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ORIGINAL FRENCH ARTICLE: Quand la Chine se réveille...

by By Dominique Bari

When China awakens...

Translated by Bianca Jacobsohn

Translated Friday 20 January 2006, by Bianca Jacobsohn

THE MIDDLE KINGDOM. The social cost of development blamed. Private companies exposed for exploitation of employees.

While a recent evaluation of China’s gross domestic product places it among the top four world economies, criticism of the social cost of this growth “miracle” has become more prevalent. Even within the government, the nature of this development has been called into question which marks a new phase of the economic boom that began 25 years ago. Fingers are pointing first and foremost at China’s private business sector. A report, carried out at the request of the Standing Committee of the National People’s Congress (NPC) to assess adherence to the labour law adopted in 1995, has exposed employee exploitation within the vast majority of the more than two million Chinese private businesses.

The authors of the enquiry went to 2 255 companies in seven Chinese provinces, and returned with enlightening results. "The legal rights of employees are frequently violated in more than 80% of private companies, particularly in the real estate sector, in light industry, and in the clothing and food industry”, stated He Luli, vice-president of the Standing Committee of the NPC, during a Standing Committee session. The report also states that the majority of contracts in law-abiding businesses - less than 20% of total businesses - are for a minimal period of less than one year. “Employers refuse to sign long-term contracts in order to avoid legal obligations”, commented He Luli, adding that the majority of these contracts only stipulate the employee’s obligations and the employer’s rights. “Some contracts even state that the employer cannot be held responsible in the event of the illness of even death of an employee, even if these occur at the work place”, she stated. Luli appealed to the central government to adopt effective measures to encourage respect for labour laws, further stating that it was “crucial to safeguard the interests of workers”.

Since the launch of economic reforms in China at the end of the 1970s, the creation of a non-state sector alongside state companies has been strongly encouraged by the Chinese government. The non-state sector today accounts for 20% of China’s GDP and employs 90 million people which make up 33% of the urban workforce. The “private entrepreneur” has become key to development in China and is praised and awarded “model worker” status by the government. Of course the rise of this new social layer to economic power has had political repercussions. During the 16th Congress of the Chinese Communist Party (CCP) in autumn 2002, the adoption of the Three Represents theory in the constitution opened up the doors of the CCP to these new “elites”, triggering a certain amount of controversies even within the State apparatus. At the same time, the 1998 company law, which formalised the existence of the private sector, the 1992 trade union law and the 1994 labour law, which are the three main texts that govern relations in industry in a period marked by an industrial overhaul, lack application and are without the safeguards necessary for the prevention of employee rights violations.

According to Hong Kong based NGO, China Labour Watch, 2004 saw a torrent of 57 000 labour conflicts involving three million workers. The exposure of sordid work conditions by workers, violent employers, and non-payment of wages are just some of the reasons behind the workforce shortage noted for two years in coastal factories, particularly along the Pearl River in Guangdong. Migrant workers are increasingly refusing to put up with exploitation and are, as the Chinese say, voting with their feet. Tensions in the workplace, dissatisfaction in the countryside as expressed with increasing virulence, and the rise of social and geographic inequalities are drawing a new order in China’s development. The release of Parliament’s report to the public is not an isolated act and is part of an effort, initiated by Hu Jintao and Wen Jiabao under the pressure of businesses and people in the countryside, to adjust development. While China’s GDP has doubled every seven years since 1987 - 2005 growth is in the order of 9, 8% - the spoils of this wealth have been very poorly divided.

Today the Chinese government is alarmed by these gross inequalities which threaten the stability of the country. The 11th five-year plan approved by the Central Committee of the CCP last October should result in strong reform in favour of social justice. Already the removal of the 5% tax on agricultural products has taken place and will take effect on a national scale as of January. This tax, which finds its roots in imperial history, was a primary source of revenue for the central government to finance the country’s industrialisation in the 1950s. Today it only brings in 22 billion yuan (2, 2 billion euros), less than 1% of fiscal resources which was evaluated at more than 3 000 billion RMB in 2005. Nonetheless, its abolition remains a symbolic gesture for the countryside.

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