The Ongoing Plight of Labour Rights in China

University of Amsterdam

MSc Political Economy

Looking Beyond Economic Globalisation: The Ongoing Plight of Labour Rights in China

Author: Yannick Walther Michael Heinrich (12449288)

July 10, 2020

Supervisor and First Reader:

Prof. Dr. Brian Burgoon

Table of Contents

TABLE OF CONTENTS ...... 2 MOTIVATION AND ACKNOWLEDGEMENTS ...... 3 ABSTRACT ...... 4 I. INTRODUCTION ...... 5 II. RESEARCH QUESTIONS ...... 7 2. LITERATURE REVIEW AND THEORETICAL FRAMEWORK ...... 9 2.1. LABOUR RIGHTS AND LABOUR MARKET ...... 9 2.1.1. Labour rights definition ...... 9 2.2. CALIFORNIA EFFECT? STAKEHOLDERS AND IMPORTANT FACTORS ...... 10 2.3. THE SITUATION OF LABOUR IN CHINA: LAWS AND REALITY ON THE GROUND ...... 14 2.3.1. The role of labour movements in the promotion of worker rights ...... 14 2.3.2. The Chinese labour market, labour protections and labour market organisations ...... 15 2.3.3. A brief history of the Chinese labour market: ...... 19 2.4. TRADING UP LABOUR? THE ROLE OF COMMERCE, THE WTO AND INTERNATIONAL ORGANISATIONS ...... 23 2.5. CHINA AND GLOBALISATION: EFFECTS ON STATE, FIRMS AND SOCIETY ...... 30 2.5.1. The Chinese State – implications of the authoritarian rule...... 30 2.5.2. Firm-level governance: passive enablers or active change-makers for labour? ...... 35 3.4.3. The Chinese society: the dispersion of collective power...... 39 3. METHODOLOGY ...... 41 4. ANALYSIS ...... 44

4.1. TESTING FOR A CALIFORNIA EFFECT IN CHINESE LABOUR RIGHTS ...... 45 4.2. CONTEMPORARY CHINA: THE PLIGHT FOR LABOUR RIGHTS, REPRESENTATION IN A RAPIDLY- CHANGING LABOUR MARKET 49 4.2.1. WORKER PROTECTIONS AND LABOUR PRACTICES ...... 50 4.2.2. WORK CULTURE AND SOCIETY ...... 55 III. CONCLUSIONS ...... 59 IV. REFERENCES ...... 63 V. APPENDIX ...... 68

2 Motivation and acknowledgements

My first time in China was in 2013 during my first exchange semester as a Bachelors student. The day I arrived in Beijing, I was struck by the sheer number of migrant workers

I could easily identify in the metro and elsewhere. With what seemed to be their entire life packed in a dozen bags that piled onto their backs, these wrinkled, darker-skinned and modestly dressed men and women had arrived to a major city to once again work and send remittances back to their families that they so seldom saw anymore. It was clear that China was unique in that sense, given its large population of workers willing to work for little, far from their homes and under poor conditions. The image of these workers never left me, and as I started my career in China, I would visit factories and meet some of them, becoming increasingly aware of the strong inequalities permeating contemporary China, but most importantly also of the difficult work conditions many workers live under. These memories, alongside the wealth of the Chinese culture and the wonderful memories I forged in China, were the carrying undertones that led me to researching and writing about this thesis topic.

I would like to take this opportunity to acknowledge the advice of my supervisor,

Professor Brian Burgoon, whom I will remain indebted to for guiding me through the challenging amalgamation of having to change supervisors, the thesis writing under time pressure, and the general Covid-19 lockdown context. Furthermore, I would like to express my deepest gratitude to Max Beauroyre and Ella Werleman, for their unwavering trust and loving support.

3 Abstract

Chinese labour standards have not significantly since China’s increased engagement with the world economy, despite improvements in work hours and wage levels. Continuous pressure on behalf of activists, has insisted on labour gaining better representation and mediation through independent trade unions. However, China’s economic growth seems only to have emboldened its authoritarian clampdown on worker activism. Research shows that trade and investment flows between developed economies and developing ones can lead not only to economic prosperity but also increases in regulations, tending toward the level set by the importing and investing markets. After reviewing the role of trade, globalisation and Chinese authoritarian rule, however, this thesis’ analysis shows that labour standards in China have not improved and why that is. In order to make this observation, measures of the quality of labour practices were regressed onto measures of globalisation, such as trade and FDI inflows, and a series of interviews with workers, managers and owners of factories in the Shanghai, Wuxi and Guangzhou areas were conducted. In combining these methods, this thesis hopes to shed light on the difficulties facing workers in China today, and why the current domestic and international institutions have failed them.

4 I. Introduction

Recent work examining the impact economic integration has on regulatory standards has received particular attention from scholars studying how the advance of globalisation and markets has positively influenced regulations in spheres ranging from human rights all the way to environmental standards. Particularly influential has been the work of Vogel (1997), who coined the term ‘California effect’ to describe the positive effect economic integration can have on the ‘ratcheting up’ of environmental regulations.

While the focus of his study was on environmental standards as applied to products and how trade could be a vessel by which such improvements could be ‘traded up’, other scholars have turned toward investment flows to see if a similar effect could be seen

(Greenhill, Mosley, & Prakash, 2009; Mosley, 2010; Prakash & Potoski, 2007). The link between trade and labour protections (LPs) has been studied on a European level, focussing on the inclusion of LPs in Preferential Trade Agreements (Raess, Dür, & Sari,

2018), but far more attention has been paid to the relationship of economic integration with private industry, product source and environmental standards (see for example

Sykes, 1995; Prakash & Potoski, 2007; Perkins & Neumayer, 2012). Due to complexities regarding data collection, transparency and the uncertain legal environment in China, little empirical work has studied the possibility of labour-related California Effect there.

Greenhill et al.’s (2009) work is seminal in that it is the first to systematically study changes in labour standards and the relationship of these changes to economic integration to study a labour-focused California effect. However, despite these limitations, the International Labour Organisation (ILO), intrepid civil right activists, NGOs and a

5 handful of scholars have continued providing data that is essential to understand the advancements of labour standards in China (Chan & Nadvi, 2014; Friedman & Lee, 2010;

ILO, 2019a).

After China’s economy began its ‘opening up’ strategy it found itself in a position where it had immense supply of cheap labour that it could use to attract foreign capital looking to outsource production due to high labour costs in their home economy. China took advantage of this unique position by promoting its rapid industrialization on the back of a strong trade surplus, FDI inflows and the State’s aggressive lending policies. A few decades later, China’s economic growth has been marked as a historic success, pulling

800m people out of poverty, an effort described by the World Bank as “the fastest sustained expansion by a major economy in history” (The World Bank, 2020). Today, after more than three decades averaging close to 10% GDP growth per year, China boasts the world’s second largest GDP and has transitioned into an upper-middle-income economy (The World Bank, 2020). As its growth pace slows down, the strategy of focussing on the low-cost manufacturing of export-oriented goods has close to run its course, as labour has become more expensive as China aims to fully transition towards an economy fuelled by high value-added goods and services. Yet, manufacturing remains the backbone of the Chinese economy, and in a context of increased economic inequality, it is more crucial than ever to address the plight of workers in China.

This thesis will examine the interaction between China’s increased integration with the global economy and changes in labour standards and discuss the consequences of this relationship for labour. To provide for e analysing this relationship, the author hopes to

6 shed light on the economic and political dynamics behind the improvement of labour rights, and in what ways China is a unique case to this relationship.

I argue that China has seen only modest domestic improvements in labour standards because despite economic growth and increased interaction with the world, it does not have to prioritise labour rights. It can impose emboldened authoritarian measures on its citizens and keep labour costs low, while it quashes whatever form of organised opposition through the fragmentation of collective voice and no cohesive domestic or international response has been mounted to counter this trend.

II. Research questions

By looking at the relationship between globalisation and the accompanying interconnectedness of markets, this thesis will first look at how labour rights have evolved as a result of increased trade between China and developed nations, and how the struggle for the improvement of standards is a reflection of wider political dynamics pertaining to China.

Research Question: How has the increased trade and investment between China and the world interacted with changes in the protections of labour?

Sub-question 1: How role does the structure and governance of labour market organisations play in the implementation of labour standards in China?

7 Sub-question 2: Do China’s changes in labour rights over time reflect the existence of a

California effect?

Sub-question 3: What is the role MNCs and the international trade play in the improvement of working conditions in China?

To understand the questions at hand, this thesis puts labour rights improvement in China in the context of the Chinese Political Economy and China’s increased interaction with global markets. In the first part of this thesis, after defining labour rights and briefly overviewing the Chinese labour market, theories pertaining to the political and economic dynamics of China’s developing economy will be reviewed. This is divided into three parts, as China’s global opening up affected its State, firm-level and market as well as its civil society. As this thesis emphasises changes in labour standards, the focus will then turn onto its labour market and the current state of labour rights and standards in China as well as a longitudinal analysis of its history. These will then help us understand why the current state of the labour market and the Chinese economy in transition present a contradiction between forces wanting reform and protection of labour and those wanting control, submission and economic growth, which are again apparent on the State, firm- level and societal level. This bird-eye view of the Chinese social, political and economic dynamics then begs the questions this thesis seeks to answer, namely uncovering the role economic interaction of China with the world has had on the development of labour rights, thereby uncovering a more granular picture of the state of labour rights in China. To answer this question, this thesis will perform a mixed methods analysis, using both quantitative data as well as qualitative data from interviews with factory owners, managers and workers in China.

2. Literature Review and Theoretical Framework

Through this section, after literature is combined with a theoretical framework, which after defining labour rights, the California Effect and the governance of the Chinese labour market are juxtaposed to the role the authoritarian State, firms and society play in in the context of labour rights.

2.1. Labour rights and Labour Market

Before discussing the plight of Chinese labour rights and the political, societal and economic forces that relate to their development, it is important to define labour rights.

2.1.1. Labour rights definition

When addressing labour standards and labour rights, the author refers to the ‘core’ labour standards as defined by the International Labour Organisation’s (ILO) in the 1998

Declaration of Fundamental Principles and Rights at Work, which are: the freedom of association and the effective recognition of the right to collective bargaining; the elimination of all forms of forced or compulsory labour; the effective abolition of child labour; and the elimination of discrimination in respect of employment and occupation

(ILO, 2020). It also includes the rights to free association and collective bargaining, the

9 right to establish and join worker and union organizations, the right to bargain collectively.

China has never ratified the Convention No. 87 of 1948 ‘Freedom of Association and

Protection of the Right to Organise’ on collective bargaining. As China has since ratified conventions to tackle child and the worst forms of forced labour and its passing of laws and mechanism to address discrimination (ILO, 2019b)1, the right of collective bargaining becomes particularly relevant to our thesis’s analysis.

2.2. California effect? Stakeholders and important factors

As China began the progressive liberalisation of its markets and joined the World Trade

Organisation (WTO) in 2001, liberal economists, globalisation enthusiasts and political scientists predicted the advent of a new form of Chinese liberalised State. which, by adhering to global trade regimes and exposing its economy and society to external influences from the likes of Western developed economies, would continue reforming until it eventually became a fully-fledged liberalised democracy. At the very least, the influence of foreign capital would make indents in the norms of firms and factories, as they would raise the standards, with positive economy-wide reverberations. This type of

‘norm diffusion’ would then translate to not only increased industry and product

1 China ratified Convention No. 100 in 1990 for equal pay of women and men, as well as Convention No. 111 in 2006, addressing general work discrimination on the basis on race, creed or sex (ILO, 2019b)

10 standards but also on the level of human rights and labour protection for workers in primary, secondary and tertiary sectors.

Beyond the political liberalization and policy reforms within the Chinese State, globalization would unleash reforms reaching firm-level business and employer practices with respect to their workers and a change in the militancy and demands of workers, awakened to the potential change collective action focussed on their mutual wants could engender, both on a level of policy and work practices.

When studying how economic integration affects labour rights, a debate has traditionally sprung up in the economic literature between a ‘race-to-the-bottom’ effect of policies and those arguing that through positive assimilation, a spiralling up of conditions and human development follows economic prosperity (see Meyer, 2015; Trebilcock & Howse, 1998).

Mosley & Uno's (2007) account of the effect of investment inflows and trade indicates that there is a strong correlation between economic integration for developing countries and improvement in labour standards. At the same time, there is also mounting concern about the potential race to the bottom the competition developing economies are engaged in in order to promote trade and attract foreign capital could mean for labour conditions (Mosley, 2010). Whether workers are becoming worse or better off due to the effects of globalization is a matter that depends on multiple stakeholders beyond the

‘integration’ of an economy, such as domestic institutions and the active commitment of

MNCs to improve labour conditions (Mosley, 2010; Mosley & Uno, 2007).

The idea that through increased economic integration, regulatory standards could be ratcheted up to the level of countries with higher standards via institutional influence

11 was coined as the ‘California effect’ by David Vogel (Vogel, 1997). Originally used by Vogel the California effect referred to the environmental conditions applied by California on its trading partners, most prominently auto manufacturing US states and countries such as

Germany who saw no option but to ratchet up their standards to meet California’s, in order not to risk losing this precious automotive market. Other author’s focus has been to see if a similar dynamic has been observed in terms of improvement in labour standards (see: Greenhill et al., 2009; Mosley & Uno, 2007). Studying the Labour standards - globalisation interaction through the lens of trade and FDI and accounting for a multitude of other variables, the author found that indeed, when faced with higher regulatory standards and labour conditionality, due to institutional and market pressures, exporting countries with typically lower labour standards would work their way to improve those standards closer to the level of importing countries’ (Greenhill et al., 2009;

Mosley & Uno, 2007). In Greenhill et al. (2009), however, this relationship turned out to be stronger in terms of regulations ratcheting up (measured as LaborLaws), whilst the actual practice of these improved standards was shown to present more mixed results

(in LabourPractices), indicating laws did not account for the full picture, but that broadly, there was a ‘California effect’ to be observed. However, for this to hold true, improvements in regulations had to be backed up by legitimate and significant monitoring and enforcement procedures. It is worth noting, as the authors do, that unlike the initial ‘California effect’ which was based on product standards, labour standards are what they call a “process standard”, which is more problematic in that it involves more variables than a product (e.g. emission levels) and is therefore “more difficult to monitor and enforce” (Greenhill, et. al, p. 672).

12 Figure 1: China’s share of world trade compared to Japan, Germany and the US

Source: UN Comtrade, as calculated by Li & Jiang (2018)

Since Greenhill et.al ‘s (2009) analysis, China has become a major product market, the world’s second largest economy and has become to be the second- and third- largest trading partner of the EU and the US, respectively (Eurostat, 2020; U.S. Trade

Representative, 2019). As Figure 1 shows, China’s proportion of global exports has risen dramatically, increasing from less than 5% throughout the 1980-90s to about 13 per cent in 2015 (Li & Jiang, 2018). However, despite these economic advances, China continues to undermine the advancement of labour rights (Cingranelli, Richards, & Cla, 2014;

Freedom House, 2020).

Indeed, according to data from the Human Rights Dataset by Cingranelli, Richards, & Clay

(2014), in crucial measures of human rights that relate to labour, China has an abysmal record. In the category of Workers Rights (‘Worker’), China has scored 0 in every year from 1981 until 2011, meaning Worker Rights are “seriously restricted”. This variable includes Freedom of Association as well as other ILO convention such as forced labour,

13 work conditions, health and safety issues and respect to minimum wages and hours of work.

When analysing the economic integration - labour conditions (from here on EI-LC) relationship, it is of relevance to review the literature pertaining to the analysis of trade as a mechanism for the improvement of labour rights, the literature relating to roles of the State, firms and society as stakeholders in what could broadly be seen as economic globalisation, and of course, to review the literature analysing the Chinese labour market and the current state of labour standards in China.

2.3. The situation of Labour in China: Laws and reality on the ground

2.3.1. The role of labour movements in the promotion of worker rights

Labour standards have long been part and parcel of political discussions that since the age of European Industrialisation, have scrutinised the impact unhinged market expansion could have on the living and working conditions of the average worker (Hepple,

2005). As per Hepple’s description, industrialists in Switzerland and Germany implored political elites in industrialised nations to move forward with improved and enforceable labour standards, lest they faced mass revolts and risked violent dissent, which culminated with the establishment of the International Association for Labour

Legislation, founded in Basel in 1901 and predecessor to the ILO, which was then founded after the treaty of Versailles in 1919 (Hepple, 2005). The rationale for the establishment of the ILO was that the strong industrial development of Europe and the USA came at immeasurable human costs for the weakest in society, namely the class of workers.

14 The ILO is composed of tripartite organisation, namely: government, industry and trade union representatives, and have increasingly taken a more active role in the implementation and monitoring of labour standards, albeit more on a voluntary basis and thus with far lesser powers than the WTO could apply (Potter, 2006).

2.3.2. The Chinese labour market, labour protections and labour market organisations

As it relates to ILO Conventions, China has not ratified either the Freedom of Association or Protection of the Right to Organise Convention, 1948 (No. 87), or the Right to Organise and Collective Bargaining Convention, 1949 (No. 98). Additionally, it has failed to ratify

Forced Labour Conventions (C029 and C105) (See Table 1).

Table 1: ILO conventions ratified by China

ILO Freedom of Forced Discrimination Child labour Equal Health and Convention association Labour Remuneration Safety

C087 C098 C029 C105 C100 C111 C138 C182 C100 C155 Year of X X X X 1990 2006 1999 2002 1990 2007 ratification

Labour Law (Article 77) states that “If a labour dispute between the employing unit and a labourer arises, the parties may apply for mediation or arbitration or take legal proceedings according to law, or may seek for a settlement through consultation” (ILO,

1994) Yet it is risky and difficult to collectively ask for change. “Picking quarrels and making trouble” (xúnxìn zīshì) is a crime carrying a sentence of up to five years in prison

(PRC, 1997).

ILO, however, did not serve only worker interests, but also those of the industrialist class, who feared the political tumult organised and dissatisfied labour could cause, thus finding new ways of pacifying worker unrest while still obtaining their production goals.

As domestic suppliers of MNCs grew into dominant firms in their own right, more and more workers migrated to cities in the hopes of finding industrial employment. Today, there are more than 277.5 million migrant workers (36% of the total workforce of 770 million) (The World Bank, 2020).

China refuses to recognise some of the core ILO labour rights such as the right of free association, meaning that if workers are faced with a problem, they have no choice but to rely on the existing dispute settlement mechanisms and are not free to express their collective discontent by for example, putting economic pressure on local government and

16 owners of capital through the means of striking or occupying buildings (Bieler & Lee,

2017). The existing mechanisms all involve the only officially recognised trade union in

China, the All-China Federation of Trade Unions (ACFTU), which works with and through the Communist Party of China (CPC) (ILO, 2019a). “Trade unions,” observed Su, a respondent in this thesis’ interviews and the owner of a major factory producing sunglasses, “are not really present and in fact are an extension of the local government”.

This means that, as opposed to trade unions as they are known in other countries, such as Taiwan, France or the US, workers in China obtain legal protection through a channel that is not independent of the State. Indeed, the ACFTU does not act as a trade union and workers’ last resource is often relying on direct complaint filing with the local government (Friedman & Lee, 2010). The structure of the ACFTU in fact follows the local- state-national structure of the CPC administration and is structurally weak, in that it is dependent on CPC approval for its decisions and therefore unable to truly represent workers’ interests (Friedman & Lee, 2010). Figure 2 shows how the ACFTU is structured by geographic levels (e.g. provincial, county, grass-roots), allowing each level to be controlled directly by the equivalent CPC hierarchy (China Labour Bulletin, 2020;

Friedman & Lee, 2010).

It is precisely due to this institutional weakness of the ACFTU and the lack of true representation that it offers workers, that workers have had to fend for themselves, often putting themselves at risk. In the past decade, there have been thousands of worker protests in China, with more than 257 wage arrears protests in 2020 alone (Labour

Bulletin China, 2020). In 2019, more than a thousand collective protests were recorded, and in 2014, 49 worker protests had more than a thousand workers taking part in them

(China Labour Bulletin, 2019).

Figure 2: Simplified organisational chart of the ACFTU.

Source: China Labour Bulletin (2020)

The ILO has also made specific investigations into labour issues that severely violated its

Conventions. For example, concerning labour protests at a shoe factory called Lide and a firm called JASIC technology in Guangdong, during which 32 individuals were detained, among which were “eight advisors and paralegals who provided support services to workers and workers’ organizations in several recent labour disputes, by assisting them in the exercise of their right to organize and bargain collectively” (ILO, 2019a). Had the

ACFTU been able to act as an effective mediator, these arrests and abductions would have not had to happen. As Friedman & Lee (2010) explain, as a response to the number of protests and mounting pressure, the ACFTU does not address underlying “power

18 relations in society”, but rather legislates and works through administration. This has led to some progress, such as the Labour Law of 1995, giving workers more clearly defined rights to legal protection in case of unpaid work, to the Trade Union Law of 2001 as well as the Labour Contract Law and Labour Mediation and Arbitration Law in 20072.

In order to understand the labour market and the wider labour movement of China, it is important to understand the ACFTU’s role and history, as through it, the dynamics between labour, employers and the Chinese state will become more evident.

2.3.3. A brief history of the Chinese labour market:

Labour movements have been a part and parcel of China’s economic and political transformations. In China, despite an uncertain political environment and poor labour standards, workers have used their collective force to push for improved protections

(Friedman & Lee, 2010). However, their collective voice has increasingly been controlled and their organisation fragmented.

It is during China’s first wave of industrialisation, under the Kuomintang (KMT) regime led by Generalissimo Chiang Kai-Shek, which functioned as an American-inspired federalist State which envisioned a democratic China, that labour saw its first mass organising as an effect to growing nationalism and democratisation efforts (Traub-Merz,

2011). As corruption and poverty tainted the KMT leadership, labour leaders became members of the CPC, changing affiliation. This culminated in a mass movement of workers in Shanghai, where the first umbrella labour organisation was agreed upon,

2 For a more detailed analysis, see (Friedman & Lee, 2010, p. 522)

19 which led to the creation of the ACFTU in 1925, first representing more than half a million workers (Traub-Merz, 2011). It is during these tumultuous years that the ACFTU was first used as a political tool to organise mass strikes in the mid 1920s in the context of dwindling control of the KMT over major commercial centres such as Shanghai and

Guangzhou. The ACFTU became the “transmission belt” for the CPC to organise strikes and project its power and directives onto the larger population (Zheng, 2006, p. 28). The shift in loyalties and general sentiment, led to the general persecution and killing of union leaders and CPC cadres. This oppression continued into the 30s, as the CPC was forced into exile and re-grouped in the countryside in what is known as the Long March.

During the mid-50s, the CPC oriented its economy toward massive industrialisation, during which it nationalised major firms under socialist direction. The economic model spearheaded by the CPC was based on the clear distinction made by its leaders between rural and urban locations under its “hukou” regime. Hukou, which means “household registration”, made migration for work illegal unless it was granted permission by communist leaders in order to keep tight control over its population and worker migration. This gave workers access to state benefits only in their place of registration, which further increased rural-urban inequality but also increased the direct control of the CPC over China’s labour market (Kuang & Liu, 2012).

With the socialist movement gaining traction, a new set of policies were introduced into

Chinese labour relations, focussing on welfare and lifelong employment or “work units” also called danwei (单位), promoting equality of income (Ngok, 2008). ACFTU as the

“conveyor belt” of Chinese communist leadership focussed on increased productivity, and democratised local management. However, this in fact undermined collective bargaining:

20 wages were set top-down by the party administration, and not locally, as the national economy was given priority over local concerns. With the elimination of collective bargaining, trade unions of the ACFTU were then responsible for the workers’ benefits, housing, maternity leave, sick leave, etc. (Traub-Merz, 2011). Worker participation became purely consultative, as it rarely if ever exercised its role to complain about factory management, and management’s freedom of action was also restricted, as it was unable to exercise its power beyond what purely served state directives (Traub-Merz, 2011).

After the accession to power of Deng Xiaoping in 1977, the economy was completely transformed to serve the purpose of rapid industrialisation, de-centralisation and partial privatisation. (Lau, Qian, & Roland, 2000) A new labour market was established with

State-owned enterprises (SOEs) in urban areas, Township and Village Enterprises (TVE) as well as private companies. Property rights and enterprises introduced to rural communities in order for them to benefit from localised market economies. These came in the form not of privatized land but through the Household Responsibility System, whereby land would be assigned to households according to size and through the TVE

(Township and Village Enterprise) - firms owned by the local community (not private or central), where the revenue would contribute to the local wellbeing. By 1991, China’s 18 million rural enterprises employed 23 per cent of the rural work force, or around 93 million workers (on average one-third of rural per capita income came from TVE employment) (Kosok, 1971). Urban SOEs installed a ‘‘contract responsibility system’’ which gave greater autonomy and allowed for enterprises to retain their earnings, which had positive effects on firm performance and incentives (Lau et al., 2000). The TVEs were of central importance to China as they contributed to a 50% of share in industrial value- added during the early 90s (Rodrik, 2005). The surplus micro-institutions such as the

21 TVEs made and could use at their own disposal spawned new markets and productions and, as Deng Xiaoping put it unleashed “a new force that just came into being spontaneously” (Yao & Chang, 2015)3. However, China’s reforms were not structural as it “did not even adopt a private property rights regime and it merely appended a market system to the scaffolding of a planned economy” (Rodrik, 2005, p. 975).

At the margins, however, it did reform. First in agriculture, farmers were allowed to sell surplus output (crops) at market prices, engendering healthy levels of competition which would add ‘winners’, at no cost to ‘losers’, as they first had to fulfil their allocated output obligations, allowing the Chinese State to reform its markets gradually without losing popular support while also insulating itself from political reform (Lau et al., 2000). This system was then extended to the labour market (through labour contracts) as well as other industries, such as coal and gas. For the labour market, this only applied to new employment contracts. Employers that had hired according to the State allocation of workers were not allowed to change those contracts or apply market-determined wages to them, causing rigidities that would lead to massive need for reallocations and layoff in the mid 1990s (Lau et al., 2000).

In the last decades, due to increased demands for labour and an increasing number of protests, conditions have steadily improved for Chinese workers, particularly when looking solely at health and safety as well as wage levels (Chan & Nadvi, 2014). On top of this, the passing of the aforementioned labour laws between 1995 and 2007 were important steps in providing workers with some of the basic standards and protections

3 One such markets was the production of coal, tapped into by town and village coalmines (TVCMs) (Yao & Chang, 2015).

22 that could help guarantee their dignified work (MOFCOM, 2007). However, despite these advances, on top of an increasing economic inequality, as mentioned in the previous sub- section, workers in China are still subject to persistent abuse, intimidation and arrests in

China.

2.4. Trading up labour? The role of commerce, the WTO and international

organisations

One of the central factors in determining the impact increased economic interaction may have in ratcheting up regulations is through the analysis trade, which has long been a principal catalyst toward increased growth and globalisation, and of labour conditionality in trade agreements. When it comes to labour standards, the central question then is whether labour conditions have effectively been introduced into trade agreements or not, in order to push an agenda for higher protection of labour. Through this mechanism, labour standards could be anchored into agreements, which would hold trading partners accountable to upholding these standards, lest financial penalties are imposed on them in case of labour violations (Mosley & Singer, 2015). During the 1990s the US and major international trade unions advocated for the introduction of the ILO’s

Core Labour Standards (CLS) as clauses in trade agreements, sparking a major debate between factions (see Charnovitz, 2006).

Conditionality of Free Trade Agreements (FTAs) based on human and labour rights could be possible, but there has been a lack of enforceable standards and mechanism of control as well as a concern often raised that this could be harmful for developing nations who

23 use cheap labour and lax standards to attract FDI (Hafner-Burton, 2005; Rodrik,

Grossman, & Norman, 1995). After WWII, the ITO was the first international attempt to bring together economies through trade agreements, also including clauses on labour protection but because of the binding mechanism to compel nations to respect agreements, the US never joined the organisation (Meyer, 2015). Being by far the world’s largest market and largest exporter, without the US no international trade organisation could be established (Meyer, 2015). This meant that de facto, it was the GATT that was the principal international trade governance organisation until the WTO replaced it in

1995. The GATT, however, lacked the ability to impose sanctions based on binding agreements and principally focussed on the reduction of tariffs. These times were still those of “embedded liberalism”, during which countries adopted “progressive” domestic policies while also mutually agreeing to cut tariffs and focus on trade liberalisation through GATT negotiations, which brought them great economic growth and prosperity

(Howse Langille & Burda, 2006).

By the time China joined the WTO, the era of “embedded liberalism” had already come to an end. As the membership of the GATT expanded, the notion of members sharing a

“progressive” agenda or even a “normative floor” had long been given up (Howse, Langille

& Burda, 2006, p. 158). As a new member which, despite its deep economic reforms and hopes for future liberalisation, remained a country under the dictatorial and human- rights infringing rule of the CPC, China’s accession to the WTO in 2001, was no exception to this trend. Despite the demise of embedded liberalism, however, there have been multiple attempts to revive the introduction of labour rights into trade talks at the WTO, such as the US proposal during the Havana Chapter of 1953, or that of a group of

European nations in the 1980s or Singapore Round of 1996 and Seattle Round of 1999

24 (Samet, 2003, p. 753; Meyer, 2015, p. 417). The debate is still ongoing but has left no clear

- much less a binding – outcome for member states or the accession of new ones. In fact, from a neoliberal point of view, the imposition of such a normative floor and the setting of binding agreements (incl. those regarding labour) may be counterproductive and

“antithetical to economic development” (Howse et al. 2006, p. 158, cited in Leary &

Warner, 2006).

Contrary to the GATT, the WTO has the ability to sanction member states for non- compliance of agreements. However, as mentioned, the Global South has been a vehement opponent to those proposing labour protection clauses in trade agreements, emphasising the ILO’s responsibility in the promotion of labour rights (Meyer, 2015). As mentioned in the Singapore Declaration (1996):

“We renew our commitment to the observation of internationally recognized core labour

standards. The International Labour Organization (ILO) is the competent body to set and deal

with these standards and we reaffirm our support for its work promoting them […] We reject

the use of labour standards for protectionist purposes, and agree that the comparative

advantage of countries, particularly low-wage developing countries, must in no way be put

into question.” (Howse, et.al, 2006, p. 179-180).

Beyond advocating for best-practice mechanism such as CLS, the ILO however is not capable of imposing sanctions. Since the establishment of the GATT and after that of the

WTO, much to the surprise of policy makers, developing nations have opposed the integration of clear and enforceable labour conditions due to the fact that they base an important part of their competitiveness based on the availability cheap labour costs and

25 low standards, and have seen it as a “trap” benefitting developed nations who already have and can afford higher labour costs due to higher value-added production and services.

The arguments developing nations have made against labour conditionality are manifold, being mainly social and economic by nature. Beyond the argument for self-determination, weak labour protection and benefits, low wages, the inability to unionise are all factors that in the eyes of developing nations are a comparative advantage that developing nations use to enact policies according to their level of development (Busse, 2002; Meyer,

2015). Seen as an interference with market mechanisms, it would be a hindrance to the efficient allocation of resources, to increased growth and attractive to foreign capital, which are social costs that could be offset by incomes that can be redistributed

(Trebilcock & Howse, 1998). In this view higher labour costs are a comparative disadvantage that a developing nation cannot afford to incur.

Proponents of stronger labour protections argue that better protected and represented workers who earn a decent wage under good condition will not only be happy and healthy, which is a positive outcome on its own, but also as a consequence more committed, loyal and productive (Meyer, 2015, p. 422). Otherwise, if countries competed on the basis of low standards and protection, high social costs could be incurred as a consequence of social dumping and worker productivity would drop. Additionally, strong labour market regulations and investments in human capital have been proven to be important factors in attracting foreign investment and growth (World Bank, 2019).

Despite not being linked to financial penalties, due to their economic nature and the stakeholders involved, PTAs have been more efficient at raising standards than the more

26 good-will depending human rights agreements (HRAs) (Hafner-Burton, 2005).

Regardless, LC-related clauses have been pushed away from the WTO and onto the ILO.

The consensus among developing nations vis-à-vis trade and labour rights being that domestic laws should not be modified by treaties between countries, the US has nevertheless continued making use of the ILO conventions as a reference in its trade and investment policies. As Charnovitz, (2006, p. 12) points out, the WTO “missed numerous opportunities to solidify a constructive employment dimension … [it] did not tackle the problem of helping workers adversely affected by trade […] Given the several provisions in WTO law that pertain to employment, the WTO could have acknowledged that a labour dimension already exists and thus moved beyond the denial of a linkage that so often permeates discourse regarding labour among trade officials”.

By including stipulations on enforceable labour standards in Free Trade Agreements

(FTA), additional pressure is put on each party to be accountable for labour standards to improve and be monitored closely. The EU could be using the attractiveness of its market and purchasing power to exert pressure on China to improve its labour standards, as it has done with pressuring for market access and access to procurement opportunities

(European Commission, 2019, p. 7) 4 . However, EU institutions have only provided

“guidance” as it concerns labour and environmental standards, citing for example that

“different corporate and labour standards” are applied and that Chinese firms receive preferential treatment in terms of credit terms and access to financing vis-à-vis their

European counterparts, but also apply (European Commission, p. 4).

4 Particularly in sectors in which EU countries are competitive, such as construction services, power generation, telecommunications, , medical equipment, among others, as a response to “rising” protectionism

27 To compare China-EU trade relations and the possible improvement of standards and regulations one could turn to the Korea-EU trade relationship. South Korea and the EU signed an FTA in 2010 in which non-tariff clauses on the improvement of labour standards were included, putting pressure on both parties to cooperate on “trade-related aspects of the ILO Decent Work Agenda, including on the interlinkages between trade and full and productive employment, labour market adjustment, core labour standards, labour statistics… , social protection and social inclusion, social dialogue and gender equality” (European Commission, 2011, p. 1330).

However, despite the EU and Korea agreeing on establishing what are called “Domestic

Advisory Groups” (DAGs), that represent civil society, business and labour organisation and provide consulting for the implementation of their sustainable development clauses

(i.e. labour and environment), not much progress has been made, in particular as it relates to labour standards. Indeed, the EU Commissioner for Trade Cecilia Malstrom said that the trade agreement between the EU and Korea had produced “large economic gains for both sides [but] trade needs however to go hand in hand with workers’ rights” and that Korea still had “not delivered on its commitments”. The following ILO conventions are referred to as still needing to be ratified and implemented:

- C87 Freedom of Association and Protection of the Right to Organise Convention,

1948;

- C98 Right to Organise and Collective Bargaining Convention, 1949;

- C29 Forced Labour Convention, 1930;

- C105 Abolition of Forced Labour Convention, 1957.

28 As labour standards have not improved and ILO Conventions have not been ratified, the

EU has now sought the counsel of a Panel of Specialists that can then decide to impose sanctions on Korea based on WTO policies. It therefore becomes evident that, despite signing FTAs, even with a developed country like Korea, trade relations and pressures are still far from guaranteeing long-term effects on labour standards. China has also refused to ratify these conventions and there are no reasons to think this will change anytime soon.

Indeed, when China joined the WTO in 2001, it accepted what were considered “far more stringent” conditions and deeper reforms relative to other new members (Bransetter &

Lardy, 2006, p. 20). China’s accession to the WTO led to sweeping reforms reducing tariffs on industrial imports and eliminating quotas and other non-tariff import barriers, as well as the abolition of a designated trade system, by which only a few selected firms were allowed to import and export commodities (Lardy, 2002). However, it has only been said that commitments with China facilitated foreign enterprises’ access to the Chinese market, without focussing on any labour issue while also allowing China to impose strict market access limitations beyond key sectors, public utilities and transportation, namely in the press and wider media (WTO, 1994). Analysts and political scientists however, were hopeful about greater liberalisation that would be engendered as a consequence of the economic ‘opening up’. They would be bitterly disappointed.

The reason China accepted wider economic and market-based reforms was linked to the fact China considered WTO accession a crucial part of its developmental strategy and reform agenda, as its leadership knew that a planned economy would not be able to thrive

29 in global production chains by only reducing only import tariffs, for example (Bransetter

& Lardy, 2006, p. 21).

2.5. China and globalisation: Effects on State, firms and society

2.5.1. The Chinese State – implications of the authoritarian rule

As China reaches the limits of its economic model, it seeks to move into a later stage of development toward long-term economic stability and growth, in order to maintain the

CPC’s leadership and political legitimacy (Drezner, 2012). The rise of Xi Jinping and his emboldened stance against freedom of speech, movement, enabled by advances in technology used for mass surveillance on top of indefinite detainment of labour rights activists have made China’s stance against human rights very transparent. China and its

CPC could be defined as an authoritarian State running a capitalist market economy.

There are different ways of defining authoritarianism, but several attempts to do so highlight the lack of political plurality and the non-acceptance of conflict, the centrality of power and the effort to maintain a power status quo, as well as the erosion of the rule of law (Cerutti, 2017). Linz (1964) also highlighted the appeal to the emotions of citizens as a way to legitimate State-class power over them, recognising the encroachment on their freedoms as a necessary path toward a more certain and secured future, as well as the condemnation and quashing of activities critical to the regime.

Glasius (2018) defines authoritarianism as “a pattern of actions, embedded in an organized context, sabotaging accountability to people (‘the forum’) over whom a political actor exerts control, or their representatives, by disabling their access to

30 information and/or disabling their voice” (p. 527). Therefore, in authoritarian regimes such as China, information that could be essential to the improvement of worker conditions is missed through this sabotaging.

Figure 3 explains the dynamics of sabotaging, undermining accountability in authoritarian states. One could imagine the actor being an employer explaining to a

Forum, a trade union, why the firm will need to dismiss a dozen workers, or, reversely, a worker addressing a trade union to inform of a complaint or violation of agreed-upon standards. This intermediation and accountability could not occur successfully in China, where, due to a lack of representation and collective bargaining, workers not only report only the worst of cases directly to the authorities, but also risk arrest if they make public their dissenting voices, therefore not passing a vital signal for the long-term improvement of conditions.

Another example could be the ACFTU’s structure itself, which, as explained in Section 2.3, is controlled by the CPC on each level of its hierarchy. Any official from the ACFTU or the

CPC, in an attempt to not raise negative attention, would obfuscate whatever message labour unrest could bring to their superiors. They therefore sabotage a process of conflict mediation by dispersing protests, arresting activists and not having these occurrences mentioned by journalists.

31 Figure 3: “Sabotaging accountability” in Authoritarian States

Source: Glasius (2018, p. 527)

During the 1990s and 2000s, as China prepared to join and finally joined the WTO in 2001,

China was described as showing characteristics of a post-totalitarian regime: it displayed some propensity to self-reform toward pluralism, while parts of its totalitarian apparatus remained, such as the CPC as only ruling party, unhinged propaganda and mass-media control, and where the population in general is more self-disciplined and displaying subdued rather than mobilised loyalty (Lai, 2006). However, in recent years, Xi Jinping’s ability to change the Chinese constitution to indefinitely remain at the head of the CPC, the persecution and mass incarceration of Muslim ethnic minorities and the omnipresent mass surveillance enabled by technological advances, inevitably echoes of China’s totalitarian past (Clarke, 2020).

Representatives of the Chinese government have made it clear that there will be no future swaying in a democratic direction, much less a multi-partied system as seen in Western

Democracies because “although China’s State organs have different responsibilities, they adhere to the line, principles and principles of the Party” (Wines, 2009). As per North et

32 al., (2009), states are seen as going through transitions, and as political elites expand their powers through economic growth, they inevitably also cede powers, be that international organisations such as the WTO imposing reforms that empower the private sector in

China, or also civil society organisations and NGOs that spring up to represent their own interests in the political arena.

Today, China displays one of the most hostile environments toward dissent and free speech. Indeed, it is the country where most reporters have been and remain jailed as of lately (RSF/Reporters Without Borders, 2020) and propaganda infiltrates every level of news and mass media, including effort to influence foreign public opinion (Miller, 2020).

China with a surveillance apparatus that, as Youwei (2015, p. 2) put it is “omnipresent, sophisticated, and extremely efficient” applies a strong filter on the dissemination of information and the arresting of the messenger (China Labour Bulletin, 2020).

China is characterised by its strong State power, as defined in the Developmental State

(DS) literature, which emphasises the importance and central role of government intervention and industrial policy in the direction of the economy (Beeson, 2009;

Haggard, 2018). The DS literature took root in Chalmer Johnson’s analysis of Japan’s departing from the neoliberal economic thought which prioritised laissez faire, deregulation and market-oriented policies, by re-organising its economy around the direction of ‘pilot’ institutions that defined economic policies from trade to financial regulation and production, and, importantly, relying on a “subordinated” population that was accepting of vertical hierarchy (Johnson, 1982, p. 314-20; Leftwich, 1995, p. 405).

Similarly, China underwent economic transformations led by pi to keep a tight control over population and keep labour input as close to a flexible commodity as possible. From

33 the perspective of China at large, full employment and the leapfrogging into later stages of development is a priority, at the cost of labour conditions and freedoms. China has made a transition from a totalitarian State toward a fully authoritarian one, which appears to be more and more stable as time advances.

Besides the aforementioned reforms that China carried through before and after its accession to the WTO, it also promulgated laws in order to attract FDI5. The successful opening to investment through these laws is marked by the increase in utilised foreign capital, of USD135bn in 2019, a twelve-fold increase compared to 1992 figures and now the second largest recipient in the world (Schaub, Zhao, Xueyun, & Wei, 2019). Most recently, it has responded to international criticism of not protecting Intellectual

Property (IL) sufficiently, by replacing the foreign investment laws with the Foreign

Investment Law (FIL), expanding its scope beyond green-field investments and into other areas such as M&A (Schaub et al., 2019).

As was addressed in the previous section, China’s accession to the WTO came with a multitude of concessions. But, unlike some scholars who speak of the rise of a new hegemony, China is in fact largely the beneficiary of what global markets and a capitalist status quo brings to its economy. As Hung (2016) explains, China is largely dependent on global trade and the consumer markets in wealthier developed states, and should therefore not be seen as a threat to the current ‘order’ of the market (Hung, 2016, p. 169).

China may indeed be authoritarian and be emboldened to continue suppressing labour

5 These laws are: the law on Sino-Foreign Equity Joint Ventures (EJV Law), the Law on Sino-Foreign Contractual Joint Ventures (CJV Law) and the Law on Wholly Foreign Owned Enterprises. For a more detailed account see (Schaub et al., 2019).

34 standards by its economic growth and the lack of international pressure, but its growth remains largely dependent on wealthier and democratic States’ interaction with it.

2.5.2. Firm-level governance: passive enablers or active change-makers for labour?

The structure of firms will be determined by the institutions of a country but also by the

“degree to which private hierarchies control economic processes [and] the degree of discretion owners allow managers in running the company” (Matten & Moon, 2008, p.

408). In that sense, firms within societies in which authority is determined by inter- personal relationship and community ties, such as China, will see these social dynamics flow into market relationships. Added to the importance of personal ties, the very hierarchical nature of Chinese culture will translate into difficulties addressing collective issues (Lockett, 1988).

Being the main employers in China, private and State-Owned firms are the main employers in China and are therefore a principal actor in the practice, the application (or violation) of labour rights. The Chinese government has passed a number of laws to protect the worker from abuse, unpaid work, etc., such as the Labour Law which came into action in 1995. The Chinese Labour Law stipulated among other things the mechanisms through which workers could request protection if there were not paid or if they worked under conditions inferior than those agreed in the collective agreement of the firm (see MOFCOM, 2007). Limitations of these laws or their application will be discussed in Part IV.

Beyond the legal framework, firms, particularly in the West, have often been called into action and to play their part as stakeholder to address social issues that go beyond the

35 direct scope of their production of goods or delivery of services, namely by engaging in

Corporate Social Responsibility (CSR). In terms of labour, that could come in the form of firms taking a stance for improved working conditions, transparency, extended paid holidays, etc. In 2005, firms in China were first called upon by the CPC to take higher levels of social responsibility and contribute to a model of a “harmonious society” by fostering CSR attitudes (Lam, 2014). Indeed, the CPC is interested in pushing not only for a competitive but also responsible business environment in order to bring about societal cohesion and increase arm-of-length control, be that in the realm of environmental and labour regulations or more generally through the communication of incentives and rules

(Sarkis, Ni, & Zhu, 2011).

As Figure 4 by Moon et al. (2008, p. 413) shows, when engaging in CSR, firms are influenced by a variety of factors, of in which aspects of the Chinese culture of guanxi, CPC directives, as well as the general institutional context of the Chinese political economy end up shaping the way a corporation operates and what role it decides to take in the wider society.

36 Figure 4. CSR and institutional context of the corporation.

Source. Matten and Moon (2008, p. 413).

Traditional Confucian virtues such as righteousness were applied in business relationship through, for example the ethics of social costs in profit making (yi li guan)

(Wang & Juslin, 2009). However, as Confucianism and any other non-communist ideology were seriously reprimanded during the Cultural Revolution in China and all business came into the hands of the CPC, CSR per se did not exist in China until Chinese firms passively took it up again as they participated in global production chains during the

1980s (Zhao, Lee, & Moon, 2019). In developing economies, the extent to which an MNC may practice CSR will depend on the strength of its governmental and traditional institutions, such as religion and family traditions (Matten & Moon, 2008). Where the former is weak, the latter will take precedence in directing the social in fostering the social responsibility of a firm. In China, by contrast, where the government’s directions are top priority, firms’ behaviour and responsibilities will be defined by regulations

(Matten & Moon, 2008). This might explain why China, despite having a historically “low

37 uptake” of CSR action, saw an increase of CSR after the 2005 “harmonious society” push

(Baskin, 2006)6. In China, for CSR and firms to really make a long-lasting impact on the wellbeing of workers, there must be a heightened public awareness of worker issues that are then brought to the table via a combination of NGOs, government and civil society representatives as well as improved transparency (Lam, 2014). Therefore, unless firms are put under significant and multi-sided pressures, there will be few to no incentives for firms to explicitly seek to improve worker conditions.

The structure of firms is of direct relevance to their expression of interests of different stakeholders involved in their transactions. This may happen through tight-knit and age- old alliances of employers (e.g. Gesamtmetall in Germany) or through tight linkage of trade unions and governments (e.g. in France). The US tends more toward self- coordination through market mechanisms based upon legal frameworks such as anti- trust laws. In China, by contrast, almost no major firm have existed for more than a couple of decades, much less forming part of an alliance that coordinates labour outcomes between workers, union representatives and governments. In Europe, the fact that union membership has historically been high has meant that labour-related issues are not negotiated on a firm-to-firm basis but on a sectoral or state level. In a similar vein,

European firms tend to pursue collective interests through the aforementioned employer associations. However, this does not hide the fact that collective bargaining coverage in many developed nations has been in steady decline (OECD, 2020)7.

6 The ‘harmonious society’ was a political campaign to foster CSR activity in 2005. As defined by the previous Chinese former president Mr. Hu (2005) a harmonious society is one “that is democratic and ruled by law, fair and just, trustworthy and fraternal, full of vitality, stable and orderly, and maintains harmony between man and nature” (Baskin, 2006).

7 See OECD (2020): Collective Bargaining Coverage, for a more detailed account.

38 As opposed to Western business environments, in China there is no anonymity of employer-employee relations, and trust is established not through systems in place but based on inter-personal relationships. Face-keeping permeates the workplace, leading to employees patching up mistakes instead of addressing root causes for malfunctions, not allowing for long-term trust to be established (Bian, 2010).

3.4.3. The Chinese society: the dispersion of collective power

Economic development leads to increased educational levels in society, while at the same time also leading to increased anomie, as per Durkheim’s social theory, which reduces public trust (Durkeim, 1994). Su, Ye, & Wang (2019) argue that China’s society has suffered from decreased social trust due to anomie 8 . Durkeim (1994) spoke of homogeneous societies, which due to strong similarities among citizens, shared beliefs and norms, were more predictable and therefore easier to regulate. As a society modernizes, however, divisions of labour run deeper into society and norms disintegrate, as members seek differentiation and heterogeneity, ultimately heightening levels and awareness of inequality among people, resulting in diminished social trust. China, which presents a very homogeneous ethno- linguistic fractionalisation, has long benefited from widely accepted social norms and informal regulations. Rodrik (1999, p. 110) found compelling evidence that weak public institutions combined with high ethno-linguistic fractionalisation led to low levels of social cohesion and worsened ability to respond to external shocks. Another important factor in Rodrik’s analysis of social cohesion were the socio-economic inequality found. As China developed economically and it adopted

8 The authors use the distinction made by Berggren and Jordahl (2006) between ‘particularised trust’, defined as trust in people one knows and ‘social trust’, which refers to trust in those one does not know.

39 market mechanisms, it ideologically drifted away from Confucian principles of social trust and the Socialist tenets of socio-economic equality while capitalistic growth has increased the gap between rich and poor and a combination of corruption in the CPC and fear of the autocratic government has left many in society in a position of powerlessness and hopelessness (Su et al., 2019).

“A ‘harmonious society’ was defined by the previous Chinese president Mr. Hu (2005) as a society ‘that is democratic and ruled by law, fair and just, trustworthy and fraternal, full of vitality, stable and orderly, and maintains harmony between man and nature’

As the Chinese economy has developed and its middle class has grown considerably, so has the heterogeneity of group interests increased. As Youwei (2015, p. 2) points out

“economic development has led to contention: peasants are demanding lower taxes, workers want more labour protections, students are forming activist groups, entrepreneurs are starting charities, media organizations have begun muckraking, and lawyers are defending human rights.” However, as mentioned above, the mass surveillance of China and the severity of punishments have increased, leading to a growing feeling of helplessness in society. As described by Glasius (2018), accountability between actors is sabotaged in authoritarian regimes, due to the distribution of power and legitimacy, not based on an “open access order” in which stakeholders play their part in holding each other accountable, but based on predisposed and fixed ordering not of what is but what should be.

However, as Glasius (2018) explains, there are different forms of sabotaging and they don’t only come in the form of sabotage of collective voice. Indeed, as can be seen in

40 Figure 3, voices are disabled not only through the lack of representation but also through any the disabling of any platform through which dissent could be expressed i.e. music,

NGO reports, journalism, etc. (Glasius, 2018, p. 528). In the last decade, Hip-Hop music has become incredibly popular in China, due to a rap competition on TV which gained a very strong following. However, shortly after its success, the entire competition was banned from TV and described as “tasteless, vulgar, and obscene” by regulators (Kitt,

2018). The fact that some rappers have shown they discontent through their tracks might have something to do with the ban too.

3. Methodology

Central to this thesis’ analysis is the interaction between trade flows, FDI and changes in labour standards is the dataset “Collective Labour Rights” (CLR) by Mosley (2011). The

CLR measures capturing the legal rights of workers to organize, associate freely, bargain collectively and strike, as well as the observation of these rights in practice. The dataset covers nearly all sovereign states, with annual data for the 1985‐2002 period. The

Collective Labour Rights indicators assess violations of labour rights in six broad categories: freedom of association and collective bargaining‐related liberties; the right to establish and join worker and union organizations; other union activities; the right to bargain collectively; the right to strike; and rights in export processing zones. The variable Labour Laws measures collective labour rights, capturing workers’ collective bargaining rights, their rights to strike, to free association. Labour Practice (coded as

‘PracticePos’) is the measure of these rights observed in practice, with higher measures

41 indicating observation of better labour practices. Collective Labour Rights is an indicator of the total of laws and practices. To reduce bias, the author takes three sources: the U.S.

State Department annual Country Reports on Human Rights Practices, ILO reports from

Committee of Experts on the Applications of Conventions and Recommendations (CEACR) and the Committee on Freedom of Association (CFA) and lastly International

Confederation of Free Trade Unions’ (ICFTU; now ITUC) Annual Survey of Violations of

Trade Union Rights.

The study by Greenhill et al. (2009) studies in detail the differences between the writing of labour laws (de jure rights), and those in practice (de facto rights), the database used makes a distinction between the two, which is why it is used in this thesis’ analysis of labour rights and practices. The database the authors use, is Mosley’s (2011) Collective

Labour Rights (CLR). For this thesis’ analysis, the data from CLR pertaining will be isolated to observe trends in labour standards in China and compare then to the mean of all other observations. The coding for labour rights used in this study therefore measures whether legal rights exist: Items 6, 14: Are labour unions and independent labour unions permitted? Item 32: Do workers have the legal right to strike?) as well as capturing violations of rights in practice: do authorities interfere with union rights of assembly?

(Item 4) do employers dismiss workers because of their union membership? (Item 10); do authorities intervene in collective bargaining processes? (Item 27).

In order to test for a California Effect with the isolated data from Mosley’s (2011) CLR, data from the Development Indicators by the World Bank (cited as WDI) were extracted for inflows and outflows of FDI as well as trade as percentage of GDP to account for the

42 increases in trade seen in China (World Bank, 2020). FDI and trade have been selected as they are indicative of China’s increased economic integration and economic development.

To corroborate these findings and operationalise changes within the realm of labour rights and practice in China, twelve semi-structured interviews were conducted, which ensured comparability across key topics approached in the interactions (Bryman, 2016, p. 468 – 469). These interviews thus combined questions addressing issues of relevance to the research with conversation-like features that allowed for interviewees to expand and give more substance or context to their answers (Campos-Seijo, 2009). Pre-selected questions focussed on the existence and efficacy of labour market organisations such as trade unions, the awareness among workers of their rights, the mechanisms for internal dispute settlement between workers and employers, comparisons of standards today and a decade ago, among others. The leeway interviewees had in their responses beyond the questions in the interview guide and the fact that the interviewees’ framing and perspective on labour matters in China determined to a large extent how they responded to and expanded beyond the questions, gave the interviews a great deal of contextual and subtle understanding of the employer-worker-government relations in China, of specific events and patterns which a very formal and structured interview may have missed

(Bryman, 2016, p. 468). By remaining aware of his own preconceptions and remain open to different answers and situations that the questions may give rise to, combined well with the semi-structured format, that gave interviewees the space to expand into what they thought was of relevance (Bryman, 2016, p. 470). This ranged from a Chinese owner of a hardware tools company expressing the importance of firm culture and responsibility through the story of the children of migrant workers receiving care by her company, to a manager explaining the positive influence of inter-cultural communication

43 in labour management, to a supply chain manager detailing minutely the way workers would face threats of dismissal if they didn’t work, treated like tireless machines and an input one could dispose of like fodder. Thereafter, to guarantee the interview’s content was not going misinterpreted, a ‘triangulation’ test was performed as per Bryman (2016, p. 386), by corroborating the results with findings from other interviews and the data found in this research project. It was thus possible to supplement the theories used in the research with the new findings.

In selecting the research group, interviewees were screened by their level of familiarity with industrial work environments in China as well as Chinese production chains at large, allowing the interviews to be carried out not only with Chinese workers, but also factory owners and employees overviewing production and supply chains.

In retrospect, the method of interviews seems to have proven to be effective, in that it allowed for personal and in-depth accounts of labour relations to supplement the qualitative research already done in the field of Chinese industrial relations. Furthermore, it gave further substance to the observations made of there being no ‘California effect’ within the labour protections in China from the analysis of Mosley’s (2011) and ILO’s datasets. The interviewees were selected from people the interviewer had met through business experiences in China

4. Analysis

The analysis of this thesis is composed of two parts, namely the empirical analysis of

Mosley’s (2011) data combined with data from the World Bank to test for a California

44 Effect. Second, corroborated by findings from interviews carried out, an analysis of the

State-firm-society nexus and its implications for labour will be made. Lastly, the current trade regime will be examined and how its shortcomings in terms of improving labour standards reflect wider illiberal political trends.

4.1. Testing for a California effect in Chinese labour rights

To begin with, the data from Mosley (2011) is produced, putting China’s Labour laws and practice against the full sample average values of all countries’ labour laws and practices, in order to compare trends and see whether China follows a different path than other countries, namely showing no California effect for labour standards. Observing Figure 5 below, it is clear that the trends in labor rights laws (de jure) and in labor rights practices

(de facto) in China show an improvement stronger than the full sample average. However, the developments with respect to practices show a more serious decline than the average, indicating a deterioration of Labour Practices.

45 Figure 5: Labour Laws and Practices in China and the world

Source: Author’s reproduction from data in Mosley (2011)

Before using OLS models, a scatter analysis is plotted to see how increases of trade as percentage of GDP in China relate to Collective labour rights practices between 1985 and

2002. Figure 6 shows how the relationship between labour standard measures and increase in the importance of trade tends to be negative in China over time, standing in sharp contrast to the otherwise overall positive relationship observed. This could be an indication that there is a no California effect, but that in the contrary, the state of collective labour rights has deteriorated. To statistically determine this, however, OLS models regressing different measures of globalisation to labour practices were applied.

46 Figure 6: Labour standards in China and the importance of trade over time

Source: Author, based on data in Mosley (2011) and World Bank WDI (World Bank, 2020)

Looking at the results from OLS Model 1 (see Appendix A) and the effect that the increased importance of trade as percentage of GDP (wdi_trade) has on Labour Practices

(PracticePos) for China, this study finds a statistically significant relationship between trade and decreases in levels of Labour practices. As Trade Levels rise, LabourPractice decreases at -0.358 coefficient. This relationship is statistically significant at the 5% level.

When regressing increases in FDI outflows from China with labour practices, OLS Model

2 finds a strong negative coefficient of -5.991, with statistical significance at the 5% level.

This shows that in China, Labour Practices have decreased with increases in FDI outflows.

47 However, by looking at the results from OLS Model 3, which analyses the relationship between worldwide labour practices and increases in FDI outflows, an increase in labour practices is observed, at a coefficient of 0.158 and a statistical significance at the 1% level.

Isolating trade in China, a second regression is run to account for a relationship between trade and labour practices in OLS Model 4. This model shows a negative relationship (-

0.000011) with significance at the 5% level, meaning that as trade increases labour practices decrease.

Additionally, Model 5 shows at a second OLS regression of increases in global FDI inflows and labour practices. This model shows no significant relationship (0.1949) at the 95% confidence interval, however it shows an increase in Labour Practices at a coefficient of

0.0059.

When regressing increases in FDI inflows to China with labour practices, OLS Model 6 shows a strongly negative relationship at a 5% significance level. The coefficient of -0.905 shows that as FDI inflows increase, the state of Labour Practices does not improve but significantly deteriorates.

However, by looking at the results from OLS Model 7, which analyses the relationship between worldwide labour practices and increases in FDI inflows, an increase in labour practices is observed, at a coefficient of 0.0059. This observation however, must take into account that it is not statistically significant at the 5% level.

From the aforementioned Models relating Chinese labour standards and measures of globalisation, we can confirm our hypothesis that no California Effect can be observed for

China. In fact, as seen in OLS Models 1, 2, 4 and 6 as pertaining to China, the relationship is negative with statistical significance at the 95% confidence interval.

48 From the OLS models we can therefore confirm that over the 1985-2002 period, despite increased trade levels and FDI in- and outflows, as China prepared to integrate into the

WTO in 2001, labour standards suffered a significant decrease. These findings show an important trend against the California Effect but must be understood as limited due to the fact that the data analysed by Mosley (2011) only covers the years up to 2002. These findings are however partly corroborated by the findings by Cingranelli et al. (2014), which have given a score of 0 for every year from 1981 until 2011. Worker Rights are therefore “seriously restricted” and have not improved since the Mosley (2011) findings, and are supplemented by general accounts of the severe restrictions of human rights and freedoms in China (Freedom House, 2020; Human Rights Watch, 2020).

As the next section of this analysis will explain, this degradation of labour rights is evident on the level of firms as well as society and general, and is a reflection of the wider emboldened authoritarianism China’s leadership has displayed, affecting workers’ rights and freedoms. As mentioned in the previous section, this analysis reflects findings from

12 interviews conducted with workers, business owners and managers in China.

4.2. Contemporary China: the plight for labour rights, representation in a rapidly-

changing labour market

The observations above tell a not-so-happy tale of globalisation: market integration alone cannot suffice for the improvement of labour rights. As the findings below will show, no

California effect can occur in a system that systematically oppresses its collective bargaining and quashes any attempts to organise a response to the authoritarian rule of

49 China9. Before exploring wider results shown by the interview findings, the findings relating directly to Mosley’s (2011) categorisation will be addressed, namely: legal protection and labour rights, labour practices and violations, health and safety issues.

4.2.1. Worker protections and Labour Practices

To address the issue of legal protection, interviewees were asked about their level of awareness of their rights and how to address potential violations. As Respondent Chen and Respondent Lyn described, there is almost no awareness among workers of what legal protections they have, much less in terms of their rights relating to trade union representation. Out of all 12 respondents, not one had heard of a trade union that could serve as an intermediary between workers and employers and workers and the government. One respondent had heard of the ACFTU but had never thought of it as more than an extension of the government. When asked about trade unions, he responded with humour, asking rhetorically “Do you mean the government?”. This goes to show how distant the ACFTU really operates to provide so-called worker representation, a structural “weakness” addressed by Friedman & Lee (2010) and Traub-merz (2011) and a point addressed in the section 2.3, in which the ACFTU is shown to work more as a political tool of control for the CPC, rather than a trade union or an organisation representing workers and advancing their wellbeing.

9 Repondents’ name or letter will be put in paratheses when cited. Please refer to Annex for a full list of interviewees (e.g. Respondent B)

50 Striking is an essential form of collective action for workers and a uniquely powerful tool to make visible the complaints of workers and their collective demands, to both the government official and to the wider society. Striking and general protesting is not illegal in China, but its legality is blurred by the line between legitimate claims and what the government considers inciting public trouble. As respondents Lyn, Mark and Su explained, it is the general undefined context and the seemingly arbitrary arrests of workers and labour activists police makes that add to the uncertainty around the right to strike. As mentioned in section 3.3.2, “Picking quarrels and making trouble” (xúnxìn zīshì) is a crime carrying a sentence of up to five years in prison (PRC, 1997).

As it pertains to the general changes in laws in protections, to the author’s surprise many respondents responded positively. Indeed, what was commented by Respondents Chen,

Yang and Su is that China in general has improved its conditions, highlighting the changes in safety, working hours and general pay that China has passed. This goes in line with the

Labour Laws passed as well as the ILO ratifications on Non-Discrimination and Equal

Remuneration (C100/C111) as well as Health and Safety (C155). What respondent Su, who owns a large factory producing sunglasses for MNCs such as Carrefour commented, is that general improvements in standards have more to do with market dynamics than with a will by the government to improve conditions. He said that as China’s labour became more educated and expensive, it has become harder to hire in factories, due to the fact a lot of young people search for jobs in services rather than production. Therefore, if he wishes to hire them in his factory, he has no choice but to provide them with a good environment to work in. It must be said, in this context, that this is not true for all factories.

Indeed, as respondent Matthieu who worked as an operations manager for an international firm in the textile industry in Shanghai commented, the conditions in some

51 of the factories he visited were squalid and had to be discarded as potential suppliers. He also reiterated Su’s comments on the general improvement of conditions being due to demand and supply dynamics of labour.

Su also mentioned that it is not that much about a change in laws which mattered in the framework of the improvement of labour protection, but about what the government cares for. Indeed, as he mentioned, government inspectors will come into factories such as his own, and in their audits make sure that fire extinguishers are in place, fire exits well marked, that licenses on machines are valid and up to date, etc. However, he said, they could walk right into a paint factory and see workers not using the right protection gear and not do anything about it.

In terms of labour practices, beyond local trade unions and regulations, it is of crucial importance how firms apply improved standards in their own production chains and audit the conditions of their suppliers. Respondent Mark, who is the lead product designer at a major clothes company in Guangzhou, mentioned how in management meetings, labour rights had “never been mentioned”, corroborating Nick’s statement He himself had not questioned conditions as they seemed fine. However, he admitted that there was no guaranteeing his suppliers of materials kept good conditions of labour, marking a strong disconnect between what white-collar workers and blue-collar workers experience in China.

For workers, the Labour laws passed in the 90s and early 2000s provide a vital first step in the provision of basic rights and mechanisms for protection against abuse by employers, unpaid work, hazardous or unsanitary work conditions, etc., but many firms in China continue to underpay their workers and multiple cases of wages arrears have

52 surfaced as of late, with more than 257 cases worker protests reported since the 1st

January 2020 related to wage arrears (Labour Bulletin China, 2020). As the experiences of multiple interviewees confirm, the relationship between managers and workers is very

“hierarchical” (Respondent Su), and in conflict, sometimes escalating to workers being

“physically threatened” (Respondent Lyn). This is linked to the undefined legal environment many workers operate in. Despite Article 77 of the Labour law citing workers may resort to legal protection and “apply for mediation or arbitration or take legal proceedings according to law, or may seek for a settlement through consultation”, workers rarely resort to legal representation for fear of potential backlash from their employer (ILO, 1994). As respondents confirmed, a worker would “definitely” (Su) get fired, as soon as she or he went “out of line” and could not solve their issue “directly with their line manager”.

In China today, as was mentioned in Part 2.3. there are close to 300m migrant workers, constituting more than a third of China’s working population. Many of these migrants are still classified under the hukou system, meaning they are registered and have access to state benefits in one place only, making the hukou akin to a caste system (Kuang & Liu,

2012). These heightened and visible inequalities increase social tension and the aforementioned social anomie (Durkeim, 1994). As was explained in Part 2.5.2., firms have been taking up CSR initiatives in their attempt to both please government initiatives and other stakeholders. However, there are cases, in which firms have genuinely looked out for the wellbeing of their workers. In one example mentioned by Respondent Chen, her father’s firm, faced worker dissatisfaction during the Summer, due to the fact many of the workers could not see their children, who were on school leave but, having no-one to take after them, had no choice but to go back to their hometown with their

53 grandparents. As a senior executive, she took the initiative to create a day-care system at the offices near the factory, in order for the parents to be able to see their children after school. The hukou system made it very difficult for workers to access equal health, education for their children, among other services. These initiatives helped decrease the psychological burden on them, in what Chen mentioned was a “moving and for workers extremely meaningful change”, which “raised satisfaction, motivation and productivity”.

This went to show how much a firm can impact the wellbeing of its workers due to the fact that these are insufficiently covered by regulations and protections. International firms producing in China have been noted to integrate their own production systems, while also adapting to local customs, as Frank, a German project manager for a major

German MNC, commented. Respondent B confirmed this, saying he appreciates the “open” and more “horizontal” structure of command within the factory of an MNC in the city of

Wuxi he works for.

From the interviews carried out it became evident that the link between individual workers and local government is too weak and to ask for assistance in mediation with local authorities is seen as too large a step to be a solution for the effective mediation of problems. If a worker asks for legal help from the local government or files a complaint, for the firm this would lead to time spent to satisfy the government’s audit, which has been described as a “process with no transparency” (Chen) but also would it mean the ostracising of the worker that filed a complaint. In case of a complaint, Chen said, a worker would face a high likelihood of being dismissed within what she called “traditional

Chinese hierarchical culture”. The lack of representation amongst Chinese workers is thus very evident. Respondent Su, who had never heard of the ACFTU, said that as an employer and factory owner, he would be happy to have a local or industry-focussed

54 trade unions as it would avoid him the “pain” of dealing with officials directly when workers complained, while also raising his workers’ satisfaction, as problems could be mediated and addressed more easily, as it added a level of impersonal communication that would alleviate “cultural burden”.

4.2.2. Work culture and society

As discussed through the influence of culture and of the authoritarian state on the working of the wider society, work culture in China can be problematic in the manager- worker relationship. The legal framework workers operate within does not provide security for workers as they still rely heavily on localised power relations, to which they are subordinated. Indeed, due the fragmentation or “cellularisation” of the Chinese worker movement and the lack of transparency, workers’ claims are held back and the strength of their collective voice is weakened (Friedman & Lee, 2010, p. 519). Importantly, on a firm level, many problems are never addressed in the first place due to the importance of inter-personal relationship and their role in firm outcomes. Firms operate within networks of influence and use guanxi to their advantage, at the cost of workers’ rights and general wellbeing. Respondent Yang discussed the importance of hongbao, which literally means ‘red packet’ but refers to the gift-giving culture within Chinese firms and wider society, in which different stakeholders, be it suppliers, partners or government officials are kept happy through the giving of gifts and favours. He mentioned that “everyone does it” and that he tasks employees with hongbao-related PR.

Respondent Lyn insisted on speaking about how widespread what he called “ ‘permitted’ corruption” is, citing major firms’ departments dedicated to “oiling the cogs” of their relationship with government officials. Respondent Chen corroborated this insight when

55 asked about it, saying that government officials must be “kept happy” and that this has led to some firms operating with more impunity than they should be given. The point made is not to say that corruption hasn’t been tackled in China, but rather that some aspects of Chinese culture are conducive to opacity of business and government relationship. The theoretical analysis of China’s firm and wider culture as very oriented toward inter-personal relations (guanxi), face-saving and where transparency is inherently undermined. The issue of accountability in authoritarian regimes, where parties misinform each-other and avoid any sort of questioning in the “sabotaging of accountability” is then exacerbated by a culture in which the relation to truth and objectivity mars the possibility of true accountability and conflict resolution (Glasius,

2018).

As it relates to labour conflicts, workers will thus be at best hesitant and at worst frightened to raise issues that they consider important if those issues present a challenge to their immediate authority. As Su commented, workers walk on eggshells when asking for change, and as are often scared when engaging in collective action. The same holds true to the ACFTU which, despite having made some progress in the last two decades in the foregrounding of worker rights, remains under strict control, where each level of its hierarchy is controlled by the level above as well as the local government on each of these levels. This is due to the fact that, as discussed earlier, local officials fear worker protests could taint their image in the eyes of their superiors within the CPC, and will therefore attempt to fragment or “cellularise” any worker movements before they occur (Friedman

& Lee, 2010, p. 519)

56 The struggle for the improvement of labour rights happens within the context of the wider Chinese political economy, its State institutions and the authoritarian ‘iron fist’ with which the CPC rules. The wider authoritarian tendencies within China, which have been displayed in the arrest of labour leader, activists and journalists has become common knowledge, but is of particular relevance in the interviews carried out, as they contribute to a form of self-policing that stifles potential expressions of anger or dissent.

Mark censored his own critique, indicating that through suggestions, that he did not want to be flagged by the surveillance apparatus. Respondent B and Respondent Yang stopped responding to questions when addressing labour protests, while respondent Huang indicated that he was “not aware of any worker protests” ever occurring. Despite efforts by local governments not to report on worker dissent and to rapidly stop and minimise the visibility of those that do occur, it is undeniable that everyone has heard of some protests occurring.

To summarise the quantitative and qualitative analysis, it was first observed that from the findings comparing globalisation indicators with changes in labour rights in China, indicated that no California effect was found, despite China’s opening up to global trade and integrating into the world economy. As the work by other scholars has shown, there is no reason to believe that since Mosley’s (2011) data covering the years up to 2002, much has fundamentally improved in terms of worker rights (Friedman & Lee, 2010;

Cingranelli et al., 2014; China Labour Bulletin 2020). As was mentioned in Part 2.3, a few laws have been passed such as the Labour Law of 1995 or the Labour Mediation and

Arbitration Law of 2007, but much of the progress is fundamentally undermined by the fact workers in China still have no right for collective bargaining, as the ACFTU structure

57 is “weak” and whenever workers collectively demand improvements, they face arbitrary and “unchecked retaliation” from employers (Friedman & Lee, 2010, p. 522).

Many of the interviewees spoke of the uniqueness of Chinese inter-personal relations and confirmed how, as per Glasius’ (2018) analysis of authoritarianism, China’s firms and labour movement suffers from the wider dynamics of accountability sabotage, recognising the need for improvements, but hampering the translation of collective thought into institutional change.

Questions pertaining to labour market organisations, which all operate under the ACFTU, confirmed Friedman & Lee's (2010) findings about institutional weakness, CPC subordination and the difficulties expressing collective voice, always fearing reprisals: from employers for workers, and from superior officials within the ACFTU or the CPC itself.

When addressing the role of firms and trade in the improvement of labour conditions, it became clear that it was the firms that had to take initiative to improve worker relations, conflict mediation, as in case of respondents B and Frank, and even benefits, as was the case of respondent Chen. International trade on its own and FDI will not lead to the

‘ratcheting up’ of labour standards on their own. As Lam (2014) discusses, worker issues must be brought to the forefront in China, through the combined work of NGOs, civil society organisations and representatives of government in a context of improved transparency.

However, as the findings from the interview demonstrate, transparency is fundamentally undermined in China, labour activists arrested and grass-roots labour organisation strongly condemned, making it impossible for a ‘California effect’ to take place.

58 III. Conclusions

Labour standards in China have failed to improve over time, despite China developing into an upper-middle-income economy through its engagement with global markets. This is intrinsically tied with the lack of freedoms granted to workers, such as the right to collective action and joining independent trade unions, and wider restrictions on freedoms, such as freedom of expression and press, imposed by China’s authoritarian ruling party. In explaining why this has been the case, an empirical answer as to the lack of a California Effect was provided, which helped shed light on the importance of non- economic factors in the improvement of labour rights and human rights in general, such as the links of authoritarian State power that the CPC projects through the ACFTU, firms and in society in general.

In response to the research questions posed at the start of this thesis, it has become evident that increased trade and investment between China and the world have not led to significant institutional changes that serve the protection and representation of workers in China. The official trade union, the ACFTU, helped push for legal representation against unpaid work and the worst forms of abuse, but given its direct dependence on the CPC, has failed to engage in a more direct way with workers and to push for reforms that could lead to the betterment of labour standards. Indeed, the

ACFTU can only legislate for marginal change, but will not engage in legal representation of workers that protest or “cause trouble”. Subordinated to CPC hierarchy, labour activists continue disappearing, are arrested and see their families physically threatened, while the ACFTU turns a blind eye. These facts contribute to a mounting dissatisfaction

59 and disillusion among workers who, as interviews confirmed, are not motivated and will engage less in collective action. This is the goal of the CPC, who, given China’s gradual economic slow-down, needs to keep its population employed and maintain social cohesion, and aims to fragment the power workers’ collective voice could have.

The control of its population comes as no surprise, as China’s economy has embraced capitalism, while Beijing has tightened its grip over free expression, effectively using technology to monitor the behaviour of its entire population. Topics that touch upon conspiracy or anti-State speech have always been banned by the CPC, but issues that were not seen as a challenge to the CPC’s authority, such as labour rights, expressions of LGBTQ affection or environmental pollution, have now also become severely reprimanded by officials. The end result is on one side a strengthened control of the population and of contemporary Chinese culture, which includes people’s self-policing, but also an emboldened ethno-nationalism that runs through the CPC’s ideology, allowing it to justify any inhuman measures it takes for the greater, collective good.

International trade and investment inflows have done very little to improve the state of matters for Chinese workers, where MNCs have limited themselves to CSR campaigns and

Western democracies strongly condemning the state of labour rights in China. It has thus become evident that, given that the last four decades have not brought Chinese workers any hope of structural improvements, the democratic West, if it desires to continue promoting pluralism, must strive to reinvent its approach to international diplomacy and trade.

Further research should therefore seek to investigate new forms of labour activism within sphere of authoritarian sabotage by constructing a framework that is specific to

60 the institutional and cultural context of China. This would allow to not only see more how and where interests are expressed, but would also would it present a view that does not apply what worked in Western democracies to what clearly has not in the Chinese case.

Furthermore, new forms of institutional and market pressures that could be exerted against the CPC could be further investigated, in order to push for more transparent and accountable worker and industrial relations. The existing frameworks of the UN Human

Rights Commission, the WTO and others simply do not have the authority and the ideological legitimacy to counter the authoritarian capitalistic encroachment on labour and human rights in China.

This thesis’ contribution has hopefully been to make evident that California effects do not spring into life on their own but, as Lam (2014) explained, require the full and transparent commitment of all stakeholders involved, including civil society organisation, firms and government representatives. The research presented the institutional limitations of labour market organisations in China in their attempt to improve labour standards and combined these with the dynamics of international capital, trade regimes and State authoritarianism. The juxtaposition of these important aspects of contemporary Chinese labour relations made evident how much the current system enables the status quo and will not lead to significant improvements. This is where the value of personal interviews and stories became most evident, as the collection of available empirical data could only ever tell one side of the story. For an agenda to be pushed that foregrounds labour standards in China, it is important to centre our analyses on the workers’ experiences, the migrants’ conditions and human freedoms at large. As discussed, politicians, activists and scholar must stop taking the path of least resistance

61 and form international alliances that are centred on progressive norms and shed light on the international dynamics of capital that, in absence of representation and protection serving the wider population, will tend toward the exploitation of the most income- dependent and weakest citizens, no matter where these might be. Europe and the wider

“developed” world cannot afford to continue diffidently pushing for ‘best practices’ and hoping that labour rights will improve based on existing trade and diplomatic channels, while at the same time trading and investing in the economies of countries that are not only undemocratic and authoritarian, but also commit acts that have as of recent taken genocidal proportions. Without having to radically disengage, but by tacitly assuming the state of labour and human rights in general will improve on its own, Western democracies are complicit in the acts committed by their authoritarian partners and lose their ideological and democratic legitimacy, of which, if not already weakened, they claim to be the bastion and the last stronghold.

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67 V. Appendix

Appendix A

Model 1: Labour Practice and Trade as percentage of GDP in China

. reg PracticePos wdi_trade if cname=="China"

Source | SS df MS Number of obs = 18 ------+------F(1, 16) = 21.53 Model | 93.2182934 1 93.2182934 Prob > F = 0.0003 Residual | 69.2817066 16 4.33010666 R-squared = 0.5737 ------+------Adj R-squared = 0.5470 Total | 162.5 17 9.55882353 Root MSE = 2.0809

Appendix B

Model 2: Labour Practice and FDI outflow in China

reg PracticePos wdi_fdiout if cname=="China"

Source | SS df MS Number of obs = 18 ------+------F(1, 16) = 4.63 Model | 36.4961301 1 36.4961301 Prob > F = 0.0469 Residual | 126.00387 16 7.87524187 R-squared = 0.2246 ------+------Adj R-squared = 0.1761 Total | 162.5 17 9.55882353 Root MSE = 2.8063

------PracticePos | Coef. Std. Err. t P>|t| [95% Conf. Interval] ------+------wdi_fdiout | -5.991669 2.783276 -2.15 0.047 -11.89195 -.0913863

68 _cons | 21.85799 1.279568 17.08 0.000 19.14543 24.57055 ------

Appendix C

Model 3: Labour Practice and Global FDI outflow

. reg PracticePos wdi_fdiout

Source | SS df MS Number of obs = 1,775 ------+------F(1, 1773) = 32.09 Model | 617.237693 1 617.237693 Prob > F = 0.0000 Residual | 34104.2553 1,773 19.2353386 R-squared = 0.0178 ------+------Adj R-squared = 0.0172 Total | 34721.493 1,774 19.5724312 Root MSE = 4.3858

Appendix D

Model 4: Labour Practice and Trade as percentage of GDP in China reg PracticePos gle_trade if cname=="China"

Source | SS df MS Number of obs = 16 ------+------F(1, 14) = 19.72 Model | 82.8954855 1 82.8954855 Prob > F = 0.0006 Residual | 58.8545145 14 4.20389389 R-squared = 0.5848 ------+------Adj R-squared = 0.5551 Total | 141.75 15 9.45 Root MSE = 2.0503

------PracticePos | Coef. Std. Err. t P>|t| [95% Conf. Interval] ------+------gle_trade | -.0000113 2.54e-06 -4.44 0.001 -.0000167 -5.84e-06

69 _cons | 22.39371 .7645013 29.29 0.000 20.75402 24.0334 ------

Appendix E

Model 5: Labour Practice and Trade as percentage of GDP – Global

. reg PracticePos gle_trade

Source | SS df MS Number of obs = 2,430 ------+------F(1, 2428) = 0.99 Model | 17.7484353 1 17.7484353 Prob > F = 0.3206 Residual | 43660.5274 2,428 17.9820953 R-squared = 0.0004 ------+------Adj R-squared = -0.0000 Total | 43678.2758 2,429 17.9819991 Root MSE = 4.2405

Appendix F

Model 6: Labour Practice and FDI inflow in China reg PracticePos wdi_fdiin if cname=="China"

Source | SS df MS Number of obs = 18 ------+------F(1, 16) = 7.40 Model | 51.3828517 1 51.3828517 Prob > F = 0.0151 Residual | 111.117148 16 6.94482177 R-squared = 0.3162 ------+------Adj R-squared = 0.2735 Total | 162.5 17 9.55882353 Root MSE = 2.6353

Appendix G

Model 7: Labour Practice and FDI inflow – Global

reg PracticePos wdi_fdiin

Source | SS df MS Number of obs = 2,370 ------+------F(1, 2368) = 1.68 Model | 32.6310735 1 32.6310735 Prob > F = 0.1949 Residual | 45961.928 2,368 19.409598 R-squared = 0.0007 ------+------Adj R-squared = 0.0003 Total | 45994.5591 2,369 19.415179 Root MSE = 4.4056