Kahn, “Major Chinese Firms Are Modeling Themselves on Japanese Conglomerates in their Expansion,” Asian Wall Street Journal, June 26, 1995, 2; Shawn Shieh, “Is Bigger Better? A Conglomerate Case Study,” China Business Review, May 1, 1999. Lessons from the Korean model are delineated by the Chinese ministers of Labor and the vice minister of State Economic and Trade Commission in “Chinese Ministers Discuss Enterprise Reform and Labour Problems,” www.chinaonline.com/issues/social. Date accessed March 2, 2000. Some Chinese leaders opposed the emphasis placed on large, diversified enterprises and continued to press for government support to small and medium sized business. “Wu Jinglian on Small, Medium Businesses,” Qiushi, July 16, 1999. In FBIS-CHI-1999-0803, wnc.fedworld.gov. Date accessed September 27, 1999.
22. Joseph Fewsmith China after Tiananman (New York: Cambridge University Press, 2001), 203.
23. Jiang Zemin, “Hold High the Great Banner of Deng Xiaoping Theory . . .” Speech delivered at the Fifteenth National Congress of the Communist Party of China. Quoted in Woodward (1999), 194.
24. Interviews at the Tangshan SOE also demonstrated that SOE management had also been made aware of the problems of the Korean model even as they pursued it. Responses to my questions about problems with the Korean chaebol system were detailed defenses of the model in general with some acceptance of the pitfalls.
25. Ren Rongwei and Liu Xiaochan, “The General Trading Company Analyzed,” Problems in International Trade (guoji maoyi wenti), April 6, 1999: 20–24. FBIS-CHI-1999, wnc.fedworld.gov/cgi. Date accessed September 27, 1999.
26. The merger between Tangshan and QX Cement is introduced here in this section on the central level because as a “key” state enterprise of Hebei Province, Tangshan was one of the SOEs to remain state-owned and to receive the full attention of the state as a potential chaebol-style firm. Tangshan managers mentioned the Korean system frequently in their interviews as a model for their expansion. Interviews, general manager, company group business manager, Tangshan SOE, July 1999. By 2003, however, the company resisted government-run mergers, preferring instead to look for new opportunities in other provinces. These opportunities emerged out of personal ties, not government fiat. Interview, SOE deputy general manager, Tangshan, November 2003.
27. Zhu Rongji, “Cut Staff, Increase Profits, Distribute the Laid Off Workers, Standardize Bankruptcy, Encourage Mergers” (jianyuan zengxiao, xiagangfenliu, guifanpochan, gulijianbing), reprinted in Jingji guanli wenzhai, March 1997, 6–7.
28. The older SOE had a workforce that was 25 percent larger than the Tangshan SOE but its annual output was only one-third that of Tangshan SOEs. Interview, company group business manager, Tangshan SOE, July 1999.
29. “Report Predicts Merger, Acquisition Wave in China,” Beijing Xinhua, March 2, 2000. In FBIS-CHI-2000-0302, www.fedworld.gov/cgi-bin. Date accessed May 17, 2000.
30. Interview, company group business manager, Tangshan SOE, July 1999.
31. Tangshan managers mentioned the recent investments of large Taiwanese cement companies as well as that of LaFarge, a French multinational. Interview, Tangshan SOE, deputy general manager, November 2003. See also “France’s Lafarge sees China as Growth Area Despite Difficult Market Conditions,” AFX News Limited, October 23, 2003.
32. One-time severance payments became very widespread by 2003. The China Daily, China’s official English newspaper even ran a special report on them. Fu Jing, “For Workers, Parting is Painful,” China Daily, February 2, 2004, 5.
33. “New Exploration of Using Foreign Investment to Spur Revision of an Industry,” (a report by the State Development Planning Commission) Renmin Ribao, August 10, 1999, 2. FBIS-CHI-1999-0826, date accessed May 17, 2000.
34. No doubt the chairmen and presidents of the multinationals who increasingly invest in China in order to reach its domestic consumer market have quite different ideas about the future of foreign firms in China. As the chairman of Proctor and Gamble stated at Fortune magazine’s Global Forum, held in Shanghai in 1999, “I believe a more open and prosperous China is sure to provide even bigger room for us.” “On World Economic Giants Interests in PRC,” Beijing Xinhua, September 26, 1999. FBIS-CHI-1999-0926, wnc.fedworld.gov/cgi-bin, date accessed May 17, 2000.
35. “Kodak Snaps Up Lucky Stake,” October 24, 2003, http://englishl.people.com.cn/200310/24/eng20031024_126772.shtml, date accessed August 25, 2004.
36. Quoted in James Kynge, “Remove the Iron Rice Bowl,” Financial Times, May 26, 1998.
37. Some analysts of this problem pointed to Taiwan’s developmental trajectory in addition to Japan’s and Korea’s to show that Chinese large firms do better when they are government-run, thus adding an efficiency argument to the argument that China needed to build competitive industries owned by the state, not by private domestic entrepreneurs. They argued that Taiwan’s economic structure was made up of many small to medium-sized entrepreneurial firms with the larger, strategic industries kept in government control. They seemed not to notice that Taiwanese small-to-medium business owners did not have to compete with large numbers of foreign-invested firms since most Taiwanese firms were linked to foreign capital indirectly through subcontracting agreements, not equity ownership. Xu Ming, ed. “The State-Owned Enterprise Problem: China Does Not Have Entrepreneurs,” The Critical Moment of Modern China: Twenty-Seven Problems that Need to be Earnestly Resolved (guanjianshike dangdai zhongguo jidaijiejuede ershiqqigewenti) (Beijing: Contemporary China Publishing House, 1997), 208–211.
38. Kynge (1998).
39. Interview with Gai Ruyin, deputy mayor of Shenyang, quoted in James Kynge, “Two-Speed China: State Factories Are Shut or Sold,” Financial Times, June 16, 1998.
40. You Ji, China’s Enterprise Reform: Changing State-Society Relations after Mao (New York and London: Routledge Press, 1998), 168.
41. “Xinhua Analyzes Liaoning’s SOE Reform,” Xinhua Domestic Service, March 7, 2000. FBIS-CHI-2000-0307, date accessed May 17, 2000. “Jiangsu’s New Policy on State Enterprise Reform,” Nanjing Xinhua Ribao, February 7, 2000. FBIS-CHI-2000-0223, date accessed May 17, 2000. “On Enlivening Small State Enterprises” (Hunan Province reforms), Renmin Ribao, January 13, 2000. FBIS-CHI-2000-0208; Bruce Gilley, “Model Privatization: Guangdong Leads China’s State-Enterprise Sell-Off,” FEER, October 9, 1997: 73; Fan Jun, “State Enterprise Reform Takes Difficult First Step” (Shandong Province reforms), Openings 1:1997, 13–16.
42. Clay Chandler, “WTO Membership Imperils China’s Industrial Dinosaurs,” Washington Post, March 30, 2000: A1.
43. Kynge, “Two Speed China.” The article quotes a one-time sum of 10,000 RMB.
44. Access to foreign capital varies widely across different regions. Shenyang and other northern cities were more aggressive in their marketing tactics (i.e., going to Europe) because these areas lacked the dynamic nonstate economies that had already grown up on the coast. Fujian, Guangdong Shanghai, Shandong, and other provinces on the coast all enjoyed a “critical mass” of foreign and private investors to draw from locally. It is, unfortunately, extremely difficult to find data on the number of sales, auctions, mergers, and grafted joint ventures that have occurred. Despite this problem, however, the argument can be made that some of the restructuring precedes the arrival of a buyer. Most local officials and SOE managers are fully aware of the drawbacks to SOEs and make attempts to cut the workforce and boost productivity as a selling point. Recent data on the percentages of FDI that are mergers and acquisitions demonstrate that this trend of foreign acquisition is real. In 1999 Chinaonline stated that 60 percent of China’s FDI (or $21 billion) went to mergers and acquisitions. “China ranked No. 2 in absorbing FDI during 1979–99,” www.chinaonline.com, October 11, 2000. However it is not clear how this figure was determined as it cannot possibly include only formal M&As, which were still restricted by the government. Other estimates for formal M&As are much lower, about 10% of all FDI in 2002.
45. The notion of an “unequal playing field” is discussed in greater detail in chapter 4.
46. “SOE Welfare Burden Hinders Profitability,” ChinaStaff, March 2000. www.asialaw.com/cc/prcnews, date accessed August 2, 2000.
47. Labor Science Research Institute, “The Influence of China’s Enterprise Reform on the Labor and Social Security Field,” Unpublished research paper, November 1998, 5. Interview, researcher, Labor Science Research Institute, Beijing, July 1999.
48. A manager at an urban collective firm in Tianjin noted that when a foreign investors invests in a company owned by the collective, they (the managers at the central office) defer immediately to foreign management practices. Interview, urban collective manager, May 1997.
49. Chinese managers in JVs particularly those with a joint position as a trade union official often spoke of their role in this way. They communicated the production goals and corporate policies of the company to the workforce but they also relayed to management which policies would be most difficult for Chinese workers to accept. This role is most relevant when a large number of workers have been transferred from the Chinese partner. With the rise in popularity of WFOEs this role has become less important. Interview, personnel manager, Sino-Japanese JV, Shanghai, July 1999; Interview, trade union chairman, Sino-American JV, Shanghai, December 2002.
50. Yasheng Huang (2000).
51. Douglas Guthrie Dragon in a Three-Piece Suit (Princeton: Princeton University Press, 1998), 216.
52. Reinhard Bendix, Work and Authority in Industry: Ideologies of Management in the Course of Industrialization (New York: John Wiley and Sons, Inc., 1956).
53. Ibid., xxi.
54. For example, a typical article in 1996 touting the deepening of state enterprise reform and the establishment of a “modern enterprise” stated that “the most important trait of a correct outlook on honor has collectivism as the foundation. The first demand is that the worker place the state’s and the enterprise’s honor before his individual honor.” “Several Problems in the Establishment of a Modern Enterprise” (xiandaiqiye jianshezhong de jigewenti), Workers Daily, November 25, 1996, 2.
55. Blecher found that workers in Tianjin tended to accept the ideas referred to here regarding the market and workers’ own fallibility in failing to adjust quickly enough to the demands of a market for labor. Marc Blecher, “Hegemony and Workers’ Politics in China,” China Quarterly (June 2002).
56. Interview, general affairs office manager, urban collective, Tianjin, March 1997.
57. Waidi dagong yunji lixiang ben xian, xiagang gong zuo dengshoulao, Workers Daily, October 11, 1997; “Would You Rather Lose Face or Your Rice Bowl” (Qiudiao mianzi duanqi fanwan), Workers Daily, October 11, 1997. “Where Are the Difficulties in Reemployment” (zaijiuye nanzaihe chu), China Business Times, March 3, 1997. These were typical articles arguing that laid-off workers must change their mindset regarding employment and go to work for rich peasants in the suburbs.
58. “State Circular on Helping Laid-Off Workers,” Beijing Xinhua, July 3, 1998, in FBIS-CHI-98-184, wnc.fedworld.gov/cgi-bin. Date accessed December 3, 1998.
59. “Facing Up to Unemployment, What Should Chinese Workers Do?” (mianduishiye, zhongguo gongrenying zenmaban), Shenyang Daily, March 12, 1997, 2.
60. “Workers, What Kind of Employment Outlook Should You Have?” (laodongzhe, gaiyou zeyangdejiuyeguan?), Workers Daily, July 18, 1997, 1.
61. Interview, personnel manager, Tangshan SOE, May 1997.
62. The Sino-HK JV had the most apparent Taylorist labor practices, organized around spinning wheels for plastic threads. The managers showed how workers had to stand a certain way in order to operate as many wheels as possible at one time. They had recently changed the pattern to increase the number of wheels per worker, thus increasing the intensity of the work. The productivity of the workers doubled, allowing a large increase in profits with hardly any increase in labor costs. Interview, Sino-HK joint venture general manager, Tangshan, May 1999, November 2003. Minghua Zhao and Theo Nichols found extensive use of “Taylorism” in state-owned textile factories as well as Japanese production methods like lean production and the “full-load work method,” a practice intended to utilize every bit of labor productivity in order to cut costs and boost productivity. Zhao and Nichols (1996), 78–80.
63. Interview, General Manager, Tangshan SOE, July 1999.
64. The policy was part of general nationwide campaign to turn workers into “civilized employees” (wenming zhigong). Infractions listed above would remove the worker’s status as civilized. The “civilized bonus” was 30 percent of the worker’s annual salary at this particular SOE. Interview, personnel manager, Tangshan SOE, May 1997.
65. Interview, general affairs office manager, urban collective, Tianjin, March 1997.
66. Firms in Tianjin and Shanghai both reported informal practices of wage setting between firms owned by the same nationality, in particular Japanese and Taiwanese firms through their respective business associations. United States firms in Beijing met monthly with the U.S.-China Business Council to discuss labor and human resource problems. Japanese companies in a Shanghai development zone circulated surveys of workers’ wages and benefits to neighboring factories in an attempt to restrain increases.
67. “Regarding the Experimental Implementation of the Confidential Wage System in Shanghai SOEs” (guanyu shanghai shi bufen guoyouqiye shixing gongzibaomi fafang), Laonei, November 1994, Report #17.
68. Bendix (1956), 436.
69. Ziya Onis, “Logic of the Developmental State,” Comparative Politics 24:1 (October 1991), 117.
70. On Japan see T. J. Pempel and Keichi Tsunekawa, “Corporatism without Labor? The Japanese Anomaly,” in Philippe Schmitter and Gerhard Lehmbruch, eds., Trends toward Corporatist Intermediation (Beverly Hills, Calif.: Sage, 1979), 231–70. See also Frederick Deyo, Beneath the Miracle: Labor Subordination in the New Asian Industrialism (Berkeley and Los Angeles: University of California, 1989) and his edited volume The Political Economy of the New Asian Industrialism (Ithaca: Cornell University Press, 1987).
1. Haitao Zhang et al., eds. Will Foreign Capital Swallow Up China: Where Should National Industry Go? (Waizi Nengfou Tunbing Zhongguo: Minzuqiye ying xiang hechuqu), (Beijing: Qiye Guanli Chuban She, 1997), 9.
2. Lawrence Lau, Yingyi Qian, and Gerald Roland, “Reform without Losers: An Interpretation of China’s Dual-Track Approach to Transition.” Journal of Political Economy 108 (February 2000), 120.
3. See “Merger, Acquisition of SOEs by Private, Foreign Enterprises Encouraged: Official,” People’s Daily Online, November 19, 2003, http://english.people.com.cn/200311/19/eng20031119_128569.shtml, date accessed August 28, 2004; “Chances and Challenges of M&A of SOEs for foreign capital,” People’s Daily Online, August 17, 2004, http://english.people.com.cn/200408/17/eng20040817_153442.html, date accessed August 28, 2004. An example of the continuous effort by local governments to entice FDI into the restructuring process is Shanghai’s publication of new liberalized regulations for foreign investment. They include two important measures (1) “encouraging foreign investors to acquire state-owned enterprises”; and (2) “promoting use of capital markets in setting up joint ventures.” The second measure will allow foreign investors to buy up shares of SOEs that were previously limited to domestic investors. “Shanghai Unveils Regs to Lure Foreign Investment,” www.chinaonline.com, October 19, 2000.
4. A recent study by Chinese Academy of Social Sciences argued that if the “SOE’s welfare payments were brought in line with private or foreign-invested enterprises, many more would be profitable.” “SOE Welfare Burden Hinders Profitability,” China Staff (March 2000).
5. China’s private sector has long suffered from discrimination due to the leadership’s ideological inclination to favor industry owned by the state or collectives; also because China’s banking system has long funneled money to state firms with good political connections over firms with favorable performance indicators, China’s private industry has had difficulty raising money for investment. As one analyst recently commented, “If state-owned enterprises can’t perform and there isn’t a viable domestic private sector, the economy will by default become mostly foreign-owned.” Quoted in Craig Smith, “Private Business in China: A Tough, Tortuous Road,” New York Times (July 12, 2000). See also Karby Leggett, “Foreign Investment: Not a Panacea,” Wall Street Journal, January 14, 2002, A1.
6. Yasumuro Kenichi, ed. China’s Labor-Capital Relations and on the Ground Management (1999) 32; Li Juexin, “Perspectives on the Hotspots of Labor Relations Friction,” (laodongguanxi mocarediantoushi) Handling and Research on Labor Disputes (laodong zhengyi chuli yu yanjiu) (September 1998), 9–11.
7. Elizabeth Rosenthal, “Factory Closings in China Arouse Workers to Fury,” New York Times, August 29, 2000: A1; “Labor Unrest Erupts as Chinese Firms Get Trimmer,” Straits Times (Singapore), August 26, 2000.
8. See, for example, Tong Xin’s account of a Thai acquisition of a SOE in Guangxi Province in “Unemployment Crisis: Its Significance for the Chinese Working Class,” Social Sciences in China (Winter 2003).
9. T. J. Pempel, “The Developmental Regime in a Changing World Economy,” in Meredith Woo-Cumings, ed., The Developmental State (Ithaca: Cornell University Press, 1999), 130.
10. Meredith Woo-Cumings, “Introduction: Chalmers Johnson and the Politics of Nationalism and Development,” in The Developmental State (Ithaca: Cornell University Press, 1999), 1.
11. Frederic C. Deyo, Beneath the Miracle: Labor Subordination in the New Asian Industrialism (Berkeley and Los Angeles: University of California Press, 1989).
12. Ronald Dore, British Factory—Japanese Factory (Berkeley and Los Angeles: University of California Press, 1974); Price (1997).
13. Deyo (1989); Ping-Chun Hsiung (1996). Ping-Chun Hsiung, Living Rooms as Factories: Class, Gender, and the Satellite Factory System in Taiwan (Philadelphia: Temple University Press, 1996).
14. Jang Jip Choi (1989); Hagen Koo in Perry, ed. (1996). Jang Jip Choi, Labor and the Authoritarian State: Labor Unions in South Korean Manufacturing Industries, 1961–1980 (Seoul: Korea University Press, 1989); Hagen Koo, “Work, Culture, and Consciousness of the Korean Working Class,” in Elizabeth J. Perry, ed., Putting Class in Its Place: Worker Identities in East Asia (Berkeley and Los Angeles: University of California Press, 1996).
15. Peter Nolan China Global Economy (New York: Palgrave, 2001), 217.
16. As is clear from the example above, workers also resort to force and the threat of violence to oppose restructuring. However, my point here still stands. The workers at Meite in Tianjin took the managers hostage because they believed that the layoff decision was in violation of their labor contracts.
17. On “tinkering” see Janos Kornai, The Socialist System: The Political Economy of Communism (Princeton: Princeton University Press, 1992).
18. Kevin O’Brien, “Rightful Resistance” World Politics 49:1 (1996), 31–55.