Labor Unrest In China Signals That Political Instability May Be Growing

China is the great economic success story of the new millennium. Its economic growth has outpaced that of every other industrialized country, and it now routinely out-produces America in such basic commodities as aluminum, steel and cement. Under the watchful eye of a highly interventionist central government, Chinese manufacturers have gradually moved up-market to produce increasingly sophisticated items like flat-screen televisions and e-books. The United States has had a negative balance of trade with China in advanced-technology products since early in the decade, and now relies heavily on China for many electronic items.

However, behind the facade of rapid growth, many Chinese workers in the manufacturing sector have suffered stagnant wages, long hours and harsh treatment at the hands of managers. Now they are starting to rebel in much the same way that U.S. workers did a century ago with the formation of unions like the American Federation of Labor. Labor unrest has been spreading rapidly in China’s major manufacturing centers as Chinese workers seek a bigger share of their country’s economic success.

This is a worrisome development for the central government, which despite its enlightened approach to economic growth and political accountability remains at heart a communist dictatorship. Chinese leaders have long believed that rapid growth is the best way of channeling underlying tensions into constructive activity, but that approach only works if the benefits of growth are widely distributed. Many workers seem to feel that they are contributing to the growth without getting sufficient rewards.

The bargaining power of workers is potentially enhanced by labor shortages, which in a true market economy would give them more control over the price of their labor. However, the Chinese government suppresses formation of any worker organizations that do not have official sanction, and so much of the current labor unrest appears to be spontaneous. For all of its success in fostering economic growth, the Chinese government has to be concerned about rising labor costs pricing China out of some export markets. A few companies engaged in low-skill, labor-intensive production like textiles are already shifting factories to lower-cost locations such as Vietnam.

In addition, China’s government cannot accept the emergence of political movements outside state control. The dilemma it faces is how to continue growth that has been based largely on the availability of low-cost, semi-skilled labor while addressing the rising expectations of workers who increasingly feel poor but empowered. If Chinese leaders cannot find a solution to this challenge, political instability could grow, exacerbated by other social trends like the imbalance between men and women arising from parental gender preferences in using birth control.