Multinational Monitor

MAY 2000
VOL 21 No. 5


The Corporate PNTR Lobby: How Big Business is Paying Millions to Gain Billions in China
by Ian Urbina

The Joys of PNTR According to the Fortune 500
by Charlie Cray

The Marlboro Man Rides To China
by Robert Weissman

Wall Street Singes the Dragon: PetroChina's Failed IPO
by Braden Penhoet

The Effect of WTO Entry on the Chinese Rural Sector
by Robert Weil

Puppets, Protesters and Police: April 16 Mobilization Builds Momentum Against the IMF and World Bank
by Robert Weissman


Chinese Rights, U.S. Wrongs
Interviews with Wei Jingsheng and Alice Kwan


Behind the Lines

The Case Against China PNTR

The Front
Ford's Smokescreen

The Lawrence Summers Memorial Award

Names In the News


Chinese Rights, U.S. Wrongs

Interviews with Wei Jingsheng and Alice Kwan

Wei Jingsheng is China's leading human rights dissident. In 1978, he posted and signed his name to an essay on Beijing's "Democracy Wall." Entitled "The Fifth Modernization," it argued that Deng Xiaopeng's four modernizations -- of agriculture, science, industry and national defenses -- were for naught absent a fifth one -- democracy. Along with a group of friends, Wei began publishing an underground magazine called Explorations. In its final issue before the government close it down, Wei wrote an article titled "Democracy or Dictatorship?" in which he identified Deng as a dictator. He was then arrested. In 1979, he was tried and convicted of "counterrevolutionary crimes," and sentenced to death. After eight months on death row, his sentence was commuted to 15 years. Deng offered to release him if he recanted, but Wei refused. He spent five years in solitary confinement. Released a few months prior to the end of his term in 1993, he was re-arrested within six months. In November 1997, Wei was forced into exile. Wei's prison letters were published in 1997 as The Courage to Stand Alone.

Multinational Monitor: Can you outline the forces within China interested in seeing the United States grant permanent national trade relations status to China?

Wei Jingsheng: Within China, there are only a limited number of people who would benefit from PNTR passing, primarily corrupted government officials.

It's quite possible that if you stopped anybody on the streets of China and asked them if they are in favor or against PNTR, they might say they are in favor -- but this would not reflect mass opinion or even their own self-interest, because they don't have access to adequate information about what PNTR means for them.

MM: Can you outline the forces within China interested in seeing the United States grant permanent national trade relations status to China?

Wei Jingsheng: Within China, there are only a limited number of people who would benefit from PNTR passing, primarily corrupted government officials. It's quite possible that if you stopped anybody on the streets of China and asked them if they are in favor or against PNTR, they might say they are in favor -- but this would not reflect mass opinion or even their own self-interest, because they don't have access to adequate information about what PNTR means for them.

MM: Why do forces in the government want to join the WTO?

Wei: They will benefit in two ways. One is politically. They won't have to suffer through an annual Congressional vote on Most Favored Nation status and an evaluation each year of China's human rights record. The annual evaluation forces them to restrain themselves. Secondly, they will benefit economically. Since the corrupt government has robbed the state-owned enterprises, those state-owned enterprises are largely emptied of their assets. Government officials hope that if they join the WTO, they can sell shares in their businesses on Wall Street markets, and again make money for themselves. The government has made mistakes investing in the wrong areas. For instance, they put a lot of funding into real estate, where supply now exceeds demand. In China, the common people don't have money to invest in housing, while the government invested in very luxurious dwellings. But they cannot sell it to anyone. If foreign investment comes in, the investors will boost the real estate market, and also buy government-owned properties.

MM: Who in China would be hurt by PNTR?

Wei: Many workers would end up unemployed. If China joins the WTO, many Chinese businesses will not survive. They will go bankrupt. These businesses cannot compete with Western corporations. This is also an attack on American workers. American workers can't compete with workers who make $300 a year. There's no labor union to protect Chinese workers, and the police can come and arrest them on the spot without any cause at all. One of the most prosperous provinces in southern China, Shenzhen, is just opposite Hong Kong, where there's an economic zone. They lock up the workers inside factories. They have nowhere to go in case of emergency. One factory caught on fire, killing the people inside. Many overseas Chinese wanted to donate money to help their families, but they couldn't even find them.

MM: What will PNTR mean for human rights and the democracy movement in China?

Wei: It will be fatal. Both the human rights groups and the democracy movement will have no lever to push for improvements in human rights in China. The dissidents working inside China and the overseas cooperative dissidents both use the international community's pressure to push for democracy in China. Since China's status now has to be reviewed on a yearly basis, the government has to allow some freedom for the people. If PNTR is granted, and the government does not feel any pressure, they will be able to exercise their power as they see fit. They will arrest people according to their wish. Currently, there are lots of arrests of dissidents and others, but once PNTR is granted you won't be able to hear about it, because no one will be able to tell the outside world what is going on.

MM: U.S. businesses say that they will help democratize China. How do you respond?

Wei: I've heard them say this for a long time, but I haven't seen any action at all. All they care about is competitive advantage and their own profits. I don't expect the business people to push for democracy, but they shouldn't jeopardize the mission of the dissidents who are pushing for democracy there.

MM: Have you been able to meet with President Clinton?

Wei: I met him in 1997. We mainly talked about human rights. I published a book in which I criticized the Chinese government. Clinton said, "You can criticize me the same way you made the criticism in your book." So I did begin to criticize him. Since then, there have been no meetings. He's always busy. I have had some private meetings with administration officials. They are all very sensitive. If they realize that the president doesn't want to meet with me, then they don't want to be openly friendly with me, either.

Alice Kwan is a researcher with the Hong Kong Christian Industrial Committee (HKCIC), where she monitors labor conditions in South China, with a particular focus on the garment and footwear industries. The Hong Kong Christian Industrial Committee has been working for the rights of workers since 1967.

Multinational Monitor: What are working conditions generally like in the manufacturing sector in China?

Alice Kwan: Most of our research focuses on working conditions in the private sector, in the coastal south of China, where access to the industrial zones is easier. There are many factories there which produce for multinational garment and footwear companies, including Nike, Adidas, Disney, JanSport and Wal-Mart.

Since we are not allowed to go inside the factories, we interview workers outside when they are off duty, to see the real picture and in order to gain their trust.

Most workers are forced to work overtime -- 12 to 14 hours a day, seven days a week. According to Chinese labor law, normal working hours should be 40 hours per week. There are also minimum wage laws, but it is difficult for workers to know whether they are paid minimum wage or not, because the wage they are paid includes an overtime bonus and some are paid in piece rates. The management does not provide a clear indication about workers' pay rates. They get paid about US$30 to US$75 per month. It is very common for workers to have no social life, because many workers have only one day off a month, on their pay day.

Occupational health and safety problems are also very serious in China. For example, there are many small-scale factories where the windows and gates are barred or locked. If there is a fire, there is no way to escape. In the Zhili fire six years ago, 87 workers died because the employer -- who makes toys for Chicco -- locked all the gates because they didn't want the workers to leave during working hours.

Most of the time, the workers have to pay their first month of wages to the management as a fee for receiving the job. This is a common practice in many private companies operating in China. The employers use this to reduce the turnover rates, as a way to control the workers. If a worker wants to leave or go home or work elsewhere, they forfeit that money.

There are other penalties for many crazy factory regulations. For example, in most factories workers are also required to attend early morning exercises before they go to work. Otherwise, their wages will be deducted. They also have to queue up in line for the cantina, or they will be fined. They are fined for talking in the workplace and so on. The workers in some factories are only allowed to go to the toilet three times a day, for no more than two minutes. So it is like a prison camp.

In some factories, body searches are practiced because the managers are afraid that the workers will steal materials from the factory. Often the body search is conducted by male guards, and in most of the factories the workers are young women ages 16 to 25. If you're older than 25, it's hard for you to find work in the south.

According to one of the local papers, there are at least 50,000 fingers cut off in industrial accidents every year in China. In some factories, they set the safety standard as losing no more than two fingers a month.

MM: Are these conditions common throughout China?

Kwan: This is what we found in Guangdong province, in the south. More and more factories are being established in cities in the north, for example, in Shanghai. For example, we know that Adidas is establishing a factory in the big industrial zone in Jiangsu.

MM: What is the relationship that multinationals have to these factories?

Kwan: All of the factories are subcontractors. There is no real Nike factory, Disney factory or Reebok factory in China. All of them use the subcontracting system.

Nike, for example, will place an order with the factory in China, which will then produce for them. So it's easy for these companies to shift responsibility to their suppliers.

In South China, especially in the footwear factories, we find that most of the suppliers are Taiwanese-owned companies. For example, there is a company called Yue Yuen. This is a Taiwanese-owned company. They have many plants in China, Indonesia and Vietnam. Nike gives the orders to Yue Yuen, which in turn places the orders to the factory.

The subcontracting system further deteriorates working conditions. For example, if factory A cannot complete an order of 10,000, they might give 4,000 to factory B, where the conditions are worse. We find that it is very hard to track the locations of the factories because the subcontracting system is so complicated. That's why we try to press multinational corporations to disclose information about all of their suppliers.

MM: What do companies like Nike do to ensure that labor rights are respected in their subcontractor factories?

Kwan: In Nike's Code of Conduct, they say they respect the right to organize. In the past few years, Nike has told us that they would like to keep their promise and respect the right to organize in China. But they also say, "It is very sensitive. It is not allowed and we don't want to do anything to violate the law, we can't do anything. We are sorry." So they wash their hands and shift responsibility to the Chinese government.

Nike is very clever. We heard that they also told their Taiwanese partner, Yue Yuen, "No matter, help them to organize." But this is manipulated by the factory management. Mostly, the trade union is composed of the management only and workers have no say in it.

Besides, all of the unions have to affiliate with the All China Federation of Trade Unions (ACFTU). ACFTU is the only union allowed in China. It is controlled by the Communist Party and the government, so the workers have no right to independent organizing.

Most of the Nike workers who we have asked whether or not they have a trade union in their factory don't know. When we ask those that say there is a union what the union does, they say they organize picnics, karaoke singing contests, a monthly birthday party, but they never try to help solve labor disputes or stand with the workers.

MM: What should people in the United States say to Nike about the situation in China?

Kwan: China is a unique case. In Indonesia, for example, there are many independent NGOs [non-governmental organizations] that help to organize the workers.

But in China (outside of Hong Kong) there are no independent NGOs or trade unions. Because most of the workers stay in the factory campus, all of their dormitories, accommodations and food are provided by the management. All of this is deducted from their wages, and it makes it difficult to contact the workers themselves.

What the people in the United States and elsewhere can do is focus on the national law rather than a company's Code of Conduct. We have put too much attention on whether Nike complies with its Code of Conduct. Whether they follow that or not, there is a national labor law that they should be forced to comply with. In many respects, the law is actually very progressive. It says that the workers should be provided with social insurance, the working hours should be no longer than 40 hours a week -- 8 hours a day, 5 days a week. The problem is the lack of implementation. It is therefore important to press Nike to comply with the law.

The most fundamental right that the workers should have is the right of collective bargaining. All of the complaints about working conditions could be resolved through collective bargaining.

The Code of Conduct is really a means of communication between the company and the consumer. They're just trying to please consumers. When we ask the workers in China if they know about the Code of Conduct, most of them say no. Or some of them say yes, they saw a poster on the wall. But they don't know what it means. So we should focus on the other issues -- whether the workers are allowed to organize themselves.

MM: How important is the emerging use of independent auditors of working conditions?

Kwan: How independent they are is the most significant question. They are currently business-oriented and paid by the companies. We think workers should be the monitors, because no one understands the conditions in the factories better than the workers themselves. In these "independent" monitoring mechanisms, however, workers' rights are marketized and workers' involvement is marginalized.

There are also cases where the inspectors get fooled.

In two Disney factories in Macao, most of the workers are migrant workers from mainland China. They have to pay a lot of money to get the job opportunities in Macao, where they are paid more than they would be in China. But the working conditions there are also very poor. In the peak season, they are forced to work overtime or overnight but are paid very low -- by the piece. But in the low season they have no work. So they get no money. In some of these cases the agent will withdraw their passport, so they have to stay there.

At these Disney factories, supervisors trained some workers to respond to questions from the independent monitoring team. When the workers are asked if they have sufficient wages, they answer yes. Do they have to work overtime? No. Are they satisfied with the working conditions? Yes. So the independent monitoring teams are fooled.

We are now demanding that workers be trained and empowered to be the monitors. They should have channels to voice their ideas about the working conditions.

MM: What is your perspective on the sweatshop campaigns in the United States -- are they having an effect?

Kwan: The Hong Kong Christian Industrial Committee is a member of a coalition called Labor Rights in China (LARIC). LARIC is an advisory council to the Workers Rights Consortium (WRC). I was in New York recently at the founding of the WRC.

We support the student movement here and agree with the ideas of WRC, because they don't want to follow the games organized by the multinationals, which is what we see with the Fair Labor Association (FLA). The WRC agrees that workers should be trained to be the monitors, and the workers should have the space and channels to complain to the WRC. The WRC demands full disclosure of suppliers' information.

MM: Why is the FLA not effective?

Kwan: The FLA is mostly dominated by the corporations.

Some of the funding for FLA comes from the corporations. Also, the FLA does not require the companies to disclose information about the suppliers' factories to the public. They can just select the ones they would like to disclose.

Last year after Nike disclosed some factories in China, I went to those factories to investigate and made a comparison to the undisclosed ones. We found differences in working hours, wages and the penalties.

We demanded that Nike disclose all of its factories. They said they disclosed the ones that were producing for the universities, and didn't disclose the others because they are not producing for the universities. But they only disclosed the ones that were producing caps, not the ones producing shirts and other items.

Also the FLA does not include a living wage demand. The WRC does. We are glad to see more and more universities joining the WRC instead of the FLA.

MM: What will be the impacts of China entering the WTO on the workers in these factories?

Kwan: There is not much discussion in China about the WTO. Most workers don't know what the WTO is. The Chinese government gives the impression that all the Chinese people support entering the WTO, but it is not the case. It is the political leaders and business people who support it. The majority have no idea, though they are the most affected ones.

Once the market is further opened up, it will create more migrant workers who are thrown off the land because they can't compete with multinational agribusinesses. Then there will be more privatization of state-owned enterprise, with mass layoffs of workers. Some of them will look to the south for jobs, though many may be too old to enter the private factories in the south. Casualization of work, already underway, is sure to intensify.

People say that more factories will open up and there will be more jobs, but we have to ask whether the numbers of new jobs can cover the unemployed, and what kinds of job opportunities will be provided. Sweatshop positions?

Once the market opens up, more people will migrate to the south, so it will be easier for the factory owners to fire one worker and hire another. For the migrant workers, the situation will likely become worse.

MM: What do you think about U.S. union opposition to China receiving Most Favored Nation status in the United States?

Kwan: We are against any hostile protectionism. If you oppose permanent MFN based on human rights, it is important to think of the next thing you can do. Just saying "no" is not enough. Don't just stop at eliminating sweatshops, but urge the corporations to improve the working conditions and press the Chinese government to let the Chinese workers organize themselves the way that workers all over the world deserve.

Actually, we find that the U.S. workers and the Chinese workers are in the same boat.

All of us suffer from the negative affects of globalization -- high unemployment, low wages, job insecurities, and deteriorating working conditions. And we have the same common enemies -- the multinationals, the World Trade Organization, the World Bank and IMF and our strong but pro-business governments. In both countries, the governments are deaf to the interests of workers. But we share the same issues. So solidarity is an important message.

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