‘All Is Not Well’ With China’s Free Trade Zone

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Lofty Socialist Ideals Fall Away

Super Investing

Communist China does not subscribe any longer to lofty socialist ideals like social insurance to industrial workers. This is the message that comes loud and clear from the Free Trade Zone (FTZ) in the southern province of Guangdong which was officially inaugurated this April.

The gala event attended by the provincial Governor, Zhu Xiaodan, Guangdong party Secretary Hu Chunhua, and Hong Kong Chief Executive Mr. Leung Chung-Ying, Macao. Officials of the Free Trade Zone were in attendance. So was the Macao Secretary for Administration and Justice Chan Hoi Fan as licenses to operate in the FTZ were issued to more than 6,500 companies and institutions.

Three Free Trade Zones

Guangdong is one of the three FTZs (the others are in Fujian province and Tianjin) that were approved this March despite the country’s first such venture failing to click in Shanghai even 18 months after it got the go ahead.

Officially the Guangdong FTZ is designed to speed up China’s economic integration with Hong Kong. While the Fujian zone is focused on Taiwan, the Tianjin FTZ is part of a push to better integrate the city with nearby Beijing and Hebei. All these free-trade zones are similar in size and have the same “list” of sensitive industries, where investments are restricted. On this list are telecommunications, broadcasting, films, and TV production, News portals and online gaming besides banking and insurance.

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Guangdong Free Trade Zone Problems

But two months down the line, the Guangdong Free Trade Zone is in trouble. It is largely a fall-out of the downturn the Chinese economy is facing. “All is not well” with the FTZ, say sources familiar with its workings.

On April 19, 2015, around 100 workers of a shoe factory (Panyu, Guangzhou) held a meeting against the overnight closure of their factory. “Pay us our dues, and relocate us,” shouted the workers as their peaceful demonstration began to attract attention of the passersby. The workers demanded their wages and full payment of their social security money.

Suddenly, a Special Police squad and local Panyu city police descended, indiscriminately thrashed them and rounded them up. The coordinator of the Panyu workers service department was taken away, local reports said.

The police action soon became a hot topic by Weibo (a Chinese version of twitter) users. Some twitterati termed the police action as brutal while some others described the baton charge as an attempt to suppress the workers. Some Weibo users also said the Panyu brutality is a big shame for Xi Jinping.

This is not an isolated incident, says blogger, Chuang (http://chuangcn.org) and points out that another shoe factory strike was suppressed a month earlier. Some 5,000-strong workforce stuck work at Stella shoe factory in Dongguan in March, capping a season of strikes in Guangdong.

Largest Strike

The largest strike at a single company in recent Chinese history took place at six Yue Yuen shoe factories in Dongguan (50,000 workers). An estimated 2,500 workers held a strike at Lide shoe factory in Guangzhou last December. Significantly the shoe factory strikes are reported from Guangdong province, though other parts of China, especially Wenzhou have their fair share of such enterprises. The main demand of strikers is housing and the response of authorities is a brutal crackdown, say reports on social networking sites.

“In Zhongshan City, Guangdong Province, nearly ten thousand workers went on strike and marched on the streets. A number of protesters were arrested and beaten by the police. Since 2000, Xin Chang Shoes Co., Ltd (Tanzhou Second Industrial Zone within Zhongshan City) refused to buy a housing fund for its workers. On Monday, March 23, Xin Chang workers staged a protest march outside the factory areas,” says one post

A labour activist Peng Jiayong was kidnapped by cops and severely beaten in April after helping workers.

Over the past five years, China has seen thousands of strikes and protests in a tide of collective action that shows no sign of ebbing. Between January 2011 and January 2015, nearly 2,900 strikes and protests occurred nationwide, almost half of them in 2014 alone, according to the Hong Kong-based NGO China Labour Bulletin. The Chinese government does not report national strike statistics.

As many as 23 strikes, labour protests and other worker demonstrations took place in the Pearl River Delta Economic Zone in the first quarter of 2015, according to Chinese social media platform, The Sound of Hammer. These incidents involved an estimated 26,000 workers. Of them, some 8000, by far the largest number for one single work place, were from a Dongguan footwear factory.

Federation of Trade Unions Ineffective

“One-third of these strikes were in response to a factory closure or relocation,” Hui Xiamei wrote in Red Flag, a leftist publication from Australia, adding that unpaid social security contributions were a factor in half of the reported incidents. “This issue has been building for two decades. Many workers who have toiled for years, especially the first generation of migrant workers, are now suddenly finding out that they won’t get any income after they retire.”

The only legally recognised workers group is the All-China Federation of Trade Unions (ACFTU). But most of the recent strikes took place with no ACFTU involvement and thus proving that the official trade union is “ineffective.”

As the Chinese economy slows, and exports stagnate, industrial unrest is expected to increase. So will the assaults on workers and intimidation, going by the labour activists.