Against the Current, No. 23, November/December 1989
Kim Moody Smashing the Iron Rice Pot:
Workers & Unions in China’s Market Socialism
By Trini Leung
Hong Kong Asia Monitor Resource Center, 1988, 233 pages, $5.
ONLY DAYS AFTER the massacre at Tiananmen Square, the government of the
People’s Republic of China arrested the leaders of the fledgling
independent trade unions that sprouted during the pro-democracy movement.
Compared to the hundreds of students arrested, the dozen or so labor
activists may have seemed insignificant But when, in Being and Shanghai,
the government began publicly executing workers who had thrown stones or
burned tanks, just as countless students had, the message became clear.
Student opposition was intolerable, but worker opposition was terminal.
In reality, the small Workers Autonomous Federations that appeared in
the streets of Shanghai and Beijing in June were hardly an immediate
threat to the Chinese Communist Party (CCP), which controls official
unions with a membership of 80 million. Nor is there evidence that
either the students or the workers were out to overthrow CCP rule per
se. Indeed, the vision of some sort of democratic capitalist ‘revolution
around the corner” peddled in much of the Western press was an illusion
in the China of 1989.
The danger of working-class involvement, from the vantage point of the
CCP bureaucracy, was not the imaginary rise of anti-collectivist
consciousness among the workers, but it’s opposite. If the unified
demand of the democratic movement spelled trouble for the CCP’s
bureaucratic rule, the disaffection among workers pointed toward
intractable problems with its economic program.
In purely numerical terms, China’s 130 million urban workforce still
represents a small minority of its more than 1 billion citizens. But it
is this urban working class and most particularly its industrial
sections that has been the carrier of China’s economic development since
the early 1950s. Through all the twists and turns of the Great Leap
Forward (1958-59) and the Cultural Revolution (1965-76), China’s vast
agricultural sector grew only enough to match population growth, if that
According to the CCP’s own accounts, it was industry that provided all
of the surplus and, hence, growth.(1) <#N1>
The growth rate of China’s industrial economy slowed from 11-13% growth
rates to 9.8% during the Cultural Revolution. Some of this decline in
growth could be attributed to the political disruption of that era, but
much of it was due to the chronic imbalances and irrationalities that
characterize the centrally planned bureaucratic economies:
overproduction of basic industry, extensive rather than intensive
investment, hoarding at the enterprise level, poor quality, etc.(2) <#N2>
Reform and Its Consequences
As in Eastern Europe, China’s rulers turned toward two expedients to
deal with its economic problems. One was foreign borrowing, the other,
sweeping economic reforms.
Like Soviet perestroika, the Chinese reforms that were implemented in
the late 1970s were couched in the language of the economic market. The
reforms included the dramatic abolition of the commune system in
agriculture and its replacement with private family farms, an act which
threw about 40% of the economy out of the formal state sector. In the
minds of most Western observers, however, the key aspect of China’s
market reforms was the opening of private production and foreign
investment in industry.
The coastal region of China has seen a decade of private investment,
including the Special Economic Zones (SEZ) that are the envy of South
Korea and Hong Kong for the cheap labor. Capital from Hong Kong, Japan
and the United States has led the way in creating China’s private sector.
The Western press lauds China’s 1980s growth rates of 10%-11%, comparing
favorably to almost any capitalist economy these days. While this growth
remains less than that of the 195( and 1960s, the business press is
quick to point out that growth rates in the more market-oriented coastal
region are more than twice the national average.(3) <#N3>
Yet, for all the editorial hype about capitalism triumphant East and
West, China’s industrial sector remains overwhelmingly state owned. Of
the perhaps 3% of the industrial output that is in private hands, 70% is
accounted for by tiny factories in the rural areas of the coastal
region. These factories are technologically primitive, typically owned
by well-to-do farmers and entrepreneurial- minded party officials—not
much of a model of economic development Chinese industry remains in the
hands of the party bureaucracy.
Thus, the heart of China’s economic reform program has occurred in
state-owned industry. Just as China’s state-employed industrial working
class was key to its earlier growth, so it is key to the reform program.
It was, at least in part, the social dynamics of the state-sector
reforms that brought hundreds of thousands of workers into the streets
to defend the students and often take the lead in confronting the
government. These events ranged from heroic confrontations with the
People’s Liberation Army in Tiananmen Square to mass demonstrations
throughout the urban centers. They included the birth and death of
independent trade unions in Beijing and Shanghai.
The urban setting and national breadth of this worker involvement make
it clear that it was primarily workers from the state sector that took
to the streets in May and June.
Smashing Workers’ Security
Socialists seeking to understand the economic reforms in China as they
affect the working class face a dearth of information. To be sure there
are academic studies of China’s economy from which one can infer
something of the impact on Chinese workers. But works, at least in
English, dealing with the working class itself are scarce.
Smashing the Iron Rice Pot: Workers and Unions in China’s Market
Socialism by Trini Leung Wing-yue is a unique and important contribution
toward a critical understanding of what has led to the events of 1989.
The book was published in 1988 by the Asia Monitor Resource Center, a
left-oriented, Hong Kong-based organization doing labor solidarity work
throughout Asia.
Smashing the Iron Rice Pot is based on extensive interview material in
China as well as on statistical and historical research. It is a useful
short course in the history of China’s labor movement, as well as a
valuable description of the impact of reform on the working class in
both the private and state sectors.
The “Iron Rice Pot” refers to the system of job security and welfare
benefits that accrued to the workers in China’s Large-scale state
enterprises prior to the unfolding of the reforms in the 198(k. Leung
uses the example of the giant Wuhan Steel Works, where she interviewed
workers and managers, to illustrate how the old system worked and how it
is changing.
The Wuhan Works, which began operation in the 1950s, employs about
140,000 workers. Until recently, these workers could count on life-time
employment and a relatively egalitarian wage scale. Housing, medical
care, education, retirement and other benefits were a function of
employment and membership in the official trade unions and were provided
within the massive complex that is like a city unto itself. According to
Leung, Wuhan workers did well economically not only by Chinese
standards, but by those of industrial workers in other parts of Asia as
well.
This sort of economic security has a special meaning for China. Unlike
the Soviet Union, where full employment is in part a result of a general
labor shortage, China is awash in surplus labor. The surplus rural labor
form alone is estimated at 150 million. To sustain the level of economic
security that exists in plants and industrial complexes like Wuhan
required the absence of market forces.
The economic reformers know this and hope to change things. The
now-deposed reform leader Zhao Ziyang stated that a third of China’s
workers had no real function in their workplace. The reforms that both
Zhao and his detractor Deng Xiaoping advocate are meant to eliminate
that surplus.
The immediate introduction of market-induced unemployment was not
considered wise by any faction of the bureaucracy for reasons that are
not difficult to imagine. Instead, as Smashing The Iron Rice Pot
describes, they introduced a system of temporary contract labor into the
commanding heights of state industry. Contract labor has existed in
China throughout Communist rule, but until the mid-1980s it operated
outside the favored bastions of heavy industry.(4) <#N4> Now it was to
operate as a means of cracking the iron rice pot.
Contract workers are hired by a state enterprise for a period of years,
usually two to five As temporary workers they are not entitled to the
extensive welfare and benefits system. The initial 1984 contract labor
“reform” embraced only newly hired workers at Wuhan and similar
enterprises. But by April1987, 75million workers within the slate
industrial sector were contract workers.
“Ultimately,” Leung writes, “all China’s workers would come under a
labor contract system, even existing permanent employees.” Even if this
goal proves unworkable, it is evident that a second tier of temporary
workers without benefits will tend to undermine the security and
conditions of the permanent employees.
Another central feature of the reforms is the change of the wage system
in state industry. Some of the “excess” wages of industrial workers can
be and has been eroded by price reforms that lead to inflation. But the
basic method of attempting to tie wages to performance has been to
remove decisions about wage changes from the political center to the
enterprise management.
In China, as in the Soviet Union, Hungary and Poland, greater initiative
and flexibility by enterprise management is the heart of China’s reform.
This has often had contradictory results. In fact, for a time it seems
that this decentralization of wage determination actually created a wage
inflation, as managers sought to gain the cooperation of their workers
in increasing output.(5) <#N5>
But the decentralization has another consequence as well. As Leung
points out, significant wage differentials have developed between
plants, jobs and locations. She cites surveys that show that Chinese
workers see this as unfair and object to it.
One of the most interesting chapters describes the particular effects of
these reforms on women workers. The growth of contract work is
particularly devastating to women because benefits such as childcare,
maternity leave and healthcare are tied to permanent employment. The
figures cited at Wuhan also indicate that women are prime targets for
the contract system. In the Wuhan steel works there are 39,000 permanent
women workers, but 56,000 female contract workers.
As might be expected in a program seeking to reduce the surplus labor
force, women are also the prime target for removal from the workforce
Women are induced to “return to the kitchen” by the promise that their
husbands will receive the benefits of permanent employment. There is,
however, resistance.
Problems of Official Unions
Another unique aspect of this book is that it doesn’t just describe the
problems faced by workers in China’s changing economy. It speculates on
the impact of the specific changes on the collective struggle of workers
and on the behavior of China’s official trade unions.
Leung makes it clear that China’s official unions and their federation,
the All-China Federation of Trade Unions (ACFI1J), are creatures of the
government and the party. But she also argues that the decentralization
and, at the periphery, the private-market sector, create new problems
for the unions as well as the workers.
Specifically, they create a latitude for bargaining over wages and
conditions that did not really exist when wages were centrally
determined and largely standardized. Even if, as other studies show,
today’s flexible plant manager tends to grant concessions across the
board, rather than individually within an enterprise, the rise in
inequality between enterprises is a goad to workers on the losing end.
Indeed, while the wage inflation that began after the wage reforms of
the mid-19806 is often portrayed as the result of collusion between
managers and workers, it is more than likely that the pressure for
increases by the workers accelerated as disparities develop between
enterprises and geographic areas. A conflictual element necessarily
arises as the enterprise’s resources are taxed.
This creates anew pressure on the official unions. As Leung says at
various points, the stated goal of China’s official unions is to
encourage greater productivity, on the one hand, and, on the other, to
administer the distribution of housing and welfare benefits. But now,
not only wages, but housing and welfare funds as well, vary according to
the performance of the enterprise. Both the levels and the distribution,
while formally determined by management, become the object of pushing
and pulling, if the official trade unions do not engage in such
bargaining, it will be done informally or through the enterprises’
“workers’ congresses,” which are supposed to monitor management.
Leung clearly believes the official trade unions should play a
traditional adversarial/advocacy role, even though she recognizes the
barriers to such a transformation. Even in the private sector and the
SEZs, where such a role seems obvious, the official unions play “a role
almost akin to personnel managers.” Still, the book concludes with a
quote from ACFIU Chairman Ni Zhifu in which he confesses that the unions
were “not representative of the interests of workers.” The implication
is that they should take up these interests. Leung seems to be saying as
much.
Smashing the Iron Rice Pot was written in 1988. The events of 1989 have
most certainly laid to rest hopes that the economic reforms are a
prelude to democratic reforms by the bureaucracy itself if there are to
be even modest democratic reforms, such as those in the Soviet Union or
Poland, they will have to be pried from the hands of the rulers by force.
Leung has, during and since the May-July events, followed her loyalty to
the working dam rather than her hopes for trade-union reform. She was,
in fact, one of the first to report favorably on the formation of the
Autonomous Workers Federations in Beijing and Shanghai this spring.(6) <#N6>
The weakness of Smashing The Iron Rice Pot is ultimately that its author
assumes China to be a socialist society, albeit a very bureaucratically
disfigured one. The book, for example, limits the sources of industrial
conflict largely to the implementation of the new reforms and the rise
of a private sector. In point of fact, the sources of such conflict lie
far deeper in the nature of China’s social system.
Precisely because bureaucratic central planning is inherently
inefficient, the bureaucracy needs a variety of political instruments to
effect its frequent adjust-merits or changes in emphasis.
The official trade unions have always been one such instrument in China
as in the Soviet Union. Their central function, as Leung points out, has
always been to encourage greater efforts by the workers. They do this by
the stick of “education” or emulation, or the carrot of housing and
welfare benefits. They are run by the party for the party.
At times, these unions can be a transmission belt of worker opinion from
the workplace to the central bureaucracy, which is why they occasionally
disagree with their party chiefs. And, of course, their leaders can side
with one faction of the party leadership against another.(7) <#N7> But
fundamentally, they are as much a part of the control apparatus as the
enterprise party secretary or the economic ministries.
Smashing the Iron Rice Pot may not provide the analytical framework for
assessing the future of China’s trade unions, but it does provide a
clear picture of the reforms as they have affected the industrial
working class. These reforms will continue, despite some reluctance in
the West to return or increase investments. This book will prove an
important contribution to understanding the roots of the next great
upheaval in China. [Smashing the Iron Rice Pot can be ordered from the
Asia Monitor Resource Center.] Notes 1. Nigel Harris, The Mandate of History: Marx and Mao in Modern China
(London, 1978) 1901, 7. 2. Harris 190-19; Richard Smith, “Class Structure and Economic
Development: The Contradictions of Market Socialism in China,’ UCLA,
unpublished thesis, 1989, Chapter 3, 1-16. 3. For example, Business Week, June 5,1989: 38. 4. Harris 132-134. 5. Smith 37-43. 6. Labor Notes, July 1989; “Echoes From Tiananmen,” Friends of Chinese
Mlnzhu (Hong Kong, 1989) 12-13. 7. This may have been the case this spring, as the ACFTU did issue a
statement of support for the students in mid-May. So far as I know,
however, they were silent on the executions of workers and the
military suppression of the democracy movement in Beijing.
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