Labor advances...

...in China?

SHANGHAI, Oct. 12 — 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.

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.

Brad Plumer wonders if China is sincere. I think that is the wrong question to ask. Of course China is sincere. That's one nice thing about authoritarian regimes, they're not sucking up to voters for election day.

Now, lets just make it clear that I'm no fan of the CCP. At all. However, in this case, the important thing to remember is that the interests of the CCP and that of the multinational companies are by no means aligned. It's certainly not the same way in the US where business friendly policies lead pretty much consistently to however many cents on the dollar of campaign contribution.

Whereas the ruling parties of America seek to maintain political survival through the electoral process, there is only one ruling party in China and it rules through maintaining stability. Guess what's really, really really bad for stability? The kind of inequality and horrible work conditions you see now in China. People will put up with really really shitty conditions, but only if they have the sense that their lives are getting incrementally better.

Also, you might consider this as a price adjustment on labor by the Chinese government -- Chinese labor has been such a good deal for foreign companies that maybe it's time to raise the price so that more of the profits stay in China. Multinationals may huff and puff, but they can't threaten China unless they unite as a block and threaten to pull their investments all at once, something I just don't see happening. I predict unions are going to have more power at foreign run companies while native Chinese companies are going to be able to get away with more abuses for longer.

So the burning question is, are the foreign multinational going to pull up stakes from China and seek the next pool of cheap labor? Remember that China is experimenting with labor with a cold, technocratic eye. They won't kill the goose that lays the golden egg. It's like adjusting the price upwards on any good -- you'll lose some sales, but you might make more profit despite of that.

Plumer wonders: "Maybe Zimbabwe can provide the next generation of Nike sweatshops." Indeed.Those who decide that China has become too expensive for their business might want to consider Africa, where sweatshops and exploitation would be a blessing.