Pang Qing Xiang climbs furtively up the narrow staircase leading to the private dining rooms of a noodle shop in Liaoyang, a city in northeastern China. He speaks quietly as he takes a seat, and flinches whenever there is a sound or when someone enters the room. That’s the price Pang, 60, is still paying for having tried to organize unpaid employees at the ferro-alloy factory where he worked three years ago. Independent trade unions are banned in China, and Pang’s incipient unionism got him nine months in prison, where he was often beaten and abused. “To them we were nothing,” says Pang, who is still tailed by plainclothes police officers. “Certainly not people who had a right to demand anything, not even pay. When I told them work without pay is slavery, they just laughed.”
Global consumers buying $25 Chinese-made DVD players usually assume Chinese labor is cheap because the country has a limitless supply of poor workers. But the morally cumbersome truth is that the Chinese government systematically prevents workers from being paid the full value of their labor. Chinese workers can join several state-controlled unions, but since the state and politically connected clans, or families, own most of the Chinese economy, official union representatives who work too zealously first get a warning smack on the wrist–then worse. Ask Kong Youping. After Kong, a trade union official in Liaoyang, raised the ire of local officials by fighting doggedly for the rights of recently laid-off workers, he was sentenced to fifteen years in prison.
This power imbalance between owners and workers in China means that almost 200 million Chinese workers go to bed every night in overcrowded dormitory rooms after having worked eighteen-hour days in Dickensian factories where some employees are literally worked to death. The phenomenon has even added a new word to the Mandarin vocabulary: guolaosi, or overwork death, where fatigued workers fall off their stools bleeding from the ears, nose and anus.
Pang says conditions for Chinese workers could get worse before they get better. China’s economic “miracle” has long hinged on five elements: cheap labor, market reforms, disregard for intellectual property rights, loose environmental standards and cheap capital from state-controlled banks. Together, they’ve offered global investors a unique combination of nineteenth-century business practices and twenty-first-century infrastructure that have allowed China to attract almost $900 billion in direct foreign investment since 1979, mostly in the labor-intensive manufacturing sector.
But China’s economic ground realities are changing. Ecological devastation is forcing better environmental standards. Beijing is under pressure from the West to enforce intellectual property rights. And the public listing of major state-owned banks is reducing the banks’ ability to make political loans to China’s gargantuan state-owned companies. That’s left China’s cheap and disempowered labor force as the country’s only unchanged manufacturing “competitive advantage.” The government recognizes it cannot constrain workers and wages forever and is trying to move the Chinese economy up the value chain. But that could take decades. In the meantime, “the exploitation here is getting harsher,” according to Han Dongfang, a unionist with the China Labor Bulletin, a journal in Hong Kong, who was expelled from China for trying to organize workers in 1993. “On the one hand, we have better laws than ever. But in reality there is no enforcement, and actions always tell you better than words what people really want.”