Taikongren’s definitive “What’s happening with Chinese Labor” post (updated)

The following is all based on meta-research, not first hand study. I will freely add my opinion on this, based on my “expert” opinion. I don’t see any reason why I shouldn’t. It is my blog, after all. And more and more, I feel that the “official” experts (ie. those quoted in the news) get it wrong.

So… what are people saying about what’s happening with Chinese labor, and what is actually happening?

1. Wages in primary manufacturing areas are rising. Yadda yadda yadda.

2. Wage rises are caused by labor shortages, which are in – part caused by…
a) Workers unwilling to work for the wages which manufacturers are forced to provide by their customers.
b) Workers finding work in the more Western areas, which are in part because of the stimulus money.
c) Government promotion of higher wages
d) External inflation in housing and food prices causing higher wage
e) Some mixture of all the above.

3. MY HYPOTHESIS (in addition to all-the-above) is that increases in income in-land has a proportional, and possibly disproportionately large affect on wage level on the coast. That is because a job close to home allows a worker to continue to live a normal life after the shift stops. I feel it would be interesting to scientifically explore the relationship (if there is a statistical correlation) between in-land and coastal wage increases.

4. Meanwhile, foreign investment should be headed to second-tier cities, and even further in-land, as a way to deal with the increasing wage level. But I have not read any report of any mass movement to, say, Gansu province. The reasons why factories don’t move inland are probably because less developed infrastructure, and more difficulty getting the right talent to run the business with quality.

5. Some companies which have capital-heavy manufacturing systems have decided to move back to the US… and this really has little to do with labor costs.

6. As a corollary to the above, China should start making higher end products to fit its more-expensive industrial base. However, that seems to be happening very slowly, if at all. Slow shift towards higher-end production may be because Chinese companies don’t know much about branding.

7. The strikes of the Honda Factory and Foxconn suicides are often linked in the news lately. But lets be clear: the Foxconn Suicides are not because of Foxconn. There is no evidence at all to suggest that Foxconn is at fault in any way. Some people suggest that the suicides are “cries for help” in dehumanizing conditions. To this I have to ask two questions: 1) how can an operator’s job on a CMS type production line become more humanized?, 2) is monotonous farm-hand work any better? But anyway, Foxconn made this problem bigger for themselves with their stupid reactions to the suicides.

8. What’s clear is that the government was to promote higher wages in order to reduce income gaps between rich and poor. I personally like this goal. However, I believe the strikes in Honda plant, and elsewhere, are caused NOT by a rising power of labor, but because the strikes support the goal of the government…for now. What is interesting is that the strikes have spread throughout an industry. Which suggests that labor is organizing independently from the official Labor Union (ie. CCP). In the end, I cannot believe this will happen. At a certain point, the objective of raising worker income will clash with the more important objective of promoting China’s industrial policy, which relies on exports and foreign investment.

9.In my opinion, the biggest source of power to Chinese workers in these strikes is the Labor Law, which prevents factories from shutting down without government permission. This was noticeable in the Economic Downturn, when many Taiwanese companies were shutting down. The government halted this so as to maintain stability.

10. I would really like to know if any of the factories with labor strikes are State Owned Enterprise JVs. The media has not reported this. In the automotive sector, many of the factories are actually SOE JVs, because of historical reasons. Has labor unrest spread to the JVs? If this has not happened, I would say this would be an “inflection point” where the government will step in to control labor unrest.

11. In other news, Chinese workers actually use the internet and cell phone text messages to organize their labor protests! ZOMG! But Rebecca MacKinnon, “a China specialist and fellow at the Center for Information Technology Policy at Princeton University. ‘QQ is not secure. ‘” When can I get my name published in the New York Times – as a “China Specialist” for stating something so incredibly obvious?

[update- This is a comment I left on China Law Blog, edited because my grammar and writing style...needs improvement
]
I am honored that Dan called attention to my post, which is really just combining information from many other posts. So about 10 times the number of usual visitors came to my site yesterday. And from his comments I realize that I should not write “pique” into my posts, unless its about someone who really deserves it. Its not professional. Right now I write like I talk: with bad grammar, and without enough dicipline. I will try to improve on this.

I am slightly prejudiced against Ms. MacKinnon and other “experts”. Part of that is just jealousy. But part of this prejudice comes from what “China Internet Watchers” said about Google and the Chinese internet back in March. I strongly believe that when Google “left” China, they did so in a way which was not particularly morally righteous…it was rather self-righteous. I felt the subsequent analysis and commentary by her and others, was even more self-righteous than Google’s own reasoning. Furthermore, I feel most of the analysis and commentary underestimates the clear sophistication of Chinese internet users.

But truth is…it has my prejudice and the annoyance at the past display of self-righteousness has nothing to do with the article she was quoted for, and so I should have left that comment out.

In the NYT article with Ms. MacKinnon, the main theme was basically “look at these quaint Chinese workers who use technology to communicate, but lets not forget that actually Big Brother is watching them”. Funny thing is… the article (and no other article I read) didn’t say why Big Brother is looking at them. We, the reader assumesthey are watched because the control-freaks in the government just like to watch anything that may cause dis-harmony. But there is a bigger story here. The almost obvious implication of the labor unrest is, at a certain point, the government of China will come down hard on the protesters. The only topic more taboo to the CCP than the independence of an island province is the topic of an independent, geographically connected organization becoming the representative of workers, whom should be soley represented by the Party. Independent Labor is a direct threat to the principle of the Party as the sole representative of the Worker, which is at the heart of Leninist Marxism.

It does not take a media or internet expert to understand that, with such a sensitive issue, the government is going to look at all media and have monitors everywhere. They will read SMS messages, QQ, Skype, email, and each and every communications channel. Despite this monitoring, the labor unrest will continue… unless it jumps beyond the purpose and “channel” which the government thinks is acceptable. So to me, a meaningful analysis of the the use of technology in this issue would not be to state the obvious – that a particular channel is monitored and controlled by the government – but rather to analyze the real effectiveness of the controls.