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July 2010, Volume 17, Number 3

China: Migrants, Strikes

The Ministry of Agriculture's Research Centre for Rural Economy reported in summer 2010 that the real incomes of rural households rose 15 percent in 2009, reflecting rising demand for labor in both rural and urban areas and slower labor force growth. By some measures, nominal rural incomes doubled between 2003 and 2009. The Ministry estimated the number of rural-urban migrants at 152 million in Fall 2009, up slightly from 151 million in summer 2009.

Rural-urban migration is regulated with a hukou or household registration system that limits access to public housing, education, medical and other benefits to the place where a person is registered. Many internal migrants are denied social benefits by local governments in the places where they live and work.

Guangdong province in June 2010 urged local governments to make it easier for the 1.8 million rural-urban migrants to change their hukous from their rural origins to the Guangdong cities where they work. Under the Points Accumulation System for Farmer-turned Workers to become Urban Residents plan, migrants who achieve at least 60 points are to be given urban hukous, with points awarded for education, skills and contributions to social security records; points are deducted for crime and violation of family planning policy. The goal is to give two-thirds of Guangdong's migrants urban hukous by 2012.

Immigration. The demand for labor in urban areas has been rising, attracting migrants from Vietnam, who are reportedly moving to southern China to fill low-wage factory jobs. Some toy factories in Guangdong's Dongguan City are replacing rural-urban Chinese migrants with Vietnamese migrants, many of whom are smuggled into China via Dongxing, a port on the border with Vietnam. Vietnamese migrants earn at least twice as much as they would at home, and Filipino maids reportedly earn $400 a month in Shenzhen.

Chinese employers can be fined 50,000 yuan ($7,300) for each unauthorized foreign worker they hire. However, with wages for unauthorized foreigners less than half of wages for Chinese workers, many employers prefer foreigners.

Violence between Turkic-speaking Muslim Uyghurs and Han Chinese in a toy factory in southeastern China led to riots in July 2009 in Umqui, the capital of Xinjiang province. Almost 200 mostly Han Chinese died, and most of the 1,500 protestors detained were Uyghurs. The provincial governor was replaced and a $1.5 billion development strategy was announced, but heavy security simply keeps a lid on underlying tensions between Uyghurs and the Han Chinese who migrated to Xinjiang.

Strikes. At least 10 young male migrants at Foxconn, a subsidiary of Hon Hai Precision Industry of Taiwan that is a contract electronics manufacturer for Apple, Hewlett-Packard and other US firms, committed suicide between April and May 2010. In response, Foxconn raised its minimum wage from 900 yuan ($132) a month to 2,000 yuan ($293) at its Hon Hai's manufacturing complex in Shenzhen, which employs 400,000 workers and is considered the world's largest factory.

Monthly wages may be misleading because Chinese factory workers work long hours, meaning considerable overtime. One effect of rising wages may be less overtime and reduced turnover. Foxconn's Shenzhen factories have five percent monthly turnover, meaning that 20,000 workers leave every month and must be replaced.

Some 1,900 workers at a Honda transmission plant in Foshan went on strike in May 2010; the strike was settled after two weeks with a 24 percent wage increase to 1,910 yuan ($280) a month, almost double the minimum wage; at least two strike leaders were fired. About 30 percent of Honda's workers were trainees who are paid less than the minimum wage for a year-long internship that often involves working alongside regular workers.

Strikers at the Honda plant in Zhongshan elected shop stewards to represent them and demanded the right to form their own union? only unions belonging to the All-China Federation of Trade Unions are permitted [the ACFTU claims 134 million members in 1,713,000 primary trade union organizations]. The Zhongshan workers, mostly rural-urban migrants who have a junior high school education, want to be paid as much as the Foshan workers, who generally have the equivalent of high school diplomas or community college education. Honda offered wage increases and began to hire replacements for strikers.

As strikes spread, some factories announced wage increases of 10 to 30 percent and relaxed their hiring rules; in the past, many hired only 18- to 24-year old workers. Over the past decade, labor productivity has risen much faster than wages, fueling worker frustration. Many rural-urban migrants today want to resettle in cities, so they are more aware than previous migrants of the extreme inequality in Chinese cities.

Prime Minister Wen Jiabao, meeting with migrants in Beijing, said "Rural migrant workers are the main army of the contemporary Chinese industrial workforce. Our wealth and our tall buildings are all distillations of your hard work and sweat." The wage share of GDP was 53 percent in 1999, and fell to 40 percent in 2009.

Minimum wages in China vary by province and change frequently. They are about $125 a month in much of southern China, and are rising to $140 a month in Beijing. A combination of rising minimum wages, tougher enforcement of labor and environmental laws, and perhaps a rising value of the Chinese currency promise to push up costs of production in China.

Economy. China's labor force growth is projected to fall to 3.1 million a year between 2010 and 2015, down from the 7.4 million a year increase between 2005 and 2010; the number of 15- to 25-year olds, whose first formal sector jobs are often in export-oriented factories, is projected to fall from 225 million in 2010 to 150 million in 2022.

Economists expect the Chinese economy to continue expanding by about 10 percent a year, with inflation averaging five percent a year.

The US imports far more from China than it exports; the US government wants the Chinese government to revalue the yuan to reduce the trade deficit. But many economists doubt that devaluation of the yuan will reduce the overall US trade deficit? it may simply push the production of goods imported by the US such as electronics and toys to lower wage countries such as Vietnam.

Some say that Chinese industrial policies, which often require foreign firms to share technology and limit government purchases of imported goods, are reasons why imports of US goods remain relatively low despite rapid economic growth in China.

Keith Bradsher, "A Labor Movement Stirs in China," New York Times, June 10, 2010. David Barboza and Hiroko Tabuchi, "With Strikes, China's Workers Seem to Gain Power," New York Times, June 8, 2010. John Garnaut, "China's labor deficit helps lift wages for rural migrants," Sydney Morning Herald, May 17, 2010. Grace Ng, "Cheaper foreign laborers flood into China," Straits Times, April 22, 2010.