Chinese working class in SOEs: transformation under marketization

Wang Ting is our workshop's talented translator. She is currently a Ph.D. candidate at the Department of Applied Social Sciences, City University of Hong Kong. This is her guest post. 

For over 30 years since the economic reform, the Chinese state abandoned its socialist planned economy where all production activities and products were centrally planned for production and distribution, it then indulged in the miracle of a fast growing GDP relying on export and accumulation from land and real estate property, regardless of its uneven development in economic structure and regional layout. State-Owned Enterprises (SOEs) that used to be the main economy which employed almost all urban residents, also cooperated with this tide of pursuing economic profits in face of marketization and rising private enterprises, and they have together brought about the discourse of market economy.

Transforming SOEs

Before the economic reform and SOE’s transformation, Chinese workers in socialist SOEs developed an institutional dependency on the Party-State (Walder, 1988). They were employed for life-long, meaning that factories could not dismiss them easily and that workers could not resign or transfer to other positions without permission of factory committee. However, SOEs have the power of recruiting and dismissing laborers in the name of “human resource” now; also they have an ultimate goal of making profits. The market like a magnet has attracted factories to throw away redundant workers with old promise on social benefits, to march towards a blooming economy in the name of efficiency. 

The life-long employment with full social benefits is abolished in SOEs, replaced by labor contract without bargaining and increasing welfare commodification. SOEs transformed to be owned by shareholder, yet the process of transformation did not involve workers in, and all the assets of old factory as well as earnings from transformation often did not benefit workers because of the managers’ manipulation. All together, this not only left the enormous number of laid-off workers without proper pensions, but also disclosed a huge transition of Chinese economy from “socialism” to “capitalism”.

Transforming working class in SOEs

Marketization won its first battle when SOEs started to make profits for themselves and encouraged workers with extra wage rewards. Under the stimulus policy in factory, workers worked hard to earn extra reward, whose amount was far more than the regulated wage. The huge difference between the old equal but low wage system and the new marketized wage stimulus hence bought workers over, resulting them believe in the power of market and capital. While the economic policy was made under the direction of state without participation of working class, the latter took a long time to realize that they are actually being left behind the benefits from economic development.

SOEs remained two systems, one for old SOE workers under the socialist mechanism of employment and social benefit, while the other for all workers under the market-oriented mechanism of employment and benefit. It tried to reduce and remove the burden of old system by buying off old SOE workers and recruiting migrant workers from market instead. The market price is there, labeling workers with a price a little more than minimum wage, and the newly recruited workers can never enjoy the old social benefits in SOEs. Workers’ congress and factory’s general committee, which used to be two democratic agencies that were in charge of the production plan, factory’s budget and workers’ benefits, were disappeared and replaced by management rules, which in turn regulates daily operation and penalty towards workers. Trade unions retreated from its community function and silenced under management, let alone organizing workers to fight for a balanced labor-capital relation. SOEs adjust to the market economy by commodifying labor and pursuing profits, hence behave like most enterprises, presenting the class tension in ways of management and tension in unfair distribution. This changing despotic management together with the loss of state assets in SOEs’ bankruptcy have resulted a lot of labor disputes from late 1990s.

If the marketization has empowered SOE workers to free from socialist institutions, it has also led them trap into a capitalist development model with Chinese characteristics. Workers are repressed by power from both the capital and the state, that state's legislation with a direction of individualism undermined their capacity for collective action, that workers did not have a balancing power to bargain with capitalists, and that workers did not have the political right of strike and association. The situation hence became that SOE workers have to endure the poor working condition with huge inequality in wage and social welfare between workers and management.

A forming working class without class discourse

In socialist SOEs, factories did not have differentiated class interests or capitalist exploitation, yet there was continuing usage of “class struggle” where class is placed under or maneuvered by the political power, instead of initiated by working class. When SOE workers participated in the political mass movement, they might have not experienced the class conflict at all. Nevertheless, when there happened numerous laid off SOE workers in late 1990s, they picked up the socialist class discourse in appeal for pensions and economic compensation in collective actions.

The class discourse however, did not spread to remaining SOE workers and rising migrant workers in a national wide. The reasons could have been various: first, in the field of economy, Chinese state’s propaganda of a socialist market economy has led to an economic discourse hegemony that rejects the class analysis which is not pro current economic policy and seemingly brings no good for harmony. Second, in the political level, the state is fear of class unionization and solidarity in threat of its political regime, hence it repressed workers’ independent union and political leaders all along, let alone permitting them to unionize as a class-for-itself. And third, in the ideological and cultural level, Chinese people spoke little of class out of a reverse political correctness---that class struggle reminds them of the disordered political movement with the notorious usage of "class struggle" as tools against human rights.

However, the material-based differentiation and increasing economic inequality in China have no doubt resulted a working class-in-itself, though not a united class-for-itself at the moment. Although remaining SOEs workers do not express their “class identity” or “class experience”, they know that they do not own anything, factories do not belong to them any longer, also factories managers are not like old factory directors any more. Old SOE workers may be differentiated with migrant workers in SOEs out of two welfare systems; nevertheless, they have a common experience and understanding that they can only get payment when they work, that they are nothing but wage earners in the situation of overwhelming logic of market. They are actually being divided with management, instead of with other workers, in SOEs, and are gradually aware of the huge economic inequality---perhaps not all in a clear class conscious---that they belong to one class whereas the management do not.

Revival of working class

The process of turning workers from life-long to contract workers though first succeeded in its money-rewarding stimulus while secretly abolishing workers’ old social benefits, it now faced the pressure of workers not afraid of losing anything when they are relatively possessing less with less purchasing power.

In face of rising labor strikes and a potential national wide labor movement, the Chinese state has recently promulgated a number of labor law including labor contract law and social insurance law, with a hope of easing increasing class conflict and gradually providing a social security network. However, it is a response to workers’ actions rather than an active mediation in rebalancing the relation of labor and capital, also it always restricts the crucial empowerment of workers in collective bargaining and free association and collective action. As long as it tries to pacify both capital and labor by its economic hegemony regardless of economic inequality, as long as it tries to lead workers to individualized law and welfare channel, it is biased and would definitely not erase the class conflict in the market economy. It could not regulate the formats of workers' collective action at all, which in turn becomes this party-state regime’s upmost fear and pressure at present.

At last, old SOE workers are decreasing in quantity and being replaced by more and more migrant workers now, who become homeless after the state policy of land expropriation. This new trend will witness an increasing number of proletarians in transformed SOEs as well as other enterprises in China, which will present a national wide class conflict and contribute to the future of labor movement under the uneven Chinese economic development and unbalanced state-capital-labor relationship.

Reference:

Walder, A. G. (1988). Communist neo-traditionalism: Work and authority in Chinese industry. University of California Press.