From Master to Wage Labor:

Chinese Workers at the Turn of the New Millennium




Baogang Guo, Ph.D.


Department of History and Political Science

Thomas College

Thomasville, GA 31792

Tel: (912) 227-6361 (H)

Tel: (912) 226-1621 (O)

















From Master to Wage Labor:

  Chinese Workers at the Turn of the New Millennium





As China's economic reform deepens, labor's political and economic interests have been victimized.  To understand the roots of current tension between the state and labor, this article examines Chinese labor policy in the context of two labor reforms.  Labor reform in the1950s was based on the growth in the scope and scale of the government's commitment to laborers.  The new reform of 1990s, however, has shifted government's focus from "breakthrough" politics and welfare socialism to rationalization of the policies already in place.  Faced with the reduced legitimacy of the government in the eyes of unhappy workers, the state must readjust its role to facilitate the emergence of the new tripartite labor relationship.   



 For years, Chinese Communist Party (CCP) has maintained that workers are masters of the society. However, in the last few years, labor discontent has spread rapidly. Signs of labor unrest are seen in many parts of the country, especially in those areas where business restructuring, mergers and bankruptcies have taken big tolls on the livelihood of million of workers and their families. Labor's dissatisfaction with their economic and political rights is increasingly becoming a de-stabilizing factor in China.

There has been extensive coverage of the recent Chinese labor movement by the news media in the West. Economists and sociologists have also paid due attention to the issue.  But political scientists have paid relatively less attention to the political significance of the recent development.   This study will examine current labor issues in the context of two labor reforms: the labor reform in the1950s and the labor reform in the 1990s.  Both reforms have an important bearing on the status of Chinese labor's political power, social prestige, and economic interest. By comparing these two reforms, we can better understand the roots of labor discontent in China and points out some possible solutions for resolving these potentially explosive issues.    

 The focus of this study is on the state-labor relationship.  Questions to be discussed include: Is the relationship between the Chinese state and the workers fundamentally adversarial or collaborative? [1]  Is there any resemblance between labor policy in China and corporatist labor policy in the West? [2]  What impact will market reform have on labor rights?   In the following discussion, we will first examine labor policy and labor rights in the 1950s; then, we will examine labor issues in the 1990s; and finally, the paper will compare the two reforms and discuss the policy implications.


Labor Reform of the 1950s

Labor has an important place in socialist theory and practice. The ideology of Marxism is based on the assumption that after the "conquest of power by the proletariat," labor will no longer be a commodity, and the accumulated labor, the capital, "is but a means to widen, to enrich, to promote the existence of the laborer."  Marx and Engels proclaimed that in overthrowing capitalism, "[t]he proletarians have nothing to lose but their chains." [3]  With this grand vision and historical mission, the Chinese Communists fought tirelessly to seize political power. The founding of the People's Republic of China in 1949 marked the beginning of the first transformation of the state-labor relation. 

The theory of socialist transformation demands a transfer of the ownership of the means of production to the state and the public; the elimination of the wage labor system; and a fair distribution of economic wealth.  Before the communist revolution, China had a very small capitalist economy. The working conditions of laborers before 1949 have been studied extensively.[4]  In general, low wages, long hours under poor working conditions, and general ill treatment were the primary grievances.  The unique system of Baogong (contract labor system) allowed the middlemen to control workers' wages and to dictate the terms of labor contracts.[5]  Frequent labor strikes were the only defense workers could resort to. What made the CCP attractive to common workers was its promise to build a "workers' paradise" in China and to "liberate" workers from exploitation by domestic and international capitalists.

With a goal to emulate Soviet style state socialism, China took only a few short years to eliminate all private-owned enterprises, commerce, transportation and craft-making industries, and completed the initial stage of socialist transformation. Many state-owned factories were built during the periods of the first and second Five-year Plans.  Millions of farmers joined industrial labor forces (see Table 1).  In 1949 there were only 8 million workers in the state-own enterprises. By 1981, this number jumped to 83.7 million.  It is ironic to point out the fact that the very social class that is supposed to make the communist revolution is in fact largely a creation of the communist revolution.  

Table 1             Number of Workers in the Public Sector                              (in million)



Enterprises                            1949                        1952                        1965                        1975                        1981



State-Owned                              8                        15.8                         37*                          64*                         83.7        

Collectively-owned                   -                            0.2                         12*                          22*                         25.7        


Sources: CCP Secretariat and ACFL, The Condition of the Working Class in China (Beijing, Central Party School Publishing House, 1983), trans. by International Journal Political Economy (Spring 1995) Vol. 25. No.1   *Estimated numbers


Labor reform in this period was carried out in the areas of wage, management, and social security. The wage reform standardized the wages and salaries.  State-owned enterprises and institutions had to follow guidelines and wage standards set up by the State Council.   Although the state managed to keep the real wage significantly lower than what workers deserved, workers obtained many generous fringe benefits, including medical care, child care, kindergarten, schooling, pension and public housing.   The government invested heavily in those areas. For instance, in 1950, there were only 1,800 kindergartens enrolling140,000 children, by 1958, there were 700,000 kindergartens enrolling 29 million kids.

Working conditions and workplace safety were improved.   In 1951 the new Insurance Regulation set up a generous welfare system for workers.  According to the regulation, enterprises were obligated to pay for labors' life, health and retirement insurance to cover their injury, sickness and retirement.   Workers paid no premium.

Chart 1.            State-built Workers' New Housing Units     (unit: square meters)

Sources: State Statistical Bureau: Weida De Shinian (The Great Ten Years)(Beijing: People's Publishing House, 1959), p. 192


Workers who were disabled due to work related injuries could get their health care covered entirely, plus 75% of their regular wages paid until their death.  When workers retired they would receive 30-60% of their regular wages till their death.  Female workers could get two-month paid maternity leave. [6]  Unions and enterprise were also responsible for operating collective insurance system which provided rehabilitation and leisure facilities such as worker sanatorium, disability home, orphanage, etc.[7] State-paid health insurance expanded gradually.  In 1952, only 4 million workers were covered.   By 1958, nearly 7 million workers were covered.  By the1980s, most workers were included in the unit-based welfare system.

The most important change was workers' social status.  Wage labor system was abolished.  At the center of the improvement was the equality of status between workers and the management. Workers were allowed to participate in the decision making process Chart 2           Beneficiaries of the Labor Insurance System          (unit: 10,000)


Sources: State Statistics Bureau: Weida De Shinian (The Great Ten Years)(Beijing: People's Publishing House, 1959) , p.193


in enterprises.

Managers were mostly chosen from workers, and were supposed to be "civil servants" of workers.  Managers and technical staff were required to spend time to work together with workers. The distinction and function of laborers and management was un-clarified and non-differentiated.  Managers functioned in many ways as social service providers who were overwhelmed with workers' welfare issues.  They acted as bargain-hunter to negotiate with the paternal state to maximize the availability of national resources to their own employees.[8] 

 Women joined work forces in large numbers; wage discrimination was made illegal.  Physical abuse of workers was prohibited. Workers were asked to concern themselves with national and enterprise affairs.  Political meetings and study sessions were common in workplaces. A model worker system was established to reward workers who excelled in their work performance.  Emulation rather than competition were encouraged to promote work efficiency and raise productivity.

Workers who had worked before 1949 appreciated their newly acquired economic security and political equality. Farmer-turned workers were even more complacent about their improved economic status.   Both of them became the most important source of social support to the communist state. 

To be sure, there were many sectional and regional variances in workers' political status, social prestige and economic welfare. Small scale of labor disputes did exist. But overall, the relationship between the state and workers were collaborative rather than adversarial.  This was partially achieved through CCP's control over trade union organizations.  In June 1950, the government proclaimed the Trade Union Law.  The government organized workers' congresses and labor unions.   Workers could join the union on a voluntary basis. A centralized unitary system of union organization was established.  On top of the hierarchy was the All China Federation of Trade Unions.  Underneath it were provincial and county trade unions.  A superior Union organization must approve the establishment of any local union organization.  Only one union was allowed in each unit. 

Unions were treated as the peripheral organization of the ruling party. The CCP claimed absolute leadership over the union. Trade unions was described as ”schools of communism” or "transmission belts."  But their primary duty was to protect state interest and to promote production and worker discipline, with only secondary responsibility to represent workers and reflect their concerns and voices.  For most union members, the union was merely a welfare organization and a friendship club.  Although there were five attempts by the union leaders at various times to acquire more autonomy from the party, each ended up with failure. [9] From very early on, the ruling party's endorsement of union leaders was a must.    Many key union leaders were communist leaders at the same time. Financially, most of the half million union leaders were on government payroll.  Union cadres at and above county level were considered to be state cadres who could receive a salary equivalent to a deputy administer in the government, and enjoy all other admired material benefits such as pension, travel and health care.  Union members paid 2% of their wages or salary as union dues.  Enterprises and institutions contributed another 2% of their total wages and salary payment to unions.  Government also subsidized unions in many ways.  In addition to direct financing, union's office and meeting places were to be provided by the enterprise and institutions.

Many recent studies have pointed out the corporatist nature of China's labor policy. [10]  Like many European countries in their initial stage of industrialization, the Chinese new state actively promotes cooperation and collaboration between the state and labor.   The state wants workers to believe that the antagonistic relationship between the state and capitalist on the one hand and working class on the other has become a thing of the past.  Indeed, cooperation and collaboration characterized the new relationship between the state and labor throughout the 1950s.  In the following three decades, labor policy was subjected to many changes, but the scope and scale of the state's commitments towards laborers continued to expand, and eventually reached the breakdown point by the end of the 1980s.


Labor Reform of the 1990s

            Since1979, China has moved away quickly from the command economy. Labor reform is an important part of the economic reform, which has many ups and downs in the past two decades.  But it is clear by the early 1990s that the reform is geared towards the abolishment of the "welfare socialism" established between the 1950s and 1970s.[11] Under the new condition of market socialism, the state-labor relations are rapidly changing.  

Reforms at enterprise level were lunched in the 1980s. The Factory Director Responsibility System was introduced to give enterprise directors or managers broader power of making production-related decisions. The long-discredited Taylor management system was once again reintroduced in the name of improving efficiency and productivity.  The managerial reform was soon followed by personnel reform and wage reform.  The power of managers was further enhanced by the "Regulation on Transforming the Management Mechanism of State-Owned Enterprises" of 1992. As a results of these reforms, enterprises now are free to hire workers without restriction as to type of recruitment; number of employees hired, or terms of labor contracts.  They are also free to set wages and to promote management from the ranks of ordinary workers. The centerpiece of the wage labor system-- the contract labor system--has been restored and promoted nationwide since 1986.  Labor Department required all types of employers to sign labor contract with their employees by the end of 1999.[12]  A new labor contract law is being drafted.  Labor's "iron rice bows" are broken.  Masters are now selling their labor to their employers as a commodity.  Equal exchange and competition become the norms of the market place. 

To be sure, reforms do have many positive impacts on workers’ life. Although workers lose their lifetime employment privileges, they gain their freedom and mobility. Their economic situation also improved steadily. Various schemes of wage reform have been experimented at the enterprise level.  Floating pay, piecework pay, and obscure wage (mohu gongzi) are tactics used to replace the fixed pay system.  Both foreign-owned enterprises and state-owned enterprises are beginning to adopt the Concealed Income Distribution System in which managers decide workers’ actual wage, bonus and allowance. Employees are not allowed to know each other’s wages.   After nearly decades of drafting and revision, the Labor Law was finally adopted by the People's Congress in 1994.  It codified many labor reform measures.  It stipulates that: (1) labor contracts be included for all workers in all types of enterprises;  (2) labor arbitration and inspection divisions be established at all levels of provincial and local government to resolve labor disputes;  (3) collective bargaining is formally allowed in all types of enterprises; and (4) enterprises may be free to fire workers for economic reasons without prior consultation with local government. [13]

Since the mid-1990s, the reform of state-owned enterprises has been given the highest priority by the government.  The Separation of the government from enterprises (zhengqi fenkai) is on top of the reformers' agenda.  The drive to shed surplus workers is proceeding at full, yet cautious, speed, with the annual reduction of worker forces in state-owned enterprises exceeding 15 million.  When Zhu Rongji became Premier of the State Council in 1998, he pushed for the completion of three more labor market reforms in three years: social insurance reform, health care insurance reform and housing reform.[14]  The social insurance reform includes an unemployment insurance program to be paid for by a one percent payroll tax on all types of enterprises, and will provide unemployment relief funds to unemployed workers for up to two years.  A new pension system is also established which is paid for by mandatory individual contributions from both employees and employers.  The health care reform changed the old system in which the government and enterprises pay all health care cost for workers. The new system requires workers to pay two percent of their wages to their individual insurance account to cover basic services. Enterprise contributions will be pooled together to cover the cost of major illness.[15] The housing reform started in July 1998. All housing allocation in the urban areas will be stopped. Public housing has been gradually sold to workers at a subsidized price.[16]  Workers will have to purchase their own housing from now on. Another major perk is gone.  When all these mandatory contributions are combined many workers find a third or more of their wage is deducted before they even see it.

All of these reforms have transformed the state corporatist regime in China.  Although the new labor system mandated in the Labor Law has not been fully realized, the law does lay a brand new framework for future state-labor relations.  Labor's mobility means more freedom for workers in choosing their employers and place to work.  The collective bargaining system provides labor with the opportunities to defend their interest and improve their conditions.  More importantly, it gives the trade union an active and independent role in labor-management relationship.  Labor Law has codified a three-way relationship between the state, labor and management to replace the traditional two-way relationship between the labor and the state.     

However, workers can also feel the negative impact of the reform.  Among them,  the income polarization has been most troublesome.   Reform has benefited many laborers.  Their absolute income has been increased, and their standard of living has also been improved.  But at the same time the income gap between managers and workers, technicians and workers, workers in state-owned enterprises and workers in foreign owned enterprises are widened significantly.  The key value served to maintain the cooperative relationship among all players in the game, namely, the sense of equality, is lost, and the phenomenon of relative poverty, a term Marx used a century ago, has become a reality despite the increase in workers' real wages.   Meanwhile the problem of absolute poverty also strikes many workers and retirees.   The current drive to reform the public sectors through closure, shutdown, merger, transfer and bankruptcy has resulted in a drastic increase in the number of out-post workers.  Compared with 1997, the numbers of workers in state-owned and collective-owned enterprises in 1998 was reduced by 15 million.  The number of unemployed workers reached 12.54 million.[17] According to a survey conducted by Chinese Academy of Social Science in 1992, the number of laid-off workers increased year by year.





Table 2             Number of Workers in the Public Sector                              (in million)



                                1981                        1993                        1997                        1998



State-Owned                           83.7                      109.2                       98                             88

Collectively-owned                25.7                       33.9                         23                            18.9                       

Sources: China Labor Union Statistical yearbook (1993)


In 1999, the number of unemployed workers will reach 15 million.[18] With a rate of labor redundancy of at least 30 percent in state sectors, millions more will lose their jobs soon. Although the registered unemployment rate stands at 3.1%, the real unemployment rate is believed to be 7-9%.[19] For those who can not find a job, the only chance to survive is to depend on the newly created unemployment insurance system and social welfare system.

Chart 3             Off-post Workers among Workers forces      (unit:  %)


Sources: Fu Shengqi, "Xiagang Zhigong Yu Dalu Gong Chao (Laid-off Workers and Labor Unrest, " China Spring, 1998, vol. 58, The survey is based on data collected from 1,234 enterprises in 17 provinces


According to a survey in Henan province, some of the trouble workers already encountered the fate of absolute poverty (see Table 3).  In 1994, there were 7 million workers nationwide living under poverty, or 20 million individuals when workers’ family members are also taken into consideration. The per capita income of these families was only 62 Yuan, or 42 percent of the national average.[20] In Liaoning province, 70% of unemployed are women.  Only 50% of them will have a chance to be re-employed.  Many who did find jobs might see their income significantly lower than what they had before (see Table 4).

Reform's biggest impact is the marginalization of workers in the workplace.  The Director Responsibility System gives managers tremendous amounts of powers to terminate employees, to decrease and increase employees' pay or bonus, and to promote

Table 3             Unemployment and Retirement Population in Henan          (unit: 10,000)


                                total        lose insurance or ratio        ratio        in absolute                   rate 

Or pension payment                            poverty



Unemployed †      97                            39                            40%                        --                      --   

Retired                 95                            14                            19%                        5                      6.8%


Sources: He Lisheng & Lin Shixuan, "Tizhi Zhuanhuan Shiqi Henansheng Chengshi Pingkunceng Y&anjiu (A Study of Urban Poverty in Henan in the Period of System Changes" Henan Sheke Jie, Dec 30, 1998

 †1996;     ‡ July 1997


Table 4             Reemployment Situation for Suspended Employees from State-Run Enterprises in Ten Cities and Provinces                                            (unit: % 1994)


Reurned to                               Took up                   Transferred              found own                                Remained

                                Work after               internally                 to work in                                work                        without

                                Training                   coordinated work     tertiary sector                                          work


Jiangxi                     6.4                           10.4                         5.1                           28.1                         50.0

Gansu                       1.7                           71.3                         7.2                           5.3                           14.5

Hebei                       9.3                           21.4                         1.3                           21.4                         31.6

Shanxi                      10.0                         21.0                         4.0                           5.6                           53.4

Shanghai                  --                             32.2                         13.9                         14.2                         39.7

Shandong                 13.1                         23.9                         19.9                         9.0                           34.1

Wuhan                                                     28.6                         6.6                           5.0                           59.8

Xi’an                       8.0                                                           31.6                         47.0                         14.0

Wenzhou                 --                             2.3                                                           44.3                         53.4

Harbin                      --                             5.0                           16.0                         23.0                         48.0

Source: Chang Kai, “A Survey and Investigation of Unemployment and Reemployment of female Employees in State-Owned Enterprises,” Chinese Sociology and Anthropology, vol. 30, no.2, Winter 1997-98, p. 38 table 7.


employees to managerial positions. Many newly established township factories and foreign-factories become modern day sweatshops. With little fringe benefits and protections, labor rights are being sacrificed. [21] The concept of workplace equality is replaced by hierarchical structures.  In private-owned and foreign-owned companies, the sense of mastership is totally lost.  Workers in most situations dare not to challenge managers and dare not to complain about their unfair treatment for fear of losing their jobs or benefits.[22]  Inhuman treatment, physical abuse, compulsory overtime, high task quotas, military style of rules and regulations, arbitrary fine and punishment let workers taste the bitterness of capitalism.  Managers play the game of the secret bonus system to reward workers. [23]  Suffering from personal insult and physical abuse, many workers are forced to take extreme actions. [24]

Labor disputes are on the rise.  The Complaint Receiving Bureau (Xinfangju), under the joint control of the Central Party Committee and the State Council, documented that it handled 87 percent more cases of workers' collective complaints and 164 percent more individual complaints in 1993 than in 1990. During the same period, among 27 provinces surveyed 18 provinces had a marked increase in collective complaints and 21 provinces had a sharp increase in workers’ individual complaints.[25] Most of them are related to unpaid wages or pensions.   There are no accurate yearly statistics about the number of labor disputes.  In 1993, official figures registered 233 labor strikes, even though strikes are outlawed in China's Constitution.  In 1996, there were a total of 48,121 labor disputes, an increase of 50% over the previous year, 1,700 enterprises had workers strikes or slow-downs.  In 1998, workers in Zigong, Mianyang and Wuhan reportedly went on strike.   Some labor activists went even further by calling for the creation of an autonomous labor union or labor party to compete with the official unions.[26]

Although the labor movement in China remains largely reactive and passive, it can develop into a disastrous national unrest that will jeopardize the current economic reform in China.  The labor reform in the 1990s has reproduced the chronicle problem faced by laborers in many capitalist economies in the world, namely the alienation and frustration of labors.  When labor becomes a commodity, laborers' production activities become passive, involuntary and coercive. They will inevitably lose their sense of pride on what they do. [27]  These kinds of economic alienation will generate political frustration over the official image of workers that has been propagated over the years, and become a breading ground for labor unrest. 

The Chinese government has been put on high alert to any sign of labor unrest.  It has realized that the lack of social security and social insurance system has contributed to most of the recent labor protests.  The government proposed in 1998 a policy of "dual guarantees," namely, to guarantee the minimum of standard of living payment for the laid-off workers and pension payment for retirees. In September 1999, the government raised the monthly pension and unemployment payment by 15-30 percent. Unpaid pension money will be paid in a lump-sum payment by the central government.  Employment centers are established by all enterprises that have downsized their labor forces.  There are 6 millions workers now registered with these centers.   An underground labor movement is on the rise.  There are many attempts on the part of workers to set up independent trade unions.  Some even tried to establish a Chinese Labor Party. The stability-minded government is determined to put down any demand for labor autonomy.  Many labor activists have been jailed or exiled. 


Now and Then

The two labor reforms differ sharply from one another.  The first reform is indeed revolutionary.  It drastically improved labor's status in the society and established a whole new system of labor relations in the workplace.  Rationalization, reorganization and retreat characterize the second reform. While the first one focuses on breakthroughs, coercion and control, the second one focuses on improving efficiency, management coherence and coordination.[28] State-owned enterprises will be trimmed, but will stay.   Workers' job security and safety net will be changed, but not be easily withered away. Social services provided by the units will be terminated, but will be replaced by other types of social services provided by the society and the government at various levels; Trade unions will be more active and workers will become more self-protective though labor disputes, but party control will remain.  Overall, the new reform is neither a rejection of the first one entirely nor a simple return to the pre-1949 wage labor system. 

The nature of the labor relations after the 1950s' labor reform is cooperative rather than antagonistic.  Ideological principles and the "shared" interests of the state, management and labor are the main theme. The mechanism of coordinating labor relations is based on tight administrative control over employment, wages, labor administration, labor protection, health care and pension, and union activities.  The state is the ultimate manager of the labor relations.  This type of labor relationship is essentially bipartite.  The harmonious relations are based on the ideology of egalitarianism in which income gap between managers and between workers is relatively small.[29]  Workers are in general complacent. The first labor reform is featured by an enlargement of the size of the working class, added new benefits and welfare, cooperative relationship between the management and the labor.   Laborers depend on the state for welfare, for job security and for health care security; they depend on the state for justice and for fair treatment; they also depend on the state for leadership and for directions.  The state ties the laborers together through its patronage.  The most commonly accepted notion of labor rights, namely, the right to organize unions, the right to collective bargain, and the right to dispute is totally redefined in this kind of environment. 

            The latest labor reform turns the traditional cooperative relationship between the state and the laborers into an antagonistic one. The state has withdrawn from enterprise-level management.  Market, instead of state command, will dictate most part of the business operation.  The relationship between workers and enterprise management "is now based primarily on an exchange of economic interests rather than on cooperative comradeship or collectivity."[30] The decentralization of labor management power to the enterprise level has caused deterioration of labor-management relations, and creates many theoretical dilemmas.  Are workers still masters any more?   Disappointed workers answer bluntly that it is simply a "big joke," or a "fancy rhetoric."  Are managers "civil servants" anymore?  Frustrated managers insist that they are the ones who have to run the factory and to make it profitable.[31]

            These are welcome frustrations because they are an indication of the formation of a new tripartite labor relationship.   Each player in this new relationship possesses relative autonomy.  The labor reform of the 1990s separates the state from the bipartite labor relations, restores the state's role as a manager of labor relations instead of being a direct participant in that relations.  The state functions as a rule-maker and rule keeper.  Its primary mission is trying to maintain a balanced approach to both employees and employers. At the moment, the state is preoccupied with enterprise reform.  It gives an impression that the state is abandoning workers, and makes an alliance with employers.  But in the long run, the state will have to maintain an intricate balance toward both.

Because of the lopsided approach, bold demands are heard openly for labor autonomy. Labor activists argue that if the state is willing to let enterprise managers to become independent to run their business, it doesn't make sense for the state to continue to maintain a tight grip on laborers.  At the present, the CCP still controls labor unions.  Labor unions have remained their bureaucratic and administrative nature, and do not act as a true agent of workers.  Union leaders are guaranteed state benefits, and incorporated into various party and governmental institutions (see Table 5).  In order to avoid the image of being another bureaucratic agency of the government and the party,

 Table 5   CCP's Influence over Trade Unions                      (unit: person)



Union's full time      Have the benefits     Members of CCP's                    Standing Members of CCP's    

 Chair and Deputy    of deputy party and  Party Committees                    Party Committees at               

 Chair                       administrative posts at various  levels                      various levels





Union                      195,648                   105,443                   82,320                                     9,212                      



Total                       234,833                   118,828                   93,631                                     10,952


 Sources: Zhongguo Gonghui Tongji Nianqian (The Statistical Yearbook of Chinese Trade Union) (1993


Union must reform itself, and to play an active role in defending laborer's rights.

As the labor contract system and collective bargaining system begin to function under market socialism, the role of trade unions will be strengthened.  The Trade Union Law of 1992 permits collective bargaining in private enterprises. The Labor Law of 1994 extends that right to all enterprises. It provides that "a collective contract shall be concluded by the trade union on behalf of the staff and workers with the enterprise."  But in many private enterprises, there are no organized unions. Faced with the mounting evidence of labor abuse in foreign-owned and private-owned enterprises, the state has no choice but to unionize laborers in these enterprises.  By 1998, 70% foreign-owned enterprises (53,600) established trade union, and 30,000 private enterprises also established union organizations. [32] To what extent unions in these enterprises will differ from unions in state-owned enterprises remain to be seen.  

 The practice of collective bargaining in China remains in its infancy.   Many more changes need to be made in order for the system to work. Unions role in settling labor disputes will also be strengthened. The sign of unions' expanded role is the new rules set up in the "Regulation on Handling Enterprise Labor Disputes in the PRC" of 1993.  The regulation mandates the establishment of Labor Dispute Committees at the enterprise level.  It stipulates that (1) such a committee must be presided by the chairman of the enterprise trade union and (2) enterprises' decision to reduce surplus workers must be made with participation of trade union representatives.

Take it as a whole, China's labor policy prior to the 1980s can be characterized as one of state corporatism.  The state managed labor relations to its favor.  According to Howard Wiarda, as countries advanced into a more affluent society, societal corporatism seems to prevail.  In a societal corporatist environment, the state loosens its control over increasingly independent labor groups.  Furthermore,  the government is willing to have dialogues with those groups on an equal basis.  Persuasion rather than coercion has become the norm of the political game. [33] This is the stage when a truly civil society is in place.  Is the current market transformation an indication of any change in that direction?  According to one researcher,

In 1990 the National People's Congress ratified the International Labor Organization's Convention 144 on tripartite consultation to implement international labor standards.   Representatives from the three camps have already met and begun to set up a regular coordinating system.  The representatives come from the Ministry of Labor(representing the state), the ACFTU (the workers) and the China Enterprise Directors' Association (CEDA, the employers). "[34]


            The stability-minded state still worries about the de-stabilizing effect of labor disputes and collective bargaining.  According to the Labor Law, all collective contracts negotiated between managers and unions still need to be approved by state labor management agencies.  China has ratified 18 Conventions of the International Labor Organizations, but has yet to ratify several key conventions including No. 87 (freedom of Association), No. 98 (The Right to Organize and Collective Bargaining) and No. 105 (Abolition of Forced Labor).[35]  China has a long way to go towards building a civil society.  The day for labor to become an independent political force is yet to come.  Nevertheless, China will move beyond state corporatism and gradually evolve into an age of societal corporatism.  From the political experience of Taiwan, the momentum for such a transition will most likely take place when political reform is off the ground in the near future.[36]


* The author want to thank Pat Carmony and He Li for their very helpful comments on the earlier version of this paper















[1]  See Alan Liu, Mass Politics in the People's Republic : State and Society in Contemporary China (Boulder, CO: Westview Press, 1996) p. 90

[2] Peihua Chen, " Geming hu? Zuhezhuyi Hu?: Hou Mao zedong Shiqi De Gonghui He Gongren Yundong (Revolutionary? Or Corporatism--Trade Union and Labor Movement in the Post-Mao Era)" Modern China Studies, Vol. 4, 1994

[3] Karl Marx & Frederick Engels, The Communist Manifesto, (New York: International Publishers, 1948), pp. 24-25; p. 44

[4] See Elizabeth J. Perry, Shanghai on Strike: the Politics of Chinese Labor (Stanford University Press, 1993) and Lynda Shatter, Mao and the Workers: the Hunan Labor Movement 1920-1923 (Armonk, NY: M.E. Sharpe, 1982)

[5] Merton Don Fletcher, Trade Union in Communist China, Ph.D. dissertation, 1968, UC Berkeley, University Microfilms, Ann Harber, MI, 1969

[6] The revised Provisional Measure regarding Worker's Retirement and Resignation  of the State Council in the 1978 further increased retirement pension to 70% of retiree's regular wage if workers had worked over 20 years.  Workers with disability can receive 80% of their regular pay as nursing fee.  Female workers' maternity leave later also changed to three months.

[7] Peng Qingzhao, Gongren Zhengzhi Keben (Workers' Political Textbook) (Beijing: Workers Publishing House, 1952)

[8] See Andrew Walder, "Wage Reform and the Web of Factory Interests," The China Quarterly (March, 1987); Yimin Lin, "Between Government and Labor: Managerial Decision-making in Chinese Industry," Studies in Comparative Communism (December 1992), Vol. XXV, No. 4, pp. 381-404

[9] Peihua Chen, op cit., p.5

[10] See Howard Wiarda, Corporatism and Comparative Politics: the Other Great "ism," (Amonk: NJ: M.E, Sharp, 1997); Daniel Chirot, "The Corporatist Model and Socialism," Theory and Society, no. 9 1980; Anita Chen, "Revolution or Corporatism--Trade Union and Labor Movement in  Post-Mao Ear," Modern China Studies, no. 4,  1994

[11] Xin Gu, "Unemployment in Transition and the Reform of Chinese Socialist Welfare System, Modern China Studies, no. 3, 1998

[12] CCTV News [Online], May 5, 1999 (

[13]  U.S. Department of Labor, Foreign laborTrend: China (1996), p. 6

[14] See a discussion of these reforms by Wei Yu, "Financing Unemployment and Pension System: What's wrong with China's Policy," Modern China Studies, no. 3, 1998

[15] Zhongguo Ribao[Online] Janueary 8, 1999, Sinanet (

[16]  According to the latest official statistics, more than 60% public housing have been sold to private owners.

[17] Renming Ribao ( RMRB), October 10, 1998

[18] Chinese Academy of Social Science Web Page {Online] News (

[19] Hu Angang, "Xunqiu Xinde Ruzuolu (Seeking New Soft Landing)," Liaowang (Beijing), vol. 31, 1997

[20] Feng Tongqing , “Workers and Trade Unions under the Market Economy: Perspectives from Grassroots Union Cadres,” Chinese Sociology and Anthropology, Spring 1996 vol. 28, no. 4, p. 23.

[21] Anita Chan and Robert A. Senser, "China's Troubled Workers" Foreign Affairs, March/April 1997, pp. 106-107

[22]  See Zhao, Minghua and Theo Nichols, "Management Control of Labor in State-Owned Enterprises," in Greg O'Leary ed., Adjusting to Capitalism (Armonk, NY: M.E. Sharper, 1998)

[23] Anita Chan also edited a special edition, “the Conditions of Chinese Workers in East Asian-Founded Enterprises, ” for Chinese Sociology and Anthropology, Summer 1998, vol.30, no. 4., which provided more detailed account of labor abuse in foreign-owned enterprise in China.

[24] Detailed accounts of some of the labor  strikes can be found in "Zhongguo Gonghui Minaling Xintiaozan: Laozi Jiufen, (Chinese Trade Union Facing New Challenges: Labor Disputes)" China Press (Qiao Pao), Oct. 26, 1998;  China and the World [Online}, no. 1, 1999 (http://www.china

[25] Feng , op cit., p. 12.

[26] Han Dongfang, "A Long Hard Journey: the Riser of a Free Labor Movement"[Online], China Rights Forum, Winter 1995 (

[27] C.H. Chang,, "The Nature of Labor Problem," Labor Research Quarterly (Taiwan), no. 95 (April 1989), p.102

[28] Lawrence D. Brown, New Policies, New Politics: Government's Response to Government's Growth (Washington D.C.: The Brookings Institution, 1983)

[29] Feng , op cit.,  pp. 7-8.

[30] Ibid., p. 7

[31] Ibid., pp.40-41

[32] RMRB, Oct. 19, 1998

[33] Howard Wiarda, Corporatism and Comparative Politics: the Other Great "Ism" (Amonk, NJ: M.E. Sharpd). 

[34] Feng, op cit., pp.11-12

[35] U.S. Department of Labor: Foreign Labor Trend: China (1994), p. 21

[36] For a discussion of Taiwan's labor policy, please see Baogang Guo, " A Comparative Study of Labor Policies in Mainland China and Taiwan," Modern China Studies, no. 1, 1999, pp. 104-124