US Companies Pushed China to Repress Unions More

Global Labor Strategies is a non-profit resource center providing research and analysis on globalization, trade and labor issues (http://laborstrategies.blogs.com). This exposé is excerpted from their 2008 report, Why China Matters: Labor Rights in the Era of Globalization.

In an unusual move, prior to the draft [Labor Contract] law’s finalization, the Chinese government opened up a period of public debate and comment on the new law. Nearly 200,000 responses poured in, most from ordinary Chinese. But some were from US and EU based corporations or their lobbying groups and they opposed the new law, prompting a global debate. As the debate on the new law unfolded, something of a paradigm shift occurred as labor and human rights advocates switched global attention from the actions of the Chinese state to the action of global corporations. Globalization had been promoted by its corporate sponsors as a way to improve rights and standards. Now corporations seemed to be blocking those rights. Foreign corporations not only lobbied the Chinese government to gut labor protections in the law, but they threatened that some might leave China if the new legislation were passed.

The American Chamber of Commerce in Shanghai (AmCham) issued a 42-page critique warning that the law may “reduce employment opportunities for PRC workers” and “negatively impact the PRCs competitiveness and appeal as a destination for foreign investment.”

Dr. Keyong Wu, an expert for the British Chambers of Commerce, stated, “Business is attracted to China not only because of its labor costs but also because of its efficiency. If regulation starts to affect that and flexibility, then companies could turn to India, Pakistan and South-East Asia.” The aggressive tactics of the global corporations appear to have worked. In December 2006, the Chinese government released a revised draft of the Labor Contract Law with many important protections for Chinese workers seriously weakened or eliminated wholesale.

The corporate community quickly claimed credit for these revisions. The US-China Business Council declared the draft a “significant improvement.” Sixty-one individual corporations were also pleased with the results of their lobbying. Scott Slipy, director of human resources in China for Microsoft, explained to Business Week, “We have enough investment at stake that we can usually get someone to listen to us if we are passionate about an issue.” According to a lawyer representing numerous corporations in China, “Comments from the business community appear to have had an impact. Whereas the March 2006 draft offered a substantial increase in the protection for employees and a greater role for unions than existing law, [the new draft] scaled back protections for employees and sharply curtailed the role of unions.”

Editor's Note: For 37 years, Peacework was published by, but did not necessarily represent the views of, the American Friends Service Committee. Peacework's final printed issue (September 2009) focused on human rights violations and nonviolent activism in China. This issue was never posted to Peacework's previous AFSC-sponsored website. Since the print magazine was being closed down as part of budget cuts resulting from the financial meltdown, AFSC decided to spin Peacework off into a fully independent blogging platform, one not sponsored by AFSC. It was agreed that the contents of Peacework's archives, including the final issue, could be posted online by the newly independent Peacework. We are working to create that blog platform, and this article is one of those from that last issue.