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Posted by: Frederik Balfour on July 27, 2009
Some 30,000 angry Chinese workers staged a riot at a steel factory in China that resulted in its boss getting beaten to death, underscoring just how quickly economic problems can stoke social unrest. The workers were protesting the sale of state-owned Tonghua Iron & Steel in Jilin province to a private group which they feared would lead to the loss of jobs. The manager, Chen Guojun, who died on Friday, had been sent to the steel plant by its new owners, Jianlong Group. According to the Financial Times, the unrest has prompted the government to scrap the privatization deal.
China’s communist leaders are obsessed with keeping social unrest under control, but the frenetic pace of economic transformation in the country often sparks uprisings. The clash between Uighurs and Han Chinese that caused nearly 200 deaths in Urumqi earlier this month was in response to labor problems at a factory thousands of miles away in Guangdong province. However it also layed bare the dangers of a fast growing economy that creates a widening gap between the haves [the Han Chinese] and the have-nots [the minority Uigyurs and Tibetans] that causes envy and resentment.
Chances are China will be faced with more violent incidents at the factory gates in the future. The export slump has led to widespread closures [in some cases with the bosses literally sneaking over the wall to escape the wrath of workers, as my colleague Dexter Robert chronicled in this labor story] and many industries are still experiencing a shake out due to overcapacity. The government has been pushing for greater consolidation, but mergers and acquisitions can turn very nasty if labor problems aren’t properly anticipated.
Multinational companies have often resisted firing workers for fear of backlash. It’s customary to keep factories open even when they aren’t producing, rather than risk having the plant looted or the foreign managers targeted.
Although China stopped publishing figures on mass incidents [read unrest] in 2005, Geoffrey Crothall, spokesman for China Labor Bulletin, and NGO based in Hong Kong that promotes labor rights in China, there were 127,000 such incidents last year, of which at least 25% were labor related. Others would be connected to environmental problems, land use disputes and local corruption.
Crothall says the working conditions at Tonghua were already bad before Friday’s uprising. Workers complained that neither the factory floor nor their dormitories were heated in the winter. And factory union provided no assistance. “State owned enterprises all have their official union but they are next to useless, they just represent management’s interest,” says Crothall. “They are out of touch with the workforce and have no power. In many cases workers left with no option but to resort to drastic measures.”
However most confrontations between labor and management rarely turn as violent as the Tonghua case, though in 2007 two people, a worker and a security guard died during a miner strike in Hunan.
BusinessWeek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies. Eye on Asia’s bloggers include Asia regional editor Bruce Einhorn, Tokyo reporter Ian Rowley, Korea bureau chief Moon Ihlwan, Asia News Editor and China Bureau Chief. Dexter Roberts, and Hong Kong-based Asia correspondent Frederik Balfour.