The Chinese Economic Miracle:
Profits of Exploitation

Jun 7, 2004

The AFL-CIO is petitioning the U.S. government to stop trade with China, pretending it is doing this on behalf of workers in China whose rights are brutally suppressed. At the same time, the AFL-CIO petition claims more than 700,000 jobs have been lost in the U.S. thanks to China’s "unfair" labor practices.

It’s true that labor conditions in China are terrible and worsening. Despite its continuing economic growth, despite the expanding private economy, unemployment has increased and misery has worsened in the Chinese countryside where the majority of the population still lives. And in the cities, the amount of inequality grows. According to a 1997 study, about 31% of all wealth was owned by 1.3% of Chinese families; the poorest 44% of families owned only 3% of the wealth. Talking about the average covers the reality of a widening gap between rich and poor, a gap that is very similar to what exists today in the United States.

Shanghai, a city often cited for its economic growth, is headquarters to 56 multinational companies; 91 investment firms have also located there. A huge boom in construction and housing boosts economic statistics. But what has this meant for the majority of the population? Previously, millions of Chinese workers in and around Shanghai lived in what was almost free housing, subsidized by the government. A roof over one’s head was considered a right. Now that the capitalist market has become the driving force, at least 2.5 million in Shanghai alone people have been pushed out of their homes, often by bulldozers plowing through their neighborhoods.

While there has been an increase in work, the conditions on the job are horrendous in both the building industry and other sectors. In the shoe industry, for example, the workweek runs as high as 80 hours, mandatory. The bosses hold on to a part of the wages earned as an added pressure to keep people working. In the toy industry, income is based on piecework. The piece rate is so low that workers are obliged to stay on the job 10, 12 even 16 hours a day, 6 and 7 days a week, to earn enough to live on. To better control their work force, some bosses have now installed dormitories in the factories, with workers sleeping there as they did in the U.S. textile industry more than 100 years ago.

This "economic miracle" in China has also produced high unemployment. Those who used to work for state run industries, along with millions of peasants who can no longer survive in the countryside, make a desperate army of between 80 and 150 million unemployed looking for any jobs available in the cities. They become victims of all kinds of scams and all kinds of official demands for permits: permits to leave where they reside, permits to move into another region, permits for temporary lodging, etc.

So yes, what the AFL-CIO says about brutal conditions is true. But why is the situation of China’s workers worsening? China’s government had in previous times provided most of its population with housing, education, health care and retirement almost for free. Now that the government has decided to invest more and more in the "free" market, guaranteed benefits and lifelong employment are being thrown aside. China is indeed entering the world market, and looks more and more like a larger version of India, with its fabulous royalty and miserable poverty-stricken millions.

But the AFL-CIO implying that millions of U.S. workers’ jobs have been lost to China is just plain false. The AFL-CIO talks as if production is leaving the United States when, in actuality, production in this country has doubled over the last 30 years. In the 1990s alone, the amount of production went up by 40%.

So what is the problem? It’s not a "decline" in production in the U.S. It’s the bosses’ cutting back on jobs. It’s the bosses speeding us up and getting more work out of every single person still working. If the number of manufacturing workers had increased as fast as production did over the last 30 years, there would be about 40 million workers in manufacturing today, instead of the 14.5 who currently are employed in such jobs.

Even if 700,000 jobs had gone to China–as the AFL-CIO claims–they would more than have been made up for by the 25 million manufacturing jobs eaten up by speed-up and other productivity pushes.

But the AFL-CIO and other union leaders don’t talk about this problem because they have led the way in supporting the U.S. bosses’ drive to increase productivity. They have helped the bosses to enforce speed-up on us in the name of staying "competitive." They pass the blame for their own stupid policies onto workers somewhere overseas.

U.S. workers don’t have enemies in China–we have them right here heading our own unions.