SHOULD WE GIVE THE BUSINESS TO CHINA?

By Gordon G. Chang

These days China proudly calls itself “the workshop of the world.” This is no idle boast: The People’s Republic is attracting more and more of the world’s manufacturing capacity. Yet success creates its own problems. The world now wants to know what’s happening inside that workshop.

“In the race to the bottom, China is the bottom,” says Bama Athreya, deputy director of the International Labor Rights Fund. In case there’s any doubt about whether China maintains the worst working conditions in the world, we should talk to He Qun, who once operated a machine that bore holes in steel plates. “All I remember thinking was, ‘How did a hand get down there?'” The 30-year-old women saw a severed hand fall to the factory floor. She no longer has a job because that hand was hers.

“Most injuries are caused by [the worker’s] own carelessness,” a spokeswoman in He’s factory said. That’s just a part of the story: He had to work twelve hours a day and seven days a week in contravention of the labor laws of the People’s Republic. The spokeswoman said that workers receive adequate safety training. That’s just not the truth in this case: He was given no such instruction and had no safety equipment. The factory made a small payment to He and then told her to leave immediately. Like tens of millions of other workers in China, she has no insurance of any kind, government or private.

As China has become the factory of the world, working conditions have worsened for many of the country’s laborers. Workers suffer the worst conditions not in state-owned facilities but in privately owned ones–including foreign operations. He Qun, for example, worked for a foreign joint venture, the Nissin Plastic and Hardware Factory, in Longhua in Guangdong Province. The notion that factories are generally better if they are not controlled by the state does not hold up in the People’s Republic.

Why? China’s mighty central government is not able to enforce its labor laws in the growing nonstate sectors of the economy. Guangdong, where many private and foreign factories are located, has one of the worst accident records in the country. The state-owned newspaper 21st Century Business Herald says that each year more than 30,000 workers in that province lose their fingers and even entire limbs.

Official statistics from the central government in Beijing tell us that, in the first six months of this year alone, 53,302 workers were killed in 447,234 accidents. The real death toll is undoubtedly higher as many incidents go unreported. Bodies of workers have been found scattered around China’s countryside in the past year as factory and mine owners seek to evade responsibility for industrial mishaps by disposing of the evidence. Wang Xianzheng, the head of the State Administration of Work Safety, recently said that conditions had deteriorated in every sector except air and road transport. As China becomes more prosperous, its workplaces become more deadly.

If the leaders of an authoritarian state cannot improve conditions for their own workforce, what chance does anyone else have? Ironically, those farthest from China may be having the most success. Activists around the world have been demanding that multinationals establish and enforce higher workplace standards in the People’s Republic, and moral suasion is beginning to succeed in improving conditions in some factories making products for foreign companies. Nonetheless, the tactic of subcontracting–the process whereby work is apportioned from large factories to small workshops–often defeats advances that we hear about.

The progress made up to now is good, but American businesses need to redouble their efforts. Stories like those of former metalworker He Qun are motivating American politicians to act. The newly released report of the Congressional-Executive Commission on China has put multinationals on notice that this issue could become political in Washington in the immediate future. The Commission, headed by Senator Max Baucus of Montana, is charged with monitoring China’s human rights record.

Its first report wants U.S. companies doing business in China “to identify systemic worker rights abuses” and bring them to the attention of Chinese government officials as a part of developing “a long-term collaborative relationship” between government and business. The goal of implementing international labor standards in this fashion, though laudable, sounds unrealistic–Beijing has already condemned the report for its “interference” in China’s internal affairs.

Although the commissioners cannot force Beijing to do anything, they can turn up the temperature on American business at home. The Commission intends to make corporate social responsibility a focus of the coming year’s efforts by measuring the activities of U.S. companies against their claims and commitments. “The Commission will examine these corporate social responsibility programs and policies, focusing on the ‘American values’ that U.S. businesses purport to bring to China and what those values embody,” the first report says.

Businesses have claimed, with more than a little justification, that they have benefited the workers they employ by introducing new standards. For example, when I lived in Shanghai during the late 1990s I could see that employees of foreign banks and joint ventures were not only paid more but received more training and benefited from written employment policies and procedures. Foreign workplaces were better than those of local enterprises and better maintained. Those Chinese who left foreign companies for local firms carried with them higher expectations, which one day will have to be fulfilled.

“Members of the business community should not be surprised if Washington begins to examine all their claims of good corporate citizenship in light of what is actually happening in the People’s Republic,” says Scott Greathead, who organized the “Making It Right” conference in New York in November on corporate standards for foreign operations. American business cannot help, or even watch, China race to the bottom without political consequences at home. As Greathead says, “The 21st century demands better.”

Gordon G. Chang is the author of The Coming Collapse of China, published by Random House last year.

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