SHANGHAI - China is planning to adopt a new law that seeks to crack down
on sweatshops and protect workers' rights by giving labor unions real power for
the first time since it introduced market forces in the 1980's.
Liu Cheng, a professor who is advising the government, says the new law will
hold companies accountable.
The move, which underscores the government¡¯s growing concern about the
widening income gap and threats of social unrest, is setting off a battle with
American and other foreign corporations that have lobbied against it by hinting
that they may build fewer factories here.
The proposed rules are being considered after the Chinese Communist Party
endorsed a new doctrine that will put greater emphasis on tackling the severe
side effects of the country¡¯s remarkable growth.
Whether the foreign corporations will follow through on their warnings is
unclear because of the many advantages of being in China - even with
restrictions and higher costs that may stem from the new law. It could go into
effect as early as next May.
It would apply to all companies in China, but its emphasis is on
foreign-owned companies and the suppliers to those companies.
The conflict with the foreign corporations is significant partly because it
comes at a time when labor, energy and land costs are rising in this country,
all indications that doing business in China is likely to get much more
expensive in the coming years.
But it is not clear how effectively such a new labor law would be carried out
through this vast land because local officials have tended to ignore directives
from the central government or seek ways around them.
China's economy has become one of the most robust in the world since the
emphasis on free markets in the 80's encouraged millions of young workers to
labor for low wages at companies that made cheap exports. As a result, foreign
investment has poured into China.
Some of the world's big companies have expressed concern that the new rules
would revive some aspects of socialism and borrow too heavily from labor laws in
union-friendly countries like France and Germany.
The Chinese government proposal, for example, would make it more difficult to
lay off workers, a condition that some companies contend would be so onerous
that they might slow their investments in China.
"This is really two steps backward after three steps forward," said Kenneth
Tung, Asia-Pacific director of legal affairs at the Goodyear Tire and Rubber
Company in Hong Kong and a legal adviser to the American Chamber of Commerce
The proposed law is being debated after Wal-Mart Stores, the world¡¯s biggest
retailer, was forced to accept unions in its Chinese outlets.
State-controlled unions here have not wielded much power in the past, but
after years of reports of worker abuse, the government seems determined to give
its union new powers to negotiate worker contracts, safety protection and
workplace ground rules.
Hoping to head off some of the rules, representatives of some American
companies are waging an intense lobbying campaign to persuade the Chinese
government to revise or abandon the proposed law.
The skirmish has pitted the American Chamber of Commerce - which
represents corporations including Dell, Ford, General Electric, Microsoft and
Nike - against labor activists and the All-China Federation of Trade
Unions, the Communist Party¡¯s official union organization.