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Friday, September 02, 2005

The Price of Economic Growth in China

The Seattle Post-Intelligencer reports on labor conditions in China through this guest editorial from Li Qiang who, as the column notes, "is founder and executive director of China Labor Watch, a New York-based non-profit organization that promotes labor rights in China. He was a visiting scholar at Columbia University."

Workers pay price for China's economy, by Li Qiang Guest Columnist, Seattle PI:  With Chinese President Hu Jintao's first stop of his U.S. visit here in Seattle, it is appropriate to greet him with some observations that will probably not be made in his tour of corporate facilities or in meetings with government officials....China's roaring economy is being built on the back of millions of Chinese workers denied their most fundamental rights. And it is being built within a political system subject to greater and greater stress from this same economic growth that it does everything to promote. ...China's rapid economic growth is ... without parallel. But China's current economic system could not exist in a democratic nation. ... [D]ecisions ... in China do not require democratic discussion, and the government of China has put aside all other considerations in order to develop the economy. Only under such authoritarian rule is it possible for the market to be so tightly controlled and for there to be this kind of trade surplus.

The Chinese elites as well as the multinational corporations are the real winners of U.S.-China trade relations. For example, a typical article of clothing produced for one of the big multinational brands in a Chinese factory at a cost of $5 will be sold to the U.S. consumer for as much as $40. And the total compensation for the labor of the Chinese worker who made it will be less than 80 cents. For these reasons, it's easy to understand why the multinationals are so eager to move orders and production lines to China.

Last year, total U.S. trade … reached … $196.7 billion … of imports from China. The reality of these imports is that they arrive on the backs of millions of Chinese workers. These workers labor six days per week (seven during peak season), 13 hours per day, for as little as 35 cents per hour. They do not have pensions or Social Security; they do not have unemployment or medical insurance. By the time they reach age 40, they start having difficulty keeping up with the heavy workload. Soon, they are left with nothing.

Factories that pollute the environment are given investment opportunities in order to develop the local economy but no measures are taken to deal with the pollution. ... Rapid economic development has greatly increased demand for the consumption of energy, which has led to overexploitation in small coal mines and oil fields. To reduce the production cost, such exploitation often takes place with cheap labor and without safety measures. This condition has caused frequent safety incidents. Many lives of mining workers were lost. The cheap energies produced in this way are consumed in industrial production, particularly in export-oriented manufacture industry, which is another reason why products made in China are so cheap in the international market.

…We see that there are increasing numbers of strikes and displays of rebellion by workers. Social instability is becoming increasingly visible. In 2003, there were more than 58,000 industrial conflicts. In 2004, that number reached 74,000. The gap between rich and poor is increasing; state-owned factories are closing and going bankrupt; workers are being laid off and losing jobs; peasants are leaving the countryside and entering factories where they have no long-term guarantees. … According to a recent survey … China's richest 10 percent enjoyed 45 percent of the nation's wealth, while the poorest 10 percent owned just 1.4 percent. Because tax revenue is not used by the government as a way of evening out disparities between unequal income earners, the gap between rich and poor is increasingly conspicuous. More than 20 years after the beginning of the era of reforms, it is easy to see that the ideal of "collective prosperity" is still very far away.

More and more U.S. companies are developing close relationships with China and, of course, there is a great deal of discussion and concern about the huge U.S. trade deficit with China. Chinese economic and political stability is therefore a matter of major concern for U.S. companies and policy-makers. The most effective and fairest way to address this concern is for China to develop policies that will enable Chinese workers to exercise their rights and enjoy the fruits of their labor. Perhaps somebody will be bold enough to suggest this to President Hu Jintao during his visit.

    Posted by on Friday, September 2, 2005 at 05:04 PM in China, Economics, International Trade | Permalink  TrackBack (0)  Comments (4)


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