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Minqi Li: Wave of strikes for higher wages could become a political movement

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PAUL JAY, SENIOR EDITOR, TRNN: Hi. I’m Paul Jay, for The Real News Network in Washington. In China in June, leaders of the Chinese Communist Party said that it’s time for workers’ wages to go up. And there’s been a lot of discussion about whether China’s actually restructuring its economy to try to boost domestic demand. Certainly what leaders say, in other parts of the world, they want, and the G-20 declaration, and in various statements by President Obama, there’s been a lot of pressure on China to try to increase demand not just for Chinese products, but for China to increase its imports of products from around the world. Now joining us to talk about a wave of worker strikes in China—because it seems the workers want higher wages, I think, whether or not anyone else is saying they should—is Minqi Li. He joins us from Utah, where he teaches at the university there. Minqi was a political prisoner in China from 1990 to 1992. And he taught at York University in Canada for a few years. He’s—as I say, he’s now at the University of Utah. His most recent book, The Rise of China and the Demise of the Capitalist World-Economy was published in 2009. Thanks for joining us, Minqi.


JAY: So, first of all, tell us what’s going on, as you know it, on the ground. I think you were in China just a few months ago. Is there a wave of worker strikes? And what is the impetus here?

LI: Well, indeed there has been a wave of strikes that has been taking place in many foreign-owned factories, especially in the export-oriented sector. And in addition to that, there was a wave of strike that took place last year in the state-owned enterprises. And the combination of these waves, I think, probably would represent the beginning of a longer-term trend. So we know that for decades China’s economic development has been based on the super-exploitation of the massive cheap labor pools. But that is about to come to an end. And, first of all, there has been this dramatic change in the population structure, so China’s population is aging rapidly. So the portion of the labor force that is 30 years old or younger is likely to decline in the coming years.

JAY: Now, just before we go further, let me just ask a couple of questions. First of all, when we talk about waves, are we talking hundreds of strikes? Thousands of strikes?

LI: Well, you don’t have exact statistics about this, but basically the news coverage of strikes have been dramatically increased.

JAY: In terms of the demographic change, do the workers have more bargaining power now? And is part of that the one-child policy? Is there just not as fast a population growth as there might have been?

LI: Well, historically, and while other countries have reached this kind of demographic change so that the surplus labor force has been depleted, and that has tended to increase workers’ bargaining power, I’m expecting the same thing to happen in China. In addition to the demographic change that is likely to increase workers’ bargaining power, another factor is that a new generation of workers, they now have high expectations. They want to live like urban residents. And so in a few years—and we are going to see the combination of these factors may result in more workers organizations and more militant workers activities, and that potentially could change China’s income distribution.

JAY: So to what extent is this being forced by the workers’ struggles versus an actual plan by the Chinese Communist Party to try to increase incomes of the workers? I mean, they do claim to be the party that represents workers.

LI: Well, they do claim. But I think, as far as the reality is concerned, the current waves of strikes and the current workers’ struggle is probably 100 percent coming from workers’ own initiative, although the central government has made repetitive statements about the desire to increase workers’ wages. But so far it has not translated into actual action at the local level. And so, because the local bargaining primarily depends on the relationship between the workers and the local capitalists and the local governments—and the central government, it appears, does not have much direct influence on this.

JAY: Apparently, in Guangdong there’s a new initiative that was pushed by the workers’ strikes there, where there—it’s going to be—they’re testing some new piece of legislation, if I understand it correctly, where workers—if more than 20 or 25 percent of the workers say they want a wage increase, then the union must organize an election of the workers to vote a negotiating committee, and prying some of the power out of the trade union leaders, who are usually either party representatives or at least, certainly, appointed by the party, and, apparently, often even appointed by management. Can you tell us a little more about all of that?

LI: That has been discussed. But I think at this stage probably we should not be over-enthusiastic about formally democratically elected unions, because we don’t know whether a genuine democratic election would take place, and even if that takes place, and whether that kind of elected union would be subject to the control by the employers or the government. I would put more hope on the spontaneous resistance organized by the workers from time to time.

JAY: And how successful has it been in terms of actually raising wages?

LI: Well, so far, despite the exciting news about these worker strikes, the immediate effect is limited. We have seen reports about a large increase in wages in some places in response to the strike. Later we heard—other reports were saying that capitalists are trying to get around the wage increases by cutting some benefits, cutting some other subsidies, moving the factories to the inner land with lower wages. So we need to wait and see. Okay. By the medium term and the longer term, I do see that the Chinese workers’ bargaining power will increase.

JAY: So to what extent can China make this transition people are talking about to a less export-led economy? And the fundamental asset of China for the last few decades has been cheap labor. I mean, are they actually in a position to make that transition now, which would also, I suppose, make them far less dependent on the American market and a little more immunized against the global crisis?

LI: Well, that is a very good question. And we know that the Chinese economy has depended upon exports and investment. And now, with the American economy basically in stagnation, China could no longer rely upon the American market. And on the other hand, investment, that has surged to, like, 50 percent of China’s GDP. And recently China has very much relied upon the real estate investment, and that potentially could lead to property bubbles, and then, if that collapses, which could have quite terrible consequences. And so China needs to have this transition into a more consumption-led economy. But the downside is that as China makes this transition, if that is going to take place through higher wages, higher purchasing power by the working people—. But the problem is that in a capitalist economy you have higher wages, and then you have less capitalist profits. So to really complete this transition, you need two additional conditions. One is that China needs to move to the technology front here in the global market. And secondly, China needs to overcome its energy and environmental crisis. And neither of the two is very easy.

JAY: There’s a lot of talk in the West about China and to some extent India being the saviors of the global economy. In fact, there’s even been some talk that the elite in the United States don’t even need the American market as much anymore; they’re looking to make their investments and their profits in Asia, particularly China and India. I mean, is that realistic? The growth in Chinese workers’ wages is going to have to increase pretty quickly to have that kind of effect.

LI: Well, the latest news is that last month the US trade deficit unexpectedly surged by 20 percent. So I think it’s too early to predict that the US is going to benefit a lot from the expansion of the Chinese market. And, certainly, as Chinese economy continue to grow, its imports will grow. But that primarily will increase China’s demand for energy and raw materials. So that will benefit the Middle East, Russia, Latin America. And China will also increase demand for high technology capital goods. So far, that has primarily benefited countries like Germany or Japan. So whether US can get a share of that, we need to wait and see.

JAY: Now, to what extent are these strike struggles political, if at all? In other words, on two fronts, one, questioning the power of the Communist Party, and two, is there—there must be a memory of at least the slogans of socialism in China. Is there any impetus towards a more real socialist type of economy? Or are the workers liking, more or less, this capitalist form?

LI: Well, you have—the one thing we need to know about the Chinese working class is that it’s still divided into, broadly speaking, two segments. On the one hand, you have the new workers, the migrant workers who had origin in the countryside and then recently moved to the cities to participate in the capitalism sector. And that is a part of the workers’ strike that has been widely covered by the media for now. And then you have another major sector, which has to do with the urban working class, and whose parents used to work in the socialist state sector. And those workers have also organized some quite impressive struggles, especially anti-privatization struggles, in recent years. And that kind of struggle has been less covered. And it’s the urban sector workers that is more political, actually, much more political compared to the migrant workers’ struggles. And moreover the urban workers’ struggle, because it’s directly about anti-privatization, and so it is directly related to a desire to return to some form of socialist legacy. And on the other hand, I would say that the migrant workers for now remain politically inexperienced. But maybe after 5 or 10 years, and after they have gained more experience in organization, in actual struggle, and then maybe they would start to desire not only higher wages but also political rights.

JAY: Okay. In the next segment of our interview let’s talk about what’s happening overall in the Chinese economy. I know in our last interview you were questioning just how real the Chinese, you could say, resistance to the global financial crisis was, how much this was a stimulus bubble. So in the next segment of our interview, let’s just talk about where things are at in China. Please join us on The Real News Network.

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Minqi Li is an associate professor of economics at the University of Utah. He is the author of The Rise of China and The Demise of the Capitalist World Economy (Pluto Press, 2009) and is the editor of Red China Website (a leading Chinese leftist website).  Minqi Li has published many articles in the field of political economy, the Chinese economy, global capitalist crisis, peak oil, and climate change.