China: A Workers' State Helping The Workers?

When retail giant Wal-Mart Stores Inc. (WMT ) announced on Nov. 22 that its workers in China could set up trade unions, not a few observers were surprised. After all, Wal-Mart is criticized in the U.S. for discouraging union efforts. And China hasn't been known for treating its workers well since it embraced capitalism, either.

What's going on? Wal-Mart says it was only clarifying its longstanding policy of following Chinese law and allowing unions if workers asked for them. In Beijing, though, the announcement was played as a big deal. The reason is politics. President Hu Jintao and Premier Wen Jiabao, having styled themselves as populist leaders, are eager to prove they're serious about supporting China's increasingly fractious working class. "Although [the communists] have brought naked capitalism back into China, this shows they are still the party of the workers," says Robin Munro, research director at China Labor Bulletin, a Hong Kong labor-rights group.

Whether the top leadership is merely pursuing a clever propaganda campaign is open to question. But some action by Beijing is crucial. Workers are increasingly taking to the streets. The number of protests reached 300,000 in 2003, estimates Munro. This year more than 500 workers in Dongguan damaged facilities and injured a manager at a big Taiwanese shoemaker. "With globalization, the conflicts between workers and employers are becoming very serious," says Chang Kai, director of the Institute for Labor Relations at People's University in Beijing.

To try to curb the protests, Hu and Wen have been pressing the official All-China Federation of Trade Unions (ACFTU) to expand into more enterprises and push for safer working conditions. A relic of China's state-planned past, the ACFTU is viewed as near-powerless by most Chinese. It "failed to represent workers when factories were taken over by multinationals and had big layoffs. So now there is a real push within the ACFTU to deliver services to members," says Auret van Heerden, president of the Washington-based Fair Labor Assn.


In late October the ACFTU announced a blacklist of multinational companies accused of blocking Chinese workers from setting up unions. Those targeted included Wal-Mart, Dell (DELL ), Eastman Kodak (EK ), McDonald's (MCD ), KFC (YUM ), and Samsung Group. When Wal-Mart later clarified its policy, the ACFTU applauded but also threatened to sue the other companies if they did not follow suit. "If foreign-funded companies still deny their workers' right to join the unions, the ACFTU will surely pursue litigation against them," an ACFTU official told the Xinhua news agency.

With nationalism on the rise, Beijing's leaders can win easy political capital by fingering labor practices at multinationals. But don't expect a powerful union movement to emerge in China. The ACFTU may try to improve worker conditions but not so aggressively that it encourages strikes at newly unionized companies. What Hu and Wen really want is to calm labor strife, show their commitment to the union cause, and stop efforts by workers to establish their own informal, illegal labor organizations. The workers may not buy it.

By Dexter Roberts in Beijing, with Aaron Bernstein in Washington and Wendy Zellner in Dallas

Edited by Rose Brady

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