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Answer ONE of the following three questions in four sentences or less.

– How does capitalist development after 1973 (the neoliberal era) differ from capitalist development prior to 1973 according to David Harvey? Your answer should be comprised of four sentences. In the first sentence, describe the process(es) upon which capitalist development was premised prior to 1973, or in other words, how capitalists realized profit in the postwar era. (Hint: Think back to “The Five Stages of Economic Growth”). In the second sentence, give an example of capitalist development in the postwar era.  In the third sentence, describe how capitalists realize profit in the post-1973 period. In the fourth sentence, give an example by citing one of the processes Harvey describes as “accumulation by dispossession”.)

According to Harvey, what is neoliberalism and why does it entail accumulation by dispossession? (Note, in your response make sure you define both neoliberalism and accumulation by dispossession).

-How does the “race to the bottom” described by Chan illustrate Harvey’s concept of accumulation by dispossession? (In your response, make sure you define accumulation by dispossession).

-How do Silver and Zhang complicate Harvey’s interpretation of resistance to accumulation by dispossession?

China Perspectives 
46 | march-april 2003

A “Race to the Bottom”
Globalisation and China’s labour standards

Anita Chan

Édition électronique
DOI : 10.4000/chinaperspectives.259
ISSN : 1996-4617

Centre d’étude français sur la Chine contemporaine

Édition imprimée
Date de publication : 15 avril 2003
ISSN : 2070-3449

Ce document vous est offert par Cornell University

Référence électronique
Anita Chan, « A “Race to the Bottom” », China Perspectives [En ligne], 46 | march-april 2003, mis en ligne
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© All rights reserved

A “Race to the Bottom”
Globalisation and China’s labour standards

Anita Chan

1 The Chinese government rejoiced on the occasion of gaining World Trade Organisation

membership in November 2001. There was an expectation in Peking that once the

country became integrated into the world economy, it would be on the right track to

attain economic prosperity. There might be some bumps along the way: some

industries and agriculture would suffer, affecting employment, but as a whole, it was

predicted, China would gain. Employment has been a major concern in China, and the

government’s best sell was that foreign investment would increase and the labour-

intensive manufacturing sector would gain: according to one estimate, 2.8 million

additional jobs in textiles and 2.6 million jobs in the garment trade, as the constraints

of quotas for garments and textiles end 1.

2 As predicted, foreign investment has been flowing into China in the past year at the

expense of its South-East Asian neighbours and the tiger economies of Hong Kong,

Taiwan, Korea and even Japan. Hong Kong and Taiwan have been the nurturers of

Chinese export industries for more than a decade, only to discover now that some of

their own industries are being “hollowed out” 2. As one observer, William Greider,

describes it, China is “sucking away” jobs. “Globalisation”, he writes, “is entering a

fateful new stage, in which the competitive perils intensify for the low-wage developing

countries. … In the ‘race to the bottom’, China is defining the bottom” 3.

3 In other words, though employment in the low-wage industries in China may be

expanding, the wages of the workers in these industries are not rising, and for many of

them have been falling. What within the Chinese system allows it to lead in this race to

the bottom in labour standards?4 First, let us examine the empirical evidence showing

that, when compared with other developing export-oriented countries, wages in China

are very low relative to the cost of living.

Chinese wages in comparative perspective

4 There is a popular image that the global divide in competition in world trade is

between the developed and underdeveloped countries. I would like to argue here that

increasingly the competition, particularly in the labour-intensive industries, is largely

A “Race to the Bottom”

China Perspectives, 46 | march-april 2003


among countries in the developing world. The intense competition in wages among

these countries is well illustrated by Figure 1, which shows the minimum legal wage in

a number of countries around the world as of 1999.

5 This shows an enormous gap between the minimum wage in the United States and

those of developing countries in Asia and Central America—with the US minimum wage

at least twenty times higher. Faced by cheap labour abroad in this era of global

production, labour-intensive industries are basically finished in the US and in most

other high-wage nations. Such goods continue to be produced there only to a marginal

extent by using illegal immigrants5 and home workers 6, “sweated” at a wage well below

the legal minimum wage.

6 Competition in these labour-intensive industries lies instead today among the countries

of the third world. All of the minimum legal wages in the developing countries in

Figure 1 hovered around US$30-50 a month. This is equivalent in China to 240-400 yuan

a month. The legal minimum wage in Shenzhen, the Chinese city with the highest

minimum wage, was equivalent to only US$42. China has set its minimum wage

standards very low, to the point that it is even competitive with Vietnam and

Cambodia, two countries where the cost of living is lower than in China. In Mexico, El

Salvador and Nicaragua, the wage levels are slightly higher than Asian wages, but this

competitive disadvantage is largely cancelled out by the proximity of Central America

to the American market.

7 When China first instituted a minimum legal wage system in the early 1990s, it had the

good intention of protecting workers in the export sector. But soon the function of the

minimum wage changed character. It simply became the amount that employers

reported to the government they had paid their workers in the labour-intensive export

industries; they rarely pay assembly-line workers above the monthly legal minimum

wage. The great majority of the workers in this sector are migrant workers from the

countryside, and as can be seen from Figure 2, they are not sharing in the standard of

living of the urban population.

8 It can be noted from this table that the setting of a minimum wage level is extremely

decentralised in China. In most Western countries there is only one nationwide

minimum wage, but in China there are hundreds. Each city or even a district in a city

can set its own minimum wage based on a formula provided by the central government.

This takes into account the cost of living in the locality, the prevailing wage, the rate of

inflation etc., and it is adjusted each year 7. The table shows that these minimum wages

have been rising every year, but when these increases are compared with the annual

consumer price indexes for each of these cities, it becomes evident that the rises in the

minimum legal wage only kept pace with inflation. In other words, even though the

Chinese economy is rapidly developing, in real terms the minimum wages have

remained level throughout the 1990s.

9 As can be seen in Figure 2, the cities in Guangdong province and other big cities along

the coast have the highest cost of living and consequently the highest minimum wages.

Elsewhere in China, the minimum legal wages are lower, which poses a threat to the

coastal region. The results of this threat, as I shall explain, are shown in Figure 2.

10 Legally, the minimum wage in each locality is not simply supposed to keep up with

inflation. According to the international standard employed by the Chinese

government, the minimum wage of a locality should be set within the range of 40% to

60% of the average wage in that locality 8. This Figure uses 40% as the cut-off point to

A “Race to the Bottom”

China Perspectives, 46 | march-april 2003


see whether the minimum wages officially set by various localities have reached this

standard in past years. 1993 was the only year in which all of these minimum wages

fulfilled the Chinese government’s own criterion of reaching at least 40% of the average

wages. Since 1993, in most localities, the minimum legal wages did not attain even this

40% mark, in direct violation of the national directive requiring that it do so. Instead,

with only a few exceptions (see the squares shaded in grey), the general trend in

minimum wages has been one of stagnation or steady decline when compared to the

incomes of urban residents. This results, for example, in the minimum legal wage in

Peking declining from 36.7% of Peking’s average wage in 1994 to only 27% in 1999; and

in Shenzhen city from 40% in 1993 to a bit under 24% in 1999. This means the income

gap between the regular urban population and the migrant workers kept on widening

in the 1990s 9.

Figure 1: Minimum wage standards of textile, garment and footwear workers in different countries,
1999 (in USD)

Source: Based on wage figures provided by U.S. Department of Labor, Bureau of International labor
Affairs, Wages, Benefits, Poverty Line, amd Meeting Worker’s Needs in the Apparel and footwear
Industries in Selected Countries, Washington D.C., Departement of Labor, 2000, p.I-51.

11 Another important conclusion that can be drawn from Figure 2 is that globalisation

scarcely leads to improved wage conditions for the workers who make goods for export

compared to the populace at large. Guangzhou and Shenzhen, the two cities that have

the highest average income in the country, and the first cities in China that the central

government allowed to woo foreign investment, have the lowest minimum wage to

average wage percentage. In these two cities it did not even reach 30%. The worst of all

the nine cities is Shenzhen, the most famous model in China of a special export zone.

The percentages in these two cities have been consistently the lowest of the nine cities

since 1997, dropping to a low of 23.8% in 1999. On the other hand, in the interior of

China the minimum legal wage in the city of Chongqing, which is the least linked with

the global economy, reached that mark of 40% in 1999. These figures reflect a very

worrying trend. As a region becomes more prosperous, it violates the national

guidelines and seeks to maintain its attractiveness to foreign capital by keeping its

minimum wage level low, in order to compete with other localities in China in selling

the labour of migrant workers. The benefits of globalisation in accordance with this

competitive logic have not, and will not, trickle down to those who make the products.

12 What is even worse—and is not revealed by this table—while on paper the local

governments comply with the central government’s decrees about raising minimum

wage levels annually to adjust to the average urban wage and inflation, in reality the

A “Race to the Bottom”

China Perspectives, 46 | march-april 2003


wages of the migrant industrial workers are often considerably lower than the official

standards. For one thing, the minimum wage, set by the month, does not reveal the

illegally long hours worked by migrant workers to attain that minimum. According to a

survey I conducted in China’s footwear industry, the average workday there amounts to

about 11 hours each day, often with no days off—that is, about an 80-hour workweek.

Nor do the official statistics take into consideration the staggering amount of wages

owed but not paid to migrant workers. Of the 51,000 cases of workers’ complaints

lodged by letters and by personal visits to the Shenzhen authorities during 2001, 43%

related to unpaid wages 10. One Chinese newspaper article described the non-payment

of wages as having become a “custom” in Guangdong 11. while another described it as

an “incurable disease” 12. When the illegally long work hours and these unpaid wages

are taken into account, a sizeable proportion of the workers are making considerably

less than the minimum legal wage.

13 In short, as China develops, the benefits have not trickled down to the assembly-line

workers from largely rural backgrounds who make the exported goods. Indeed, their

situation has even worsened since the Asian financial crisis of 1997-98; the downturn

intensified competition with South-East Asian labour, which had become much cheaper

in the wake of currency devaluations. Among the reasons why China is attractive to

foreign investors, who have been rushing into China at the expense of its Asian

neighbours, is that local Chinese authorities have been able to hold down wages by

turning a blind eye to violations of China’s own labour regulations and laws. The

central government normally does not intervene.

14 Competition within China between different regions exacerbates the problem of low

wages. And the central government has intervened in a way that encourages even

lower pay. Though migrant workers’ wages in Guangdong province are very low, the

central government has been worried that Guangdong is pricing itself out of the

international market. The government therefore has started to encourage foreign

capital to move inland, to places where the pay is even lower. The owner of an

Australian toy company who sources some of her merchandise from China noted

enthusiastically to me this past year that she is now contracting toy production at

factories further north and away from big cities. The products, she said, are just as

good and cheaper.

Mexico: China’s main competitor

15 The geographic race to the bottom that operates within China also operates in an

international context. In the 1990s China’s main competitor for the American garment

market was Mexico, on the other side of the globe 13. Since the signing of the North

American Free Trade Agreement (NAFTA), Mexico has gained a large number of new

clothing factories. Today China and Mexico are competing neck and neck for the

American market, each supplying around 15% of all apparel imports to the US. Mexico

enjoys two substantial advantages over China: it is next door to the US (and hence can

meet a faster turnover rate for orders) and it enjoys an absence of quota restrictions

due to NAFTA. As a result, Asian investors who serve as the subcontractors for the

name-brand Western multinationals—and these are particularly South Koreans and

Taiwanese—became increasingly active there in the 1990s, even moving apparel

production out of Asia to Mexico. Along the US-Mexican border assembly plants called

maquiladoras have mushroomed, employing about a million migrant workers in various

A “Race to the Bottom”

China Perspectives, 46 | march-april 2003


labour-intensive industries. This number is still small compared to the 12 million in

Guangdong province alone, but it represents a 150% increase in Mexico since 1990 14.

16 As in China, expansion in employment does not mean rising wages for Mexican migrant

workers. The minimum legal wages there are almost double that of Shenzhen, and this

produces pressures on Mexican wage trends. In the manufacturing sector, real wages

dropped by 20% during the 1990s. According to the International Labour Organisation’s

estimate, the migrant workers’ wages in Mexico’s apparel industry shed 28% of their

purchasing power in the period between 1994 and 1999.

17 Despite this drop in real wages, the maquiladoras recently have been losing ground. As

trade barriers continue to fall due to the WTO, the middleman firms from Taiwan and

South Korea have begun shifting production back to Asia, particularly China. The

numbers of maquiladoras swelled from 120 in the 1970s to 3,700 in 2000, but have

dropped by 500 factories since then 15. Pressures are therefore tightening on Mexican

enterprises to more vigorously compete with China’s long working hours and bargain-

basement wages. This also explains why Mexico was the last country to sign a trade

agreement with China, delaying China’s entry into the WTO. Mexico knew that when

the trade barriers are removed, it would have much to lose. But the international

pressure was too great for Mexico to stand its ground.

China’s pass system—the drive to the bottom

18 There are numerous reasons why Chinese wages can be kept so competitive compared

to other countries. First, it has an almost inexhaustible supply of cheap labour from the

countryside. Second, the decentralisation and deregulation in wage-setting under

China’s economic reforms has enabled local governments to turn a blind eye to labour

exploitation. Third, there is no autonomous union movement in sight in the foreseeable

future to fight to preserve wage levels, and the Chinese government is intent on

making sure that none is allowed to arise.

19 There is also a fourth fundamental reason—China’s so-called hukou system, or

household registration system, which prevents an uncontrolled rural-to-urban influx of

population. This works in similar ways to the pass system under South Africa’s former

system of apartheid. To be sure, the two systems differ markedly from each other in

origin and ideology. The South African pass system was intertwined with a history of

racism, colonialism and the development of South African capitalism, all of which

favoured the control of movement of African people to provide greater political

security and enhanced efficiency in the use of black labour. The ideology on which the

system was based was white supremacy, and apartheid was the cornerstone of the

state-building project of the South African white ruling elite after World War II.

20 The hukou system in China has a very different history. It was established after the

Communist Party came to power in 1949. To ensure that the planned economy met the

basic needs of the urban population, a rationing system was instituted in the 1950s,

which in turn required the registration of people. As ration coupons could only be used

in the locality where they were issued, this automatically restricted the geographical

mobility of all people, not just peasants 16. To reside in a different locality, one needed a

special temporary certificate.

21 This system of passes has been retained to the present day. The constraints this system

places on the geographical mobility of migrant workers, and the means by which this

can drive down wages and other labour standards today, is what is similar to what

prevailed in South Africa. In China it is there by default. It was in place before it had its

A “Race to the Bottom”

China Perspectives, 46 | march-april 2003


present function. It simply continued to be used, when it was found to work well under

a greatly changed economic system.

22 In this transitional period from socialism to capitalism, the temporary work permits

required under the hukou system act like sluice gates controlling the influx of labour

into urban centres. The hukou system helps to regulate the flow, letting in more

labourers when needed and driving them out when their number exceeds demand, or

when the number stretches local facilities to the limit. When workers lose their

working ability due to industrial accidents, or when they have become too “old” by the

age of about thirty to keep up with the break-neck work intensity, the pass system

enables cities to ship them back to the countryside—because without a job a migrant

has no right to stay in an urban area. This kind of labour flexibility cannot be as easily

imposed on the local urban population.

23 As more and more state factory workers were laid off in the nineties, some urban

governments placed tighter restrictions on job opportunities for the immigrants. One

category of jobs after another, especially in the service industries, was reserved only

for local residents. In 1993, 40,000 rural migrants in Shanghai were detained and

deported; but as the cities clamped down on opportunities, this rose in 1996 to 80,000,

and in 1997, 100,000 17. There are, however, regional differences in how strictly local

governments enforce the hukou system. In areas where the supply of labour does not

exceed demand by a large margin, the police and local government are considerably

more relaxed about the presence of migrants. This is the case in Chengdu in Sichuan

province and Fuzhou, Fujian 18.

Figure 2: Proportion of minimum wages to employees average wages in cities of China (1993-2000)

Sources: average wages are from various statistical yearbooks and minimum wages are from various
sources, including newspapers and labor bureaus.

A “Race to the Bottom”

China Perspectives, 46 | march-april 2003


24 For local governments, allowing migrants to come in from the countryside can be

lucrative. Migrant workers generate local tax revenues by attracting companies that

want cheap labour, but because of the hukou system the local government has no

obligation to pay anything for the welfare of these temporary sojourners. They are not

eligible for any of the medical, housing or unemployment benefits available to the local

urban populace. Nor are the workers from the countryside allowed by China’s pass

system to bring their families with them, and thus the urban government has no

additional educational expenses to meet either.

25 Despite this system of permits, the enormous bureaucratic edifice that was erected to

control the influx of migrants has not been able to stem the flow, just as had occurred

in South Africa. It is impossible to estimate the exact number of Chinese peasants

surging out of poor regions in search of jobs, but a range of between 50 to 80 million is

often cited. In the week immediately after the Chinese New Year, when migrant

workers who have gone home for the festival return to the cities, bringing with them

relatives and friends, the effect on transport is dramatic. For instance, in a matter of

days Guangzhou, the largest city in South China, suddenly has to handle several million

migrant workers descending upon it in trains and buses. In early 2002, before the

Chinese New Year, the Guangdong provincial government, in the hope of dampening

this vast simultaneous inflow, announced that factories should not recruit new

migrants at that time of year; but 5.2 million migrants nonetheless poured in after the

New Year, a quarter of a million more than the year before 19.

26 This large volume of people looking for low-end jobs drives down wages and working

conditions and allows these migrants to be exploited by employers, who can pay them

the lowest possible wages. New arrivals, in particular, desperate to recoup the amount

they have invested in transport expenses and in applying for the array of necessary

documents and certificates before leaving home, will take any job available.

27 Here is the case of one migrant reported in a Chinese newspaper. The young migrant

was informed by a friend that if he went to Shenzhen he would find a job. But he was

advised that before he left he had to apply for a number of documents. These included a

“border region pass” (at 120 yuan, taking six months), a personal identity card (another

80 yuan, taking one month), an unmarried status certificate (60 yuan, valid for one

year) and a certificate to prove that he was not born out of quota (45 yuan, valid for one

year), all of these totalling 305 yuan 20. To put this into perspective, the minimum wage

in Shenzhen in 2000 was 547 yuan for a full month’s work, and this young man would

be lucky if he could enter a factory that would pay him as much as that minimum wage.

28 On arrival in Shenzhen, armed with all these documents, he thought he could become a

“legal” migrant worker and could begin working without a problem. But the factory

demanded 300 yuan as a deposit before it would give him the job. He then had to spend

40 yuan for a work permit, and another 300 yuan for a temporary residence permit. It

short, on arrival at his destination he had to spend another 640 yuan. In all, without

including transport costs, he had to spend almost twice as much as the monthly wage.

Most new migrants therefore are usually in debt after they first arrive in a city.

29 According to official statistics, each of the three or four million migrants in the

Shenzhen Economic Zone on average spends 600 yuan a year on certificates 21. Migrant

workers have to carry these documents with them at all times or, if caught without

them, may be held in detention. To possess all of the necessary certificates, one needs

A “Race to the Bottom”

China Perspectives, 46 | march-april 2003


to have proof of a job, and so there is a nervous race to secure one. The deposit that this

particular migrant needed to pay to the employer is symptomatic of the desperate

situation of most migrant workers. Paying a substantial deposit has become a common

practice at the foreign-funded factories. At first sight, the practice seems paradoxical.

Instead of the employer paying a worker for the work he or she performs, the worker

first has to provide a payment to the employers as surety for the job. The deposit

obliges the worker to remain at the factory, or he or she forfeits it. To all intents and

purposes the worker is bonded labour 22.

30 Another practice used by many unscrupulous employers is not to pay a portion of the

wages every month, promising to pay the withheld portion at the end of the year. In

this situation, the longer a worker has worked, the more money he or she is owed by

the employer, and the more difficult it is for the worker to leave. This leaves the

worker vulnerable, scared to forfeit all of these unpaid wages when facing poor

treatment at the hands of managers.

31 Finally, and perhaps most effective of all, it is a widespread practice among employers

to take away the migrant workers’ documents. Without these, under China’s system of

permits, the workers could not look for another job even when the working conditions

in a factory are intolerable and they desperately want to quit.

32 Workers’ dormitories, usually located within the factory compound, extend

management control over workers’ lives beyond work hours. Movement into and out of

the factory compound can be monitored and controlled. Disciplining workers is easier

because there is near-total control over them. Especially in the factories in China

managed by Taiwanese and Koreans, where the discipline is so strict that the

management style can be described as militaristic. In some of the bigger factories that I

have visited, workers are even marched to and from meals and to and from dormitories

in tight military-style squads 23.

33 With migrant workers so controlled and cowed, physical abuse has become pervasive in

some of the factories owned and managed by Taiwanese, Koreans and Hong Kong

Chinese, and acute occupational health and safety problems are also commonplace. A

startlingly high incidence of severed limbs and fingers has been recorded. In Shenzhen

city alone, there were over 10,000 certified cases in 1999 among a migrant population of

some three to four million 24.

34 The system of permits needs an enforcement agent—in this case the police. Under the

hukou system, much as in apartheid-era South Africa, detention by the police if caught

without the necessary papers is an inherent part of the system. Their behaviour

towards migrant workers has become associated with corruption and abuses of power.

Detention is associated not only with fines and deportation from the city, but also with

mistreatment, physical violence and forced bribery. With so many migrants pouring in,

the arrests are essentially random. In much of Guangdong, people who seem to be of

rural origin are simply pulled off the streets and roughed up, sometimes for no

particular reason. Among ten young migrants whom I interviewed recently in

Shenzhen, five said they have been picked up by the police within the several months

they had been there, a few of them more than once; and nine out of the ten knew of a

friend or relative who had been detained.

35 Many migrants do not have all the right papers on them because they are not aware of

what they need. Others are too poor to buy them all. But oftentimes, through no fault

of their own, their documents are kept locked up by their employer; or they have left a

A “Race to the Bottom”

China Perspectives, 46 | march-april 2003


factory without being able to get their documents back because the employer did not

want them to leave. As a result of the latter, borrowing documents from friends and

purchasing forged ones off the street have become very common 25, as it was in South

Africa. According to one survey conducted by a government labour bureau in

Guangdong, 80% of foreign employers openly admitted that they did not care whether

the documents were fake or not, as this did not affect production 26, The infringement

of regulations being so widespread implies tacit approval has been granted by the local

authorities and police.

36 Yet this does not stop the police from detaining migrants arbitrarily. Police stations

consider this a profitable business, because bail, fines and forced bribes, also imposed

arbitrarily, can amount to several hundred yuan. Even neighbourhood committees that

have no power of detention get into the act. Some have been detaining migrant

workers and charging bail 27. The practice has become so out of hand in the past couple

of years that the central government in January 2002 issued a decree reducing the fee

for a temporary resident permit to 5 yuan a year nationwide, to enable migrants to

afford one and thus avoid detention. And in March 2002 the Guangdong provincial

government passed regulations emphasising that the detention of “vagabonds” should

be restricted to beggars and not applied to migrant workers who do not have the right

papers on them.28 But rather than obediently comply with the regulations, the

provincial police responded by declaring that they have done a good job in sheltering

beggars and vagabonds; and reaffirmed the necessity of rigorously implementing the

pass system, without mentioning that they were continuing to detain and abuse large

numbers of migrant workers 29. In a few months local-level governments and the police

came up with new fees to make up for the loss in revenues and private incomes.

Proclamations of new policies do not mean elimination of the hukou system. Those who

gain from the system are not going to desist so easily.

37 As can be seen, the Chinese hukou system and the pass system under apartheid in South

Africa generated quite similar outcomes. They produced a large, vulnerable underclass

living in constant insecurity, accompanied by daily discrimination, repression,

hardship and denial of their human dignity.

38 In light of these circumstances, it becomes possible to perceive how the Chinese hukou

system can keep wages down more easily than in Mexico. As already noted, in Mexico

the workers who produce for export are, as in China, largely migrants from the

countryside, and the majority similarly are female. But there is a major difference.

Almost all of the Chinese female migrant workers are single women in their late teens

or early twenties who, because of the household registration system, cannot bring their

families with them 30. Many factories make sure that only single women are recruited

by asking to see their officially issued identity certificates, which in keeping with the

Chinese state’s strict family-planning policy require that the marital and family

planning status of each woman is listed. Since the workers are poor single women

living in dormitories, management only needs to pay them enough for their individual

survival 31.

39 In Mexico the context is different. While most of the women workers in the

maquiladoras are migrants from poorer regions, many of them have come with their

families, since there is no pass system, and quite a number are single mothers. Very

often these women workers are the sole bread-winners. Since they live with their

families, a part of their waking hours has to be spent on “unproductive” chores (from

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China Perspectives, 46 | march-april 2003


management’s vantage point): in commuting, in household tasks such as cooking,

taking care of the old and the young. No matter how ruthless, there is a limit to the

amount of overtime work that management can squeeze out of these Mexican workers

—fewer hours than with the young single women in dormitories in China.

40 There are also legal pressures in Mexico to pay workers a bit more so that they can

provide for part of their families’ livelihood. The Mexican Labour Law states that “The

minimum wage must be sufficient to satisfy the normal necessities of the head of the

family in the material, social and cultural order, and to provide for the obligatory

education of his children” 32. This article echoes Article 25 of the Universal Declaration

of Human Rights of the United Nations. It is similar to the concept of a living wage.

Although in reality the minimum wage levels set in Mexico are far below the standard

stipulated in the law, the notion of a wage that can provide for a family exists.

41 No such concept of a “living wage” exists in the Chinese discourse on wages, nor is it

stipulated in the Chinese Labour Law. Even the migrant workers’ protests do not centre

on how low the wages are, but instead revolve mainly around the issue of unpaid

wages. Only when workers have not been paid for several months, when the situation

becomes desperate, do the workers begin to protest. Local governments in Guangdong

province occasionally launch campaigns, especially just before Chinese New Year, to

collect unpaid wages or unpaid payments for overtime work 33. But these brief

campaigns to collect money owed to workers are only the tip of the iceberg 34. The

expectation of adequate labour standards is much lower in China than in Mexico.

42 In China, the official trade union is an arm of the Party-state. It has little autonomous

space to protect labour rights. In fact, because of the massive influx of foreign capital

and the rapid rate of industrialisation, the trade union’s efforts, even when undertaken

with good will, face a near-impossible task. A parallel situation used to exist in Mexico,

where the trade unions were affiliated with the government. But since the defeat in the

last election of the former ruling party, the Institutional Revolutionary Party, there is

now a fledgling independent trade union movement. This is challenging the old unions’

authoritarian and pro-management practices with the help of North American trade

unions and the anti-sweatshop movement. This anti-sweatshop movement is composed

of trade unions, NGOs, labour advocates, university students, human rights groups and

church groups. It grew rapidly in the 1990s and has become a force that can no longer

be ignored either by multinational corporations or governments.

43 Ripples of the anti-sweatshop movement have spread to Asia, and China. The concept

of corporate social responsibility is just beginning to circulate in China. The factories

there that are run by contactors from Taiwan, Hong Kong and South Korea are now

feeling pressure from the Western multinationals that they supply. The multinationals

have nervously begun to urge them to upgrade their labour conditions. But the

factories being monitored by the multinationals are just a small minority of the better

and bigger factories, among the thousands and thousands of factories that subcontract

production. The potential role of the state becomes important here. A willingness by

the Chinese government to enforce its own laws would be much more effective than

sporadic monitoring. But the Chinese government has not yet awakened to the growing

pressures emanating from the West for improved labour standards in the export


44 A few weak rays of hope have emerged in the past two years elsewhere in Asia. Three

countries, Cambodia, Vietnam and more recently Thailand, have expressed interest in

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China Perspectives, 46 | march-april 2003


improving labour standards within their borders to attract foreign capital. Cambodia

has signed a bilateral agreement with Washington that accepts linking labour

standards to trade and has agreed to let the ILO monitor progress. The Vietnamese

government has publicly encouraged its factories to try to raise standards in order to

acquire the certifications issued by an American-based organisation that verifies labour

standards for Western corporations. The Thai government is currently engaged in talks

with this organisation about operating training programmes to upgrade labour

standards in Thailand. That is to say, three Asian countries are now taking a new

direction in their industrial development strategies. They are trying to attract foreign

investment and trade by raising labour standards instead of depressing them.

45 It is not clear whether Peking is aware of this new strategy adopted by its Asian

neighbours. But so far, China has not shown any signs of changing its policy of low

labour standards. The government has not publicly addressed the issue of corporate

social responsibility, unlike the Vietnamese government. The Guangdong provincial

government has tried to alleviate some of the most blatant abuses, but no fundamental

change in policy has been adopted. Let me quote here the director of the human rights

programme in Asia for Reebok:

Who enforces Chinese labour law? Nobody. If it were enforced China would be a

much better place for millions of people to work in. But it is ignored more than in

any other country I work in 35.

46 There have been a few reforms of the Chinese hukou system, but only to allow

successful people with considerable money or education to apply for an urban hukou.

The controls over the unskilled migrant workers who work on the production lines and

construction sites, imposed by the pass system, remain the same. And the police seem

adamantly against any changes. The hukou pass system seems likely to remain in place

for the foreseeable future, and China will continue to dominate the world’s export

market, to the point that the new initiatives taken by Vietnam, Cambodia and Thailand

may possibly collapse under the weight of Chinese competition.


1. Gongren ribao (Worker’s daily), November 19th 2001.

2. George Wehrfritz and Mahlon Meyer, with Hideko Takayama, “Trapped in a Chinese

Box”, Newsweek, February 18th 2002.

3. William Greider, “A New Giant Sucking Sound”, The Nation, December 31st 2001.

4. Labour standards, a term that was once used almost exclusively within labour and

government circles, has been making inroads into ordinary conversations, in political

speeches and in the mainstream press. It refers to wages, work hours, shopfloor

conditions, work intensity, and occupational safety and health hazards.

5. Kwong, Peter. 1998. Forbidden Workers: Illegal Chinese Immigrants and American Labor,

New York, New Press.

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China Perspectives, 46 | march-april 2003


6. Ross, J.S. Robert, forthcoming. “Declining Labor Standards in the North American

Apparel Industry”, Chapter 10 in G. Kohler and E. J. Chaves, Globalization: Critical

Perspectives, New York, Nova Science.

7. “Wages: After the Labor Law”, China News Analysis, no. 1544, October 1st 1995.

8. See Notice Concerning Regulations of Enterprises’ Minimum Wages, issued by the Chinese

Ministry of Labour on November 24th 1993.

9. This trend parallels China’s increasing Gini coefficient in the 90s — 0.42 in 1996 to

0.458 in 2000 (Zhongguo gaige bao (Chinese Reform News), September 11th 2001). A gini

coefficient of 0.4 is considered high internationally.

10. Zhongguo laodong baozhang bao (Chinese labour social insurance daily), February 19th


11. Gongren ribao, May 9th 2001.

12. Zhongguo laodong baozhang bao, February 19th 2002.

13. The following two paragraphs draw from information in a paper I have co-

authored: Robert J. S. Ross and Anita Chan, “From North-North to South-South: The

True Face of Global Competition”, Foreign Affairs, Vol. 81, No. 5 (September 2002), pp.


14. The Economist, July 7th 2001, pp. 27-30.

15. Washington Post Foreign Service, June 20th 2002.

16. Tiejun Cheng and Mark Selden, “The Origins and Social Consequences of China’s

Hukou System”, China Quarterly, no. 139, September 1994, pp. 644-668.

17. Jonathan Unger, The Transformation of Rural China, Armonk, M.E. Sharpe, 2002, p.


18. Observations during field work in these two cities in September and October 2002.

19. Clara Li “Migrant Workers out in Cold”, South China Morning Post, February 26th


20. Yangcheng wanbao (Guangzhou Evening News), March 30th 2001.

21. Ibid.

22. Anita Chan “Globalization, China’s Free (Read Bonded) Labour Market, and the
Chinese Trade Union”, Asia Pacific Business Review, Vol. 6, No. 3 & 4, Spring/Summer

2000, pp. 260–81.

23. Anita Chan, “Regimented Workers in China’s Free Labour Market”, China

Perspectives, No. 9 (January-February 1997), pp. 12-16.

24. Gongren ribao, March 31st 1999.

25. Anita Chan, “The Culture of Survival: Lives of Migrant Workers Through the Prism

of Private Letters”, in Perry Link, Richard Madsen and Paul Pickowicz, eds., Popular

China: Unofficial Culture in a Globalizing Society, Boulder, Rowman & Littlefield, 2002,

pp. 163-188.

26. Nanfang ribao (Southern Daily, Guangzhou), March 29th 2002.

27. Nanfang gongbao, Dagongren (Southern Workers’ News, Migrants), April 5th 2002.

28. Nanfang ribao, March 29th 2002.

29. Yangcheng wanbao (Guangzhou Evening News), April 22nd 2002.

30. By the author, 1998.

31. By the author, 2002.

32. The Federal Labor Law of Mexico, Chapter VI, Article 90 (1970), amended in 1998.

1996 Translation Glenn McBride,

33. Nanfang ribao, March 13th 2000; Zhonghua gongshang shibao (Chinese Commercial

News), July 5th 1994.

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China Perspectives, 46 | march-april 2003


34. Based on an interview in Guangzhou City with a reporter of a Guangdong provincial

newspaper in November 2001.

35. Associated Press Newswire (Hong Kong), May 29th 2002.

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China Perspectives, 46 | march-april 2003


  • A “Race to the Bottom”

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