China in the Driver’s Seat

China in the Driver’s Seat

On the American left, there’s no consensus about how to respond to China’s emergence. Confront China or accommodate? Slam China with tariffs or invite it to build in the US? And what about human rights? Robert Dreyfuss talks to progressives about what the country’s rapid rise means for the Chinese—and for Americans.


Sitting at a sidewalk coffee shop a block from the White House, Andy Stern, former president of the Service Employees International Union, is reflecting on a series of visits he’s made since 2002 to China, where he has discussed organizing and collective bargaining with leaders of the All-China Federation of Trade Unions (ACFTU). China’s economic transformation is a profound challenge to the United States, and to American workers in particular, Stern says. "We have to recognize that China is the first real economic competitor that has ever threatened America’s standing as the global economic superpower."

Few would argue that the rise of China has world-altering significance. But across the American left there are sharp, sometimes acrimonious differences about what constitutes appropriate and principled responses to China’s emergence as a great power, and whether the country’s ascendance is promising or ominous. Even Stern’s visits to China over the past decade have drawn withering fire from other labor leaders, along with human rights and globalization activists, who vilify the ACFTU as an instrument of antiworker repression by China’s ruling Communist Party. "Andy Stern seems to think he can find progressive elements within the ACFTU. And the SEIU is OK with that?" asks Sophie Richardson, advocacy director of Human Rights Watch’s Asia division. Jeffrey Fiedler, a longtime activist on China, an official at the International Union of Operating Engineers and a member of the Congressionally mandated US-China Economic and Security Review Commission (ESRC), is scathing. "Andy Stern threw away all principle and started dealing with the ACFTU. The head of the ACFTU is on the fucking Politburo!" he exclaims. "He’s a thug."

Many in the labor movement, of course, are riled by their belief that export factories in China, often managed by US and other multinational corporations, are stealing American manufacturing jobs. They view China as the biggest player in a worldwide rush by US and other corporations to take advantage of cheap labor and lax regulatory regimes in much of the developing world, whose producers stock the shelves of American shopping malls with imported goods. "The global imbalances generally—with Germany, Japan, China, Korea and others focused on an export model and relentlessly wedded to it without concern for moving to a more balanced marketplace—have a direct destabilizing effect on the global economy, and on this economy in particular, and can’t be sustained," says Robert Borosage, co-director of the Campaign for America’s Future. "And so the United States has to move into a series of much more fraught confrontations and challenges, not just with the Chinese."

The implications of China’s rapid ascent go far beyond those concerns. It is fast becoming an economic giant, moving from low-end assembly lines and garment sweatshops to high-end products and innovative approaches to green technology, including wind turbines, solar panels and electric cars. Despite the uncontrolled, almost Wild West nature of capitalism in China, for many developing countries its muscular combination of top-down political control and state-guided industrial growth represents a palpable challenge to the dominant post–World War II paradigm of American-style development, and it is an attractive one in many quarters. "I am concerned that there are other places in the world where China’s form of authoritarian capitalism is taking hold," says Carolyn Bartholomew, vice chair of the ESRC and a former aide to Representative Nancy Pelosi. "Look at how China is engaging in Africa."

"It’s almost as if the continental plates of global politics are shifting beneath our feet," says Orville Schell, director of the Asia Society’s Center on U.S.-China Relations. "We suddenly have this other model of authoritarian capitalism that is proving to be remarkably successful, and it is even posing a challenge, not just economically but politically, to our belief that our system of democratic governance is the one that’s best able to deliver a good life."

Along with China’s growing economic power comes an inevitable corollary: China’s eventual emergence as a political and military power wielding its influence from East Asia to the Pacific, the Indian Ocean, the Middle East, Africa and beyond.

Among progressives, there’s certainly no consensus over how to respond to the rise of China. "This drives a wedge right through the progressive community," says John Feffer, co-director of Foreign Policy in Focus at the left-leaning Institute for Policy Studies (IPS). Well aware that US policy toward China is driven by the multinational corporations and banks that invest there and by the military-industrial complex, which sees China as a rival and potential adversary, progressives know they have only limited power to affect national policy. Still, they debate choices: confront China or accommodate its rise? Slam China with tariffs and sanctions or invite its sprawling, state-owned enterprises to buy up US companies and build factories in the United States? Engage the ACFTU and other Chinese institutions or avoid them? And what about human rights, including worker rights, religious freedom and minority rights for Tibetans and Muslim Uighurs in western China? Will labor shortages, which have helped spark a wave of strikes and protests, lead China to give greater freedom to workers to organize, to secure higher wages and a better standard of living?

To answer at least some of those questions, I interviewed several dozen progressive policy analysts, economists, environmentalists, labor and human rights activists and officials, and academic specialists on China. Nearly all of them agree on one thing—namely, that to compete with China the United States must adopt a clear-cut set of industrial policies, investing in infrastructure, job creation, education and training, high-tech manufacturing, and research and development, especially in green technology.

"The first priority is to get our own house in order, so we’re not filled with so much anxiety that is easily transferred onto the rise of another country," says Schell. But even on this point there is disagreement, because many activists on the left argue that it’s difficult to promote a US industrial policy—taxing the rich, subsidizing favored industries, spending a lot more on infrastructure and training—without simultaneously taking on the dominant ideology of neoliberal globalization and free trade, and that includes the China problem. "It’s almost impossible to have a domestic industrial policy without addressing the trading regime," says Robert Kuttner, co-founder of The American Prospect.

For many in the US labor movement, there’s little doubt that China is a grave menace, at the very least, to American jobs and prosperity. At the AFL-CIO, the Economic Policy Institute (EPI) and the Alliance for American Manufacturing (a project supported by the United Steelworkers), the book on China is this: it’s a bullying, mercantilist power, competing unfairly with other countries by artificially keeping the value of its currency low and by suppressing labor rights and trampling on environmental standards, cannibalizing a generation or two of poor migrant workers to churn out cheap products for export. In this narrative, China exploits the willingness of multinationals to set up unregulated factories along its industrial southern coast, meanwhile blackmailing those firms to share trade secrets and technology with China as the price of admittance. It’s a sweeping indictment, and the remedy they suggest involves some combination of daunting and punitive tariffs—as much as 25 percent across the board on imports from China, some say—along with sanctions and other measures to force China to revalue the renminbi, its currency, by 40 percent or more.

Advocates in this camp discount fears of a confrontation or a trade war with China, and in fact they insist that the longer the United States waits before taking on China, the harder it will be. "I would say to the Chinese, ‘We are not going to allow the free access of Chinese goods, as long as you are pirating technology, requiring American companies to produce in China only for export and not for the Chinese market, extracting technology transfer agreements that are plainly coercive, and manipulating your currency.’ Then the fat would be in the fire, and the Chinese would have to decide what they’re going to do about it," says Kuttner. "It might lead to some conflict," he says. "If we took a harder line on Chinese mercantilism, it might get kind of ugly in the short term."

Robert Scott, an economist at EPI, published a study in March claiming that between 2001 and 2008 nearly 2.5 million American jobs skedaddled to China, including more than 600,000 in computer and electronics manufacturing alone. Like many in the AFL-CIO’s orbit, Scott takes a frankly nationalist stance in defense of measures to rebalance the US-China trade deficit. "The US government has an obligation to US workers to develop policies that are in our national interests," he says during an interview in his office. When I point out that over the past three decades China has lifted hundreds of millions of people out of desperate poverty, and that his attitude might sound chauvinistic to some, he nods. "It does. I view my job as being concerned with the living standards of American workers." And he insists that only a threat to close the US market to Chinese imports will be enough to get Beijing’s attention.

It’s possible to make the case that China’s success in bringing masses of peasants out of poverty—as many as 400 million and counting—is the single most important event in the world in the past quarter-century. To be sure, much of China’s growth since the late ’70s has come at the expense of the environment and of workers laboring under atrocious conditions. But many advocates of getting tough with China dismiss the vast improvement in living standards there or question whether it has happened at all. They argue that China has achieved its stunning record of growth, averaging close to 10 percent annually since 1979, by cannibalizing its workforce, with little or no material benefit for the average Chinese. "I don’t view it as a success story," says Scott Paul, founding executive director of the Alliance for American Manufacturing (AAM), a longtime labor lobbyist and former aide to David Bonior, a former Congressman from Michigan. Paul argues that Chinese workers are often not paid proper wages and that they labor under weak or nonexistent environmental and workplace safety rules. By compelling China to revalue the renminbi, Paul and others argue, the United States can force China to absorb more of what it produces, which will raise Chinese wages, consumption and living standards. "This will allow China to enjoy the fruits of its growth," says EPI’s Scott.

Over at the AFL-CIO, Thea Lee also isn’t ready to acknowledge that China’s growth has been a boon to its population. Lee, the federation’s assistant director for public policy, is part Chinese herself, and she’s intimately familiar with US policy toward China, which she faults as too accommodating and too driven by the interests of American corporations that operate there. "I don’t call it a success for working people," she says. "It’s a disgrace. The regulatory system is like the Wild West, and nobody cares. You have long-term environmental damage, you have child labor, you have forced labor, the destruction of workers’ health." Like Fiedler, Lee rolls her eyes when she talks about the ACFTU, which has nearly 200 million members. "We don’t recognize the ACFTU as a real union," she says. "I consider them to be the government. They’re management."

Even as officials and activists within the labor movement and among its allies call for a confrontational stance against what they regard as predatory trade practices by China, at times they fall into what can only be called cold war–style rhetoric. AAM’s Paul expressed grave concern about China’s efforts to enhance its military power. "The trade surplus is being used by China to build up a military. They want to build a blue-water navy in the Pacific, to develop sophisticated nuclear weapons, satellite-killing weapons. What does that say about peace?" he asks. "Their stated goal is, they want to have a presence in the Pacific Rim and challenge US supremacy in the Pacific. That has enormous implications." And on Fiedler’s list of steps to be taken to show China that the United States means business is a slowdown or suspension in US-China military ties and sharp limits on Chinese students studying in America. Fiedler tosses out words like "fascist" in regard to China, adding, "I would continue to sell arms to Taiwan."

Of course, there is another view. Some argue that it’s impractical to try to bring jobs back from China, and that in any case the United States must make room for Beijing’s rise as a great power. For these analysts, any talk of boosting America’s military response to China is alarming.

The liberal bête noire of the labor movement and its allies is James Galbraith, the heterodox economist and professor at the University of Texas, who is sharply critical of those who think that jobs can be coaxed back home via any combination of pressure tactics against China. People like Galbraith are rudely dismissed as "panda huggers" by some, and even their motives are called into question. ("He’s an apologist. His wife is Chinese. He’s done some consulting for the regime. For God’s sake, don’t quote me on that," says one left-leaning critic.) Galbraith represents a diametrically opposite point of view from the AFL-CIO/EPI/AAM nexus, and his views are echoed by people like Columbia University’s Joseph Stiglitz, MIT’s Alice Amsden and others.

Galbraith dismisses the claim that China’s economic growth has not brought massive material benefits to hundreds of millions over a short time. "It’s clear that you have vast populations that are a generation removed from grinding poverty—and with an existence that they understand very well is vastly better." He argues that a great deal of what China manufactures is produced for its domestic market, that wages and working conditions are improving (especially for those in the export sector) and that forcing China to upvalue its currency would have no effect whatsoever on US job creation.

A central argument among US labor officials and their allies is that by suppressing the value of its currency, China is also suppressing domestic consumption far too severely. And, they argue, China’s sky-high savings rate—more than 40 percent annually, one of the highest in the world, compared with US levels, which have mostly fluctuated in the zero to 5 percent range—is accomplished only by squeezing the living standards of its 1.3 billion people. So, they say, by compelling China to revalue the renminbi and direct its wealth inward, they’re only doing what’s best for China—and meanwhile helping to create Chinese demand for US goods.

Galbraith ridicules the idea that Americans know better than the Chinese what’s good for them. "The notion that China could somehow increase its consumption in ways that would materially benefit American workers is not plausible," he says. "First, consumption in China has been rising rapidly for decades. Second, raising it more rapidly means what? Having more cars and fewer roads to drive on? It doesn’t make any sense from a development standpoint. Why should they want to slow the pace at which they build infrastructure relative to the purchase of consumer goods? Why would they build fewer power plants and have more appliances in order to have brownouts?"

Some, like Galbraith, who question labor’s unblinking anti-China stance don’t shy away from accusing many of China’s most vehement critics of xenophobia, racism and Yellow Peril–style alarmism, which echoes the fearmongering about Japan’s supposed threat to US prosperity and jobs two decades ago. Progressive critics of the AFL-CIO’s China policy often make two intertwined points: that China ought to get more credit for its accomplishment in bringing so many people to the threshold of a prosperous urban life, and that it’s wrong for the United States to inflict pain on China in order to compensate for its own decades-long history of economic mismanagement. "We’re talking about a country that has the continuing potential to pull a huge number of people out of poverty," says IPS’s Feffer. "I don’t think it can do that by competing ‘fairly’ according to the rules of international policy." Compared with workers in China, never mind steelworkers in Nigeria or textile workers in Brazil, American workers are vastly better off, he says. "If you look at American workers, they’re doing pretty well."

"There is this longstanding Yellow Peril discourse in the United States, and a lot of this stuff fits into it comfortably," says Doug Henwood, editor and publisher of the Left Business Observer. "Yeah, they’re competitive, but…that history of Yellow Peril–ism makes it seem sinister and virulent. It’s a lot easier to blame China than it is to look at what’s wrong with the United States. There’s a kind of nationalism that is a little too close to xenophobia that fuels this sort of thing, and populists on the left and right can agree on not liking China."

Such a tendency is all the more regrettable in that it fuels saber-rattling arguments from the right. For years the Pentagon has been issuing increasingly dire warnings about China’s emergence as a strategic challenge to the United States, and since the end of the cold war neoconservatives and the promilitary right have raised the specter of a Chinese boogeyman to compensate for what Charles Freeman, a Mandarin-speaking former senior US diplomat, likes to call "enemy deprivation syndrome."

Selig Harrison, a former journalist and director of the Asia Program at the Center for International Policy, suggests instead that progressives ought to support an accommodation with China’s legitimate national interest in its region. "The idea that we should accept China’s interests in East Asia, I would think, should be readily understood by liberals," he says. "The fact that China is going to have a navy with a long reach, that it’s going to be a superpower, just as India is, well, America has to adjust."

But America doesn’t adjust well. It’s hard to imagine a US politician making the case that Washington should pull back from its overextended posture in Asia and the Pacific or cede an expanded presence to China. Only this summer, the Obama administration started laying bricks in a Great Wall of Containment around China by mending ties with a brutal Indonesian special forces unit and taking sides against China in a potentially dangerous dispute over Beijing’s claim to a string of islands in the South China Sea. "It would be disastrous for progressives to provide fodder for the military-industrial complex by demonizing China," says Michael Klare, author of Rising Powers, Shrinking Planet. "There are very powerful interests in Washington who want to set us on a path of confrontation."

In particular, the issue of Taiwan is a flash point, and if relations between Beijing and Washington spiral downward, a conflagration between the two nuclear powers could erupt over the Chinese island. According to Harrison, an end to US military support to Taiwan ought to be the starting point for improved US-China ties, including on economic issues. "We’ll never get China to behave economically on key issues like the currency peg and their position in the future on holding our securities if we continue to fuck them on Taiwan," he says.

Where one stands on China depends, in part, on whether one thinks China can evolve from its authoritarian system to a freer, more democratic one—and if so, how quickly.

The bible for many of those who believe that China isn’t about to change is James Mann’s 2007 book The China Fantasy. Mann, a former Los Angeles Times reporter now at the Johns Hopkins School for Advanced International Studies, argues that China is unlikely to disintegrate or democratize. Instead, he says, it’s most likely that decades from now China will be both superrich and undemocratic, and he says those who believe in the possibility of democratization are "hopelessly gullible." China, he says, "is still a Leninist regime, run by a Communist Party governed, in hierarchical ascending circles, by a Central Committee, a Politburo, and a Standing Committee of the Politburo."

It’s beyond the scope of this article to examine the various paths that China’s political system might follow in the coming decades. But if change does come about, the working class will be a driving force, and lately there are signs that Chinese workers are starting to flex their muscle. Over the past several years, they have staged an escalating series of job actions, strikes and protests, culminating in headline-grabbing shutdowns at Honda assembly plants in May. And despite those who see China in black-and-white terms—an oppressed working class beaten down by a monolithic regime and its captive ACFTU union—recent labor actions present a far more nuanced picture. At the very least, the recent wave of strikes is a sign that all the players—workers, provincial and local governments, the ACFTU, the regime in Beijing—are engaged in a complex dance. Perhaps most surprising, in many parts of China, workers, the central government and enlightened provincial authorities are united in an effort to raise wages and improve working conditions.

"More than twenty provinces have introduced increases in the minimum wage of around 20 percent," says Geoffrey Crothall, the spokesman for China Labour Bulletin (CLB), a prolabor activist group based in Hong Kong. "When strikes have broken out, many local governments have interceded and tried to get management and workers to negotiate." Crothall says there is no doubt the central government wants wages to rise, to contribute to social stability. And there are other factors that are pushing wages upward: among them, China’s need for a higher-quality workforce as it moves into high-end manufacturing, along with early signs of a labor shortage resulting from slow population growth, the one-child policy and the fact that so many millions have already left the countryside for factory jobs. The ACFTU, which has long seen itself as a defender of the party and as a "trade union with Chinese characteristics," is now being pressured to change from below by striking workers and from above by the government in Beijing.

Crothall, whose organization was founded by Han Dongfang, who set up China’s first independent union during the Tiananmen Square protests in 1989, points to the ferment in Guangdong province, site of many of China’s most important manufacturing facilities. "The ACFTU is evolving. It’s not a monolith," says Crothall. "It is a government institution. But in Guangdong, the federation is quite progressive and pragmatic-sounding." And in Guangdong, according to CLB, the provincial government is experimenting with new regulations that would allow Chinese workers to engage in collective bargaining.

That’s why Andy Stern’s efforts in China, despite the criticism, seem so valuable. "I get in trouble on Glenn Beck saying, ‘Workers of the world unite!’ It’s not just a slogan," Stern says. It’s critical, he adds, for US and Chinese workers to see each other as allies, and he argues that efforts such as his can help shift the ACFTU in a direction that will make it much more representative of its hundreds of millions of members. "There’s a big evolution going on," says Stern. "And to me, the question is, Where does the union end up, not where it started." Like Crothall, Stern emphasizes that it isn’t just workers who want the ACFTU to change the way it operates. "The government is pushing them to transform, too."

Katie Quan, a former union leader and associate chair of the Labor Center at the University of California, Berkeley, backs Stern’s effort to engage the ACFTU. "The policy of the AFL-CIO to boycott China, to have nothing to do with China, has only kept the working class behind," she says. She proposes a three-pronged approach to China and the ACFTU, involving union-to-union dialogue, worker-to-worker exchanges and talks among scholars. In recent years, she says, China has made enormous changes in labor policy, starting with a law governing contract labor that took effect in January 2008. These changes have made workers more aware of their rights and, in fact, helped spark the recent upsurge in strikes. And there are future reforms in the works, including a collective-bargaining law.

A recent report by CLB, "Going It Alone: The Workers Movement in China, 2007–2008," concludes by saying that despite the ACFTU’s history, there’s no alternative to trying to reshape the federation. "It is essential that the formal organizing power of the ACFTU somehow be integrated with the strength and support of the workers," says the report. "The two sides will have to find a way of coming together."

Of course, it’s fair to ask whether change will come fast enough. Ralph Nader, who’s inspired a generation of global-justice activists and who has long campaigned against a trade regime dominated by rules written by and for big banks and corporations, strongly advocates confronting China and other low-wage exporting countries, such as India, with a social tariff designed to compensate for the lack of collective bargaining, a decent minimum wage and poor or nonexistent regulations. He acknowledges that in the end China might change, especially if modernization causes workers to demand more rights and the growing middle class exerts pressure for more democracy. But Nader is not prepared to be patient. "If we wait long enough, in thirty-five years wages and working conditions and all that may equal out," he says. "But look at the hollowed-out communities in the United States in the meantime."

In the end, however, there is probably very little that the United States can do to change China’s trajectory. Few, if any, of the economic measures suggested to force China to make changes are likely to work, at least not without backfiring and causing massive dislocation in the United States as well. "Any attempt to get tough with the Chinese would also bite us in the ass," says Left Business Observer‘s Henwood. If a trade war begins to develop, China can, among other things, wield its vast holdings of dollars and US Treasury bills as a weapon and can look elsewhere for imports that it now buys from the United States. Sophie Richardson of Human Rights Watch says the United States ought to place democratization and human rights far higher on its agenda, even in meetings on other topics, without fear that China will be insulted: "There are all sorts of ways of saying it in meetings between the two countries without it being a giant Fuck you! in the middle of the meeting." So far, President Obama seems to have sidetracked human rights.

The United States may have little choice but to get used to the fact that China is coming into its own. If that’s the case, though, we may be able to use the Chinese challenge to make sweeping changes in the way America does business at home. "It isn’t just China’s rise, which is tectonic, but it’s our own financial, political and cultural collapse that is cause for even more consternation," says Orville Schell. "We need to find ways to accommodate China, and to influence it. And it’s not a foregone conclusion that it will be easy, or even peaceable."

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