By Cai Chongguo
China joined the World Trade Organisation (WTO) four years ago in December 2001, after preparing and negotiating for membership for 15 years, a process that resulted in major changes in the country.
Over the years, the Chinese government and mainstream economists regarded China's accession to the WTO as a trading policy issue, that they were never able to accurately calculate the impact on people's livelihood. It was regarded as a technical problem, confined to how to open up China's economy to foreign investment. But very few of them considered the high price that society, especially ordinary Chinese citizens, would have to pay for this economic commitment.
The massive propaganda campaign and real "reforms" made in preparation for WTO membership produced a complete change in the collective consciousness of society in China as well as changes in the economic culture and the political and economic elite. The WTO campaign intentionally created a new fantasy to replace the fantasy of Communism, purporting that once China joined the WTO, foreign investment would flood into the country and China's economy would develop rapidly, creating job opportunities for many Chinese. The legal system, economic management and corporate management would improve rapidly and this would accelerate China's industrial and technological modernisation. This fantasy of the central government, however, had a highly detrimental impact at the local level as well as among the leaders of state enterprises. They gave up attempts to strengthen the enforcement of existing laws and regulations and efforts to modernize government administration, economic planning and management, and corporate management, focusing instead on attracting foreign investment. They lost confidence and the patience to improve the operations of state-owned enterprises and collectively-owned enterprises. They even lost interest in their own enterprises. Attracting foreign investment and increasing exports became their singular goal. Joining the WTO would ultimately change China's entire strategy on economic development, i.e. by building it on expanding external trade and increasing foreign investment. As a result, China's economy is heavily dependent on foreign trade, which now accounts for more than 70 percent of China's national income – about 20 percent higher than that of Western countries. China has becomes the "world's factory" for cheap goods, and government offices throughout China have in fact become the China offices of international investors.
The Chinese people, in particular the ordinary workers, are suffering as a result of this reform programme.
The first result of this phenomenon is that the number of unemployed and the poor in the cities has grown dramatically. Government and businesses have laid off large numbers of workers under the programme of "quickening the pace of enterprise reform" to prepare for the entry of China into the WTO. In fact what has happened is that without the supervision of an independent workers' organisation and without an effective employees' committee, many enterprises which were faced with temporary difficulties have been forced to close down or be privatised. At the same time, other companies that are performing well have also cut their workforce, or forced some employees to take early retirement in order to improve competitiveness. Over the past 10 years, millions of workers in China have been laid off or suffered retrenchment. (The latter term applies to employees of state-owned enterprises, who once they are retrenched, lose the job they were assigned under the centrally planned economic system and are forced to accept a gradually diminishing set of social security benefits.) As of the end of 2004, some experts estimate that the number of unemployed living in urban areas in China had reached more than 20 million and that the unemployment rate lies somewhere between 15 and 18 percent. The rate of impoverishment in urban areas has also quickened. According to official statistics, about 24 million people living in urban areas depend on the minimum living allowance for their existence. This is a 10-fold increase in 10 years. However, there are a large number of poor who do not even receive this.
A second development is that more jobs are just temporary positions and working conditions have worsened. For those employed and living in urban areas, few have any kind of job security with the exception of civil servants. The head of the state enterprise or the owner of a private enterprise can fire or lay off workers at any time. Thus, for today's workers, the hours are long, the workload is heavy, and the wages are low. According to a survey done by China's Ministry of Labour and Social Security at the end of 2004, workers in all industries in China work longer hours than the law designates, working on average about 50 hours a week. Separately, a survey done by the Guangdong Provincial branch of the All China Federation of Trade Unions (ACFTU) released at the beginning of 2005, revealed that 76.3 percent of those working in the Pearl River Delta area in urban areas earned less than 1,000 yuan a month. In the past 12 years, monthly wages have risen by just 68 yuan. At the same time, work-related injuries and occupational illnesses had risen rapidly around the country. Every week there is a report of another coal mine explosion or accident.
A third phenomenon of this rapid pace of reform is the breakdown of the social security system and the privatization and commercialization of public services such as education and medical facilities. In order to quicken the pace of reform and before the set up of the new social security system, the government and enterprises have thrown out the existing pension and medical payment plans which were part of the state enterprise system. According to official reports, less than 15 percent of the workforce in China has a pension plan and medical insurance. The privatisation and the commercialisation of the medical system has brought about yearly increases in the cost of medical care. According to one report that was released in May this year, about half the population in China does not go to the doctor when they are ill because they can not afford to. As for education, in the past 10 years, tuition fees and charges have risen 15-fold.
Everyone is aware of the fact that over the past decade the inequalities in society and the wealth gap between different geographic areas in China have worsened; domestic enterprises, especially heavy industry, are near collapse. Strikes, marches, demonstrations and other forms of protest are more frequent. The oppression of the government has become more severe. China's entry into the WTO has put more workers in prison for daring to fight against the injustices in today's society.
19 December 2005