3-Day Battle by Workers in Yangjiazhangzi

Chinese Workers Protesting Privatization Are Allies for U.S. Unions

by George Shriver

In an article on the privatization of state-owned plants, factories, and other forms of enterprise in China, our international contributing editor, Zhang Kai, cites reports from Hong Kong newspapers detailing protests by laid-off workers in half a dozen or more Chinese cities last fall.

Zhang Kai also reports that the so-called Communist Party government bureaucracy plans to shut down or merge 77 more plants this year and next, adding 10 million unemployed to the 7 million or more already unemployed as a result of “reform” (read: privatization) of state-owned industry over the past 20 years as “market reform” (read: restoration of capitalism) proceeds apace in China.

Zhang Kai rightly concludes, “All these social contradictions are time bombs waiting to explode.”

A Time Bomb Explodes

In early April 2000, the Washington Post and New York Times reported an event that may signify a deepening of worker protests like those Zhang Kai described in the fall of 1999.

The April 7 New York Times reported that “three days of violent rioting over job cuts and corruption” in the mining city of Yangjiazhangzi in northeast China had occurred nearly six weeks earlier. The protests led by molybdenum miners “overwhelmed local police forces and continued until regular army troops arrived.”

A large state-owned molybdenum mine in Yangjiazhangzi was shut down in November, according to the Times, “but some of its facilities and equipment were apparently transferred to new private owners alleged to be friends of local officials.”

“What detonated the violence,” said the Times, “was the belated announcement of an extremely modest severance package for the laid-off workers.” (The mine had not issued paychecks since “early last year.”) The contrast between the “undeserved windfall for the well connected,” as the Times put it, “and the shabby treatment of longtime employees became even more of an affront when mine authorities refused to show up at a peaceful protest meeting.”

Fear of “Social Explosion”

The New York Times commented that this kind of social upheaval “terrifies the leadership in Beijing, who well know that protests by disenchanted citizens could someday escalate again into a serious threat to Communist rule.” This is a reference of course to the massive protests in Tiananmen Square in May-June 1989 against despotic bureaucratic rule by the misnamed Chinese Communist Party. Although those protests were initiated by students, many in the general population joined in, including workers who were trying to form unions independent of the government and the bureaucratic “Communist Party.”

The Times repeated what those who have read Zhang Kai’s reports in our magazine the past few years already know: “Hundreds of economic protests, some of them violent, have erupted across China in recent years…Market reforms like the privatization of large state companies produce unemployment and social dislocation. When this takes place in an atmosphere of pervasive government corruption, popular anger is understandable.”

“For several years now, Communist [sic] leaders in Beijing have seemed haunted by fears of explosive social unrest,” the Times editorializes.  (The original aim and purpose of “Communists,” as stated in the Communist Manifesto by Karl Marx and Frederick Engels, was to provide leadership to channel “explosive social unrest” — that is, social revolution — so as to replace capitalism with a new social order in which “the free association of producers” — the working class majority — would take control and by democratic decision-making determine the key questions of social and economic policy in the interests of the majority.)

“Social combustion,” “social upheaval,” “explosive social unrest” — the Times repeatedly uses these terms. But it isn’t only the Beijing leadership that is frightened by the prospect of social revolution (or what we would call a political revolution led by workers to remove the pseudo-Communist bureaucracy and establish democratic workers control of the publicly-owned economy before it is completely privatized, before capitalism is completely restored).

Corporate America, and the multinational corporations getting rich off the system of global capitalism, also fear worker-led social resistance. That is why the Times goes out of its way to advise the “Communist bureaucrats”:  “Unless Beijing enforces higher ethical standards on local officials, unrest could soon become even more widespread… Beijing should crack down on the corruption that has grown worse with the progress of economic reform…Beijing should heed the message from Yangjiazhangzi.”

A letter-writer to the New York Times, a former Soviet citizen, asked the Times editorialists ironically: “Does that mean that China should become an ethical totalitarian regime?”

The corruption in China is not just by “local officials”; it is part and parcel of bureaucratic rule and of capitalist restoration. The top bureaucratic leaders in Beijing, you can be sure, are lining their own pockets as they oversee prison labor and sweatshop labor production, in close consultation and cooperation with the multinational corporations and capitalist investors from the wealthy industrial countries, notably in the “Special Economic Zones” along the China coast. The joint venture of bringing China into the global capitalist system involves intensified exploitation of Chinese workers and peasants while the bureaucratic caste at the top transforms itself into part of the international capitalist ruling class.

Chinese Workers Fighting to Organize Are Our Allies

The protesting workers at Yangjiazhangzi are the brothers and sisters of workers in this country and everywhere in the world where those who live by selling their labor power are at the mercy of the decisions of those who own the mines, mills, and factories — or who lay claim to ownership of such facilities even when those facilities supposedly belong to the society as a whole — that is, are publicly owned.

We need to find ways to make contact and build solidarity with workers like these everywhere in the world. That is what our unions should be doing, not creating barriers of hostility by focusing on government-enforced trade restrictions.

The public forum held by the Labor Party in Seattle during the anti-WTO demonstrations pointed up the kind of contacts U.S. unions could pursue. A Chinese dissident, Cai Chong Guo, an exiled representative of  the independent trade union movement in his country, spoke there. He said in part (as reported by the January 2000 Labor Notes): “Repression in China is focused on the independent labor movement. A trade unionist who attempts to organize laid-off workers is sentenced to 11 years in jail.” The AFL-CIO could campaign for the release of jailed unionists in China, just as it did in recent years for the jailed Indonesian union leader, Muchtar Pakpahan.

Privatization Brings Unemployment

The potential explosiveness of the situation in China is underlined further in a Washington Post report dated March 30, 2000, which suggests that unemployment is growing faster and on an even more massive scale than indicated by the information cited above from Zhang Kai and the New York Times.

The Post quoted the “Communist” mayor of Shenyang, an industrial city near Harbin in northeast China, who admitted the big impact of rising unemployment in his city: “Our ability to govern is being seriously affected…All the work units have collapsed…It’s a dangerous situation.”

In a Work Force of 350 Million, 80 Million Unemployed?

According to the Post, “Experts say that out of an urban labor pool of about 350 million, at least 80 million Chinese are unemployed , with the majority concentrated in about 20 cities whose economies are dominated by dying, state-owned concerns.”

“Moreover,” says the Post, “Beijing has ordered state-owned enterprises to shed another 10 million employees this year, in addition to the 30 million already axed since 1998.” The paper quotes economist William H. Overholt from a recent essay surveying unemployment in China: “These numbers inspire fear and awe…What is going on here is so far removed from…the previous experience of the human race that it is difficult to put it into perspective.”

The WTO Connection

To gain admission to the World Trade Organization (WTO), says the Post, “Beijing has promised to dismantle high tariffs that have shielded China’s industrial dinosaurs for decades. In China’s sprawling inland factory towns — places like Wuhan, Xian, Chongqing, Chengdu, Harbin and Shenyang — increased competition resulting from the WTO deal is sure to darken an already bleak picture of joblessness and despair that has led some officials to fear urban unrest.

“Entry into the WTO, with its emphasis on lowered duties overseas, fewer restrictions at home and new access to foreign technology, will mean more opportunity for China as a whole, particularly the nimble, low-cost manufacturers that have flourished in southern ports like Shanghai, Shenzhen and Fuzhou. But already, Beijing’s attempts to rein in bloated state-owned enterprises have ravaged the economies of out-of-date manufacturing hubs” like Shenyang.

The Post reports that “there have been hundreds of demonstrations by laid-off workers,” adding: “When Beijing promised last year to hand out a small sum for city dwellers to celebrate the 50th anniversary of the Communist revolution, it fell to Shenyang’s city hall to say the money was not there, sparking a demonstration that filled several downtown avenues.”

Bureaucrats in League with Multinationals

The mayor of Shenyang, Mu Suixin, is typical of the so-called Communist officials who are promoting privatization and joblessness in alliance with investors from the wealthy capitalist countries. On March 18, Mayor Mu signed a deal with a British investment bank, the Wyvern Group, giving the bank’s local subsidiary the power to sell off hundreds — hundreds! — of state-owned factories in a city where a third of the work force was already unemployed. (The share of state-owned industries in Shenyang’s annual output had already dropped from 80 percent in 1996 to 30 percent last year, according to the Post.) The deal between Shenyang officialdom and the British bank, said the Post, is a sign of “how desperately [Chinese] officials are soliciting foreign investors” on the eve of entry into the WTO.

Mayor Mu, the Post reported, “has been among the most aggressive of China’s local leaders in scrambling for outside cash. He has been to Europe twice to tout investment opportunities in his city, proffering generous tax breaks for foreign investors. He has auctioned off a slew of Shenyang companies to investors for just one yuan  — about 12 cents — inviting criticism that the city is dumping public assets.” The March 18 deal benefited Shenyang Corporate Advisory (SCA), a joint venture between the Shenyang city administration and the Wyvern Bank subsidiary. It gave SCA “exclusive rights for the next nine months to negotiate terms of sale for nearly 300 of the city’s largest companies.”

Giving Away the Family Jewels

The Shenyang city government holds only a minority share in SCA, even though it is paying all operating expenses, gives tax breaks, and so on. Mu’s critics say this amounts to “paying a cat burglar for advice on how to give away the family jewels.” You can be sure, however, that the officials involved in such deals are getting benefits, even if those aren’t publicized.

As Zhang Kai reports elsewhere in this issue, the September 1999 resolution on privatization of state-owned industry “stipulated that the party secretary of the enterprise would be allowed to concurrently hold the position of director-general, and the directorate would decide all key questions. At the same time, the directors and managers are allowed to receive ‘remuneration for their duties and contributions.’" Thus, there are benefits for the party officials. But for the workers, the stress is on labor discipline and a system of rewards and punishment.

Analogous processes in Russia help us understand what is going on in China. In Russia, privatization of publicly owned industry was also carried out on a massive scale in the 1990s. Most of the new property owners in Russia today, it turns out (not surprisingly), belonged to the previously dominant party-government bureaucracy. With hundreds of billions of dollars in foreign investment coming into China in recent years ($40 billion in 1999 and about $45 billion in 1998, for example), the process of transformation of the ruling bureaucracy into part of the multinational capitalist ruling class is proceeding at a swift pace.

The workers of China have been paying the price, but if the Yangjiazhangzi events are any indication, their patience is reaching its limit. Helping them to organize is a key task of international labor solidarity.

Showing them by example how to organize would be an even more powerful form of assistance. What if unions here in the U.S. were to actually organize 20 million new members? (This goal is proposed by AFL-CIO education director Bill Fletcher elsewhere in this issue.) Such a lesson in direct action would not be lost on workers in China — or workers in any country of the world.