China’s Workers Movement & the End of the Rapid-Growth Era

Mary E. Gallagher

MARY E. GALLAGHER is AssociateProfessor of Political Science atthe University of Michigan, whereshe is also the Director of the Cen-ter for Chinese Studies. Her publi-cations include Contagious Capital-ism: Globalization and the Politics ofLabor in China (2005), From IronRice Bowl to Informalization: Markets,Workers, and the State in a ChangingChina (edited with Sarosh Kuruvillaand Ching Kwan Lee, 2011), andChinese Justice (edited with MargaretWoo, 2011).

China’s export powerhouse, its monopoly onproduction of many vital and common householdgoods, is built on the backs of its rural migrantworkers: residents of rural China who have lefttheir countryside homes to participate in industriallabor and the growing urban service economy.1 Noother reforming socialist economy had such idealconditions for capitalist transformation. In mostother cases, even before the political revolutions of1989, economic reform and transition requiredattacking the socialist core of the economy: thestate and collective sectors and the large portion ofthe workforce employed therein. China’s reformtrajectory has been different. Dynamic new sec-tors, including both domestic private and foreign-invested industry, were created prior to the restruc-turing of the public sectors that had employed thevast majority of the urban workforce. China’seconomy “grew out of the plan,” with the state sec-tor facing restructuring and downsizing only after

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Abstract: China’s rapid economic growth period was predicated on a development model that exploitedthe stark divide between its urban and rural citizens. As the workshop of the world, Chinese factoriestapped the vast surplus labor of the countryside. Rural workers’ expectations were low, but their desire fornew employment opportunities was boundless and their numbers seemed limitless. Three decades later,these conditions have changed: workers’ expectations are higher and their numbers are diminishing as thepopulation ages. Labor disputes and strikes are endemic as the expectations and aspirations of workersoutpace the nation’s slowing growth rate. Compared to the anemic labor movements in the West, China’sworkers are emboldened, though they are still hampered by a repressive political environment and strict con-straints on freedom of association. Conflict is spontaneous and settlement is ad-hoc. Like many authoritar-ian regimes, the Chinese Communist Party has dif½culty committing to the institutionalization of labor con-flict as it heightens the possibility of social empowerment. The state remains in charge, which also means thatlabor-capital conflict almost invariably metastasizes into a confrontation between workers and the state.

China’s economy had found new sourcesof growth.2 But these new sources ofgrowth were predicated on a developmentmodel that exploited the stark dividebetween urban and rural citizens in China.As the workshop of the world, Chinesefactories tapped the vast surplus labor ofthe countryside, those Chinese citizensunincorporated into socialist welfare andlargely emerging out of rural subsistenceagriculture.3 Their expectations were low,but their desire for new employment op -portunities was boundless. For the two de -cades after reform leader Deng Xiaoping’s1992 “southern tour,” this process wouldcontinue, extending geographically andacross sectors. Migrant labor would alsobecome essential to China’s constructionboom and the boom in the urban serviceeconomy, the latter fueled by the growingclass of urban citizens with time and mon -ey to spend on leisure and in their privatelives.

By the close of these two decades of mas -sive rural migration, the Chinese economy–and with it, the entire world of work–had been transformed. In the spring of2010, a group of workers in a Honda sup-plier factory in southern Guangdong Prov -ince went on strike for higher wages, betterconditions, and effective representation.4The strike shut down Honda’s entire Chinaproduction and led to copycat strikes inother factories and across other regions.These events drew domestic and inter -national media attention.5 Some deemed2010 a turning point in the Chinese labormovement, the point when individual-ized, mostly spontaneous, mostly atom-ized action began to crystallize and congealinto a collective movement. Young migrantworkers began to focus on structural andsystemic issues such as wage gaps betweendifferent classes of workers and the lackof effective representation by the All-ChinaFederation of Trade Unions (acftu), theonly legal trade union operating in the

country.6 The China Labour Bulletin (clb)en titled its 2011 report on Chinese laborUnity is Strength, a direct quotation from theslogans of the striking Honda workers, whodespite their relatively young age and dis-parate backgrounds, emphasized growingsolidarity among workers.7

The events of 2010 came on the heels ofthe turbulent passage of China’s LaborCon tract Law in 2007 and its implemen-tation in 2008, right when the impact ofthe global ½nancial crisis was beginningto be felt in China’s export sector.8 In 2008,labor disputes doubled in number, andcourts were inundated with labor cases;by early 2009, in the aftermath of the eco-nomic upheaval taking place in the UnitedStates and other developed economies,nearly thirty million migrant workers werelaid off. The 2010 strikes, while followingthis trend of increased labor conflict, werealso a reflection of improvement in theChinese economy brought on by the gov-ernment’s stimulus package and large in -creases in government investment. Whileworkers in other countries struggled withdeclining living standards, growing un -employment, and political assaults on theright to organize collectively, the Chineselabor movement emerged from the crisiswith increased con½dence and more spaceto make its claims and demands.

The relative vigor of Chinese workers’activism stands in sharp contrast to thestate of labor movements in other transi-tional and developing countries. ThoughChina’s workers are politically constrainedby the party-state’s ban on independentunions, the relative weakness of the acftuin controlling workers and the local state’sfear of the impact of protests on socialstability (coupled with tight labor mar-kets) also translate into signi½cant spacefor spontaneous and loosely organizedworker mobilization. In many recentlydemocratized states, newly powerfulunions are constrained by their new links

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to political competition and political par-ties.9 The political incorporation of laborin new democracies can lead to improve-ments in working conditions and wages,but the process of incorporation can alsomoderate workers’ demands or supersedetheir speci½c demands for broader politicalagendas. Moreover, democratic regimesseem to do a better job at institutionaliz-ing labor grievances.10 China, like otherauthoritarian regimes, has dif½cultycommitting to the institutionalization ofsocial conflict because it heightens thepossibility of social empowerment. Thestate remains in charge, which also meansthat labor-capital conflict almost invari-ably metastasizes into a confrontationbetween workers and the state.

The increased mobilization and activismof Chinese workers, the growing aware-ness of their legal rights, and their soli-di½ed con½dence in pressing for thoserights are all positive trends. They reflectthe winding down of China’s developmentmodel that began with the unleashing ofrural migrant labor twenty years earlier.These trends also reflect the government’ssuccess in transitioning its labor systemfrom the planned economy “iron ricebowl” to a mostly capitalistic labor marketthat rewards high skills and educationbut provides much less in employmentsecurity or bene½ts to those lower downthe labor market ladder. Despite the for-midable political challenge of strippingurban socialist workers of their entitle-ments, the state managed to break its so -cial contract with workers and reframeworkplace rights around individualizedlabor relations structured by a labor con-tract system and a growing body of laborand employment law.

However, the growing activism andener gy of the Chinese labor movementshould be fundamentally worrying to theChinese government. The system that iscurrently in place is an unstable mixture

of half-hearted adoption of “legality”–bottom-up legal mobilization by aggrievedworkers disappointed in the gap betweenlaw on the books and law in action–andreactive party and state intervention andsettlement of labor conflict. While ulti-mately unstable and dysfunctional, thereis a logical connection among these phe-nomena. China’s labor law regime, de -½ned by “high standards, low enforce-ment,” is symptomatic of the state’s am -bivalent embrace of law as an instrumentof governance (an issue explored in greaterdetail in Benjamin Liebman’s essay inthis volume). The gap between law andreality becomes a space utilized by workersfor social mobilization and by the statefor selective enforcement and discre-tionary settlement of labor grievances.Workers’ mobilization functions as a “½realarm” regulatory system in which laborgrievances and activism substitute forstate-initiated enforcement.11

Since 2008, the year of both a more pro -tective Chinese labor law and a global eco -nomic crisis, workers’ mobilization hasoutpaced the legal system’s ability to man-age it. At the point of resolution, powerreturns to the state through a system thatenlarges its discretion and expands its rolein private disputes at the expense of for-mal legal institutions. While weakeninglegal institutions, the system also createsstrong incentives for extreme behavioron the part of disgruntled workers. Oncethe state’s discretionary power becomescentral to resolution, workers direct theirpressure onto the state for a favorable solu -tion. Media attention and public opinionare critical; extreme behavior, includingother-directed and self-inflicted violence,is key.

These factors in the labor realm are amicrocosm of a more general dilemma ofthe Chinese state: how to raise standardsand expectations so as to improve gover-nance and quality of life without losing

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control. The state’s fear of social autono-my, for either labor or capital, requiresthat it stay involved. While a major causeof so cial instability in Chinese society islabor-capital conflict, the manifestationof the conflict continues to place the statefront and center. As social scientist CaiYongshun recently remarked, “With mo -nopoly of power, comes monopoly of re -sponsibility.”12

China’s current system, which relies onboth labor legality and state discretion,has its roots in the 1990s transition froma dominant public sector employmentmodel to a more diversi½ed economy, withthe state sector having shrunk and theprivate sector becoming more importantin terms of employment. The turn tolabor law addressed two separate chal-lenges of the early reform period: 1) howto (gradually) disenfranchise permanenturban workers by eliminating the socialistsystem of employment; and 2) how toprotect and empower new workers in thenew capitalistic sectors then growing in de -velopment zones and coastal cities. Thesenew sectors eventually expanded to in cludenot only foreign-invested enterprises,but also domestic private enterprises andprivatized collective and state ½rms.

China’s trajectory of reform differed infundamental ways from other reformingsocialist and post-socialist states. The criti-cal difference after 1989 was, of course, theabsence of political transition in China.While other post-socialist states addressedpolitical and economic reforms at thesame time, Chinese economic reforms af -ter 1989 proceeded while political reformsstagnated. In addition to this difference,China’s sequencing of reforms allowedan initial period of opening and expandingthe new foreign and private sectors, whileonly gradually instituting dif½cult reformsin the much more politically importantstate and collective sectors.13 Labor law

and legal institutions were at ½rst moreimportant in regulating the non-statesectors, while administrative regulationand policy held sway over the public sec-tors. But over time, as the Chinese marketgrew more integrated and state-owned en -terprise (soe) reform became more press -ing, the institutions of the new non-statesectors were extended into the old sec-tors. From 1998 to 2001, when the publicsectors were restructured and many smalland medium public ½rms privatized, overthirty million public sector workers losttheir jobs. The “iron rice bowl” institu-tions of the previous system were dis-solved. Lifetime employment ended, manysocial bene½ts of employment were re -duced or phased out, and rural migrationincreased, creating new competition atthe lower levels of the labor market. La -bor mobility also increased and bene½tedthose with the skills, education, or con-nections to ½nd better employment.14

While strikes and demonstrationsamong laid-off workers and pensionersdid occur during this period,15 the backlashagainst restructuring was managed bythe state through policies that graduallyincreased the competition with and pres-sure from the non-state sectors while alsoshielding older soe workers from the fullassault of marketization. Many informaland formal policies were developed to“treat old workers the old way, and newworkers the new way.”16 The gradual in -troduction of labor contracts and laborlaw and its application to different types ofworkers at different times lessened re -sistance. The relatively quiescent reactionto economic reform among socialist work-ers in the 1990s was not unique to China,but was apparent in post-socialist re -gimes as well.17 While the explanationsfor labor quiescence vary by country andover time, one factor is the ability of the“legacy union” of the socialist era to re -make itself in the post-socialist period, re -

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taining members and political influence.18

While the Chinese Communist Party(ccp) does not aspire to devolve morepolitical power to the acftu or to allowthe existence of independent unions, theexperiences of other post-socialist regimesindicate that legacy unions can survive po -litical transitions intact. Even “opposition”unions that were part of the movementsthat swept away Communist governmentsin 1989 moved to embrace market re -forms in the 1990s that were unfavorableto workers.19

The 1994 Labor Law, the ½rst labor lawin the history of the People’s Republic ofChina, was passed hurriedly after severalyears of discussion following a spate ofwildcat strikes in development zones inChina’s coastal cities. The law extendedmany of the provisions of labor regulationsthat had originally been crafted to ½t thenew non-state sectors. The foundation ofthe Labor Law is the labor contract sys-tem, which de½nes legal employment inChina as the establishment of a laborrelationship via a written labor contract.20

The signi½cance of this transition tolabor contracts cannot be overemphasized,especially if contrasted to the previoussystem of lifetime employment. However,the repercussions of the labor contract sys-tem were not immediate. Labor contractswere gradually adopted by ½rms in thepublic sector, usually as the ½rm was re -structuring or being privatized. Onlyyounger workers were immediately sub-ject to the strictures of the contract system.

The 1994 Labor Law was a law of aspi-ration. It set out many policy goals thatwere at the time, and in some areas re -main, unreachable. Most important ofthese is the establishment of a system ofsocial insurance that includes ½ve socialinsurance programs: pensions, medicalinsurance, occupational injury, unem-ployment, and maternity. In addition, the

law set up standards for working hours,overtime, holiday pay, and other employeebene½ts. Minimum wage regulations werealso put into effect. The law set up the pro -cedures for labor disputes, which includedvoluntary mediation, compulsory arbitra-tion via the Ministry of Labor’s labor ar -bitration committees, and litigation in Chi -nese courts if either side disagreed withthe arbitration ruling.

The Labor Law had another importantaspiration: to cover the broad spectrumof Chinese “workers” outside of agricul-ture and select services who were previ-ously not covered by law (for example,domestic workers). The Labor Law doesnot distinguish between workers basedon place of residence or urban/rural citi-zenship (hukou), nor does it distinguish by½rm ownership. In this way, the law pro-claimed that its protections should be ex -tended to China’s large and growing pop-ulation of rural migrants who lived andworked in Chinese cities and coastal de -velopment zones though did not enjoy fullpermanent residency in those areas. Theseaspirations, while important, were still farfrom being realized.

The decade spanning 1994 to 2004 wasa period of massive transformation forChinese labor. The non-state sector de -veloped rapidly while the state sectorshrank. Employment in state and collec-tive sectors fell by ½fty-nine millionbetween 1996 and 2002, the height of thesoe restructuring period.21 China’s ac -cession to the World Trade Organizationin 2001 further solidi½ed its burgeoningrole as the workshop of the world. Ex -ports as a proportion of gdp grew from 21percent in 1994 to 34 percent by 2004.22

For China’s workers, this period was alsotransformative: the framework of the 1994Labor Law began to structure the aspira-tions of the rising new working classes inChina’s export zones, while also givingform to the post-socialist employment

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world of urban workers when soes be -gan to restructure and privatize aggres-sively in the late 1990s and early 2000s.However, it is also important to recognizethat segmentation between the urban andrural working classes (one migratory andthe other not) insulated the two groupsfrom direct competition and conflict.

By 2002, state and collective employ-ment in China had declined by 42.5 percentfrom its mid-1990s numbers. Rural to ur -ban migration increased rapidly, fromnearly twenty-two million migrants toseventy-nine million by 2000. By the endof that decade, the rural migrant popula-tion had grown to over 220 million peo-ple.23 Wages also began to rise sig -ni½cantly for rural migrants after a longperiod of relatively slow increases. China’sentry into the World Trade Organizationin 2001 had a signi½cant positive influ-ence on investment, exports, and generalgrowth. These trends were reflected in ris-ing incomes among workers and the ½rstsustained evidence for labor shortages incoastal regions’ manufacturing sectors.

In addition to these positive trends,how ever, there were many problems withworkplace conditions, with labor law im -plementation and enforcement, and inthe rapid decline in employment securityfor urban workers following the restruc-turing of the soe sector. While wagesincreased, abysmal workplace conditionsand excessive overtime were typical inmany export sectors, such as apparel, toys,electronics, and household items. Work-place accidents and occupational diseasewere prevalent. Rising wages coexistedwith rampant wage arrears, especially inthe construction sector. Stark gaps in so -cial insurance coverage for migrant work -ers also meant that most workers did nothave any safety net if illness or diseaseinterrupted their ability to work. Finally,as the non-state sector developed, manyemployers disregarded the laws, failing

to sign labor contracts with employees.An increasing proportion of the urbanworkforce was employed informally,without the protection of labor contractsand without participation in social insur-ance. In 2005, 35 percent of urban workerswere employed informally, while 90 per-cent of migrant workers worked withouta labor contract.24 In addition to theexpansion of the informal labor market,labor subcontracting also became a com-mon way for employers to hire workersshort term, with less pay and social insur-ance than regular employees. By 2012, theacftu estimated that sixty million work -ers in China were employed via labor sub -contracting agencies.25

Combined with a more general concernabout rising inequality–between urbanand rural residents, within urban areas,and among regions–the Chinese statebegan to adopt policies that sought toreverse these negative trends, build moreinclusive and protective social welfareinstitutions, and bridge the gap betweenurban and rural workers. Many new lawsoffered greater employment protections,including the Labor Contract Law of 2008,which restricted use of short-term con-tracts, clari½ed the punitive clauses forviolations, and extended economic com-pensation for terminated workers;26 andthe Labor Dispute Mediation and Arbi-tration Law of 2008, which simpli½edsome of the procedures for labor disputesettlement, extended the statute of limi-tations for labor violations, and reducedfees. In 2003, Premier Wen Jiabao person-ally initiated a campaign to combat wagearrears among migrant workers, and thegovernment signaled its intention to sup-port migrant workers’ grievances by of -½cially recognizing migrants as membersof the working class.27 This increase ingovernment support was seen in laws,campaigns, and extended and more sym-pathetic media coverage of labor issues.28

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In 2004, China’s labor legislation movedfrom increasing labor flexibility and reduc -ing worker protections to increasingemployment security and increasing pro-tections. This shift was motivated by a fearof rising social instability that came notonly from concrete problems, such as wagearrears, but also from a new sense of con -½dence and rising expectations amongChina’s workers, especially rural migrantswho ½nally began to bene½t from laborshortages in manufacturing. Rising expec -tations and increased con½dence in claimsagainst employers can be seen in the con-tinued increase in labor disputes, whichhave risen steadily since the 1990s and in -creased even more dramatically after the2008 Labor Contract Law went into effect(see Figure 1). It can also be seen in strikeactivity since 2011 (see Figure 2). Whilestrike data is not systematically available,clb ½gures show that in 2011, an averageof sixteen strikes per month occurred. Thatnumber in creased to thirty-two strikes permonth in 2012. In the ½rst four months of2013, clb reports ½fty strikes per month onaverage.

In the context of weak local enforcementof laws, the government has built a systemthat uses mass mobilization from belowand direct state management from abovein an attempt to regulate and control localof½cials and ½rms, both powerful newactors. This combination of mass mobi-lization and state power is a substitute forother types of reform that are too danger-ous politically, such as liberalization of therestrictions on freedom of association, orgreater freedom and political space for civilsociety actors (like labor ngos). The Chi -nese state is not interested in delegatingpow er to other groups or social actors;however, it has encouraged the mobiliza-tion of (mostly) individualized workers inits bid to improve compliance with laborlaws and reduce labor conflict. As work-ers’ solidarity and capacity for collective

action have increased, the state has strug-gled to maintain its labor system throughmore direct management of social disputesand less reliance on formal legal institu-tions.29

From the 1994 Labor Law to the moreprotective 2008 Labor Contract Law,China’s embrace of labor legality was aninstrumental move with multiple goals.Despite the dif½culty in implementingthe 1994 standards, the government movedto raise standards even further in 2008,solidifying the “high standards, lowenforcement” model of Chinese labor law.According to an Organisation for Eco-nomic Co-operation and Development(oecd) report on employment protection,China in 2008 ranked second in employ-ment protection across ten major devel-oping economies (only Indonesia rankedhigher) and exceeded the oecd averagesubstantially.30 In protection against col-lective and individual dismissal, China out -ranked all other countries in the oecdreport, which includes all members of theoecd and several major developingeconomies, including Brazil, Russia, India,and South Africa. In terms of labor pro-tection, few countries have moved as ag -gressively as China in recent years.

The labor legislation of the last two de -cades not only developed high, aspirationalstandards for Chinese workplaces, butalso put into place a new system for theresolution of labor disputes that movedfrom more informal voluntary mediation,to arbitration via the local labor bureau,and ½nally to litigation via the civilcourts. While the previous system tendedto internalize the dispute within the en -terprise and the soe system, the new sys-tem empowered workers and invited thestate into the private dispute as a third-party actor.

In creating this system of labor disputeresolution, the Chinese state provided an

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Figure 1Number of Strikes in China, February 2011–April 2013

Source: China Labour Bulletin, 2013, http://www.clb.org.hk/en/.

Figure 2Total Labor Disputes Handled in China, 2001–2012

Source: Department of Population and Employment Statistics of the State Statistics Bureau and the Departmentof Planning and Finance Ministry of Human Resources and Social Security, China Labor Statistical Yearbook 2012(Beijing: China Statistics Press, 2012); see also labor statistical yearbooks of past years; and China Labour Net,2012 Statistical Analysis of the National Labor Dispute Resolution Situation [2012 niandu quanguo laodongrenshizhengyichuliqingkuang tongjishujufenxi], http://www.labournet.com.cn/ldzh/ckzl/t24.htm.

opportunity for non-state actors to play arole in the private enforcement of laborlaw. While the state developed both“police patrols” and “½re alarm” mecha-nisms for labor regulation,31 the ½re-alarm mechanisms have been far moreimportant in practice (just as RobertWeller, in his essay for this issue, ½nds tobe the case for the state’s handling of reli-gious dissent). Political scientists MathewMcCubbins and Thomas Schwartz de½nepolice patrol oversight mechanisms as“centralized, direct, and active.” They in -volve direct government surveillance of½rms to detect violations of labor lawcompliance–the threat of which helpsreduce such violations. Fire-alarm mech-anisms, on the other hand, are less cen-tralized, active, and direct. They involvethe creation of channels and mechanismsto mobilize individual and group actorsin society to alert the government of vio-lations by seeking redress of their speci½cgrievances. In China’s regulatory frame-work for labor, even inspections by gov-ernment agencies and the trade union areoften the result of worker complaints.While partly a consequence of weak localgovernment capacity to manage central-ized and direct regulation, there are alsoimportant reasons for governments toprefer such methods. First, ½re-alarm over -sight is particularistic. It tends to mobilizesocial actors with more ef½cacy, better re -sources, or more motivation for resolu-tion. Second, it is more effective in expos-ing egregious violators than a police patrolsystem, which is less targeted and moresweeping. For a large, fragmented author -itarian system, these characteristics areespecially important.

This mode of popular mobilizationshould be seen as part of a continuum ofChinese Communist policy-making thatactivates individuals (“the masses”) whilemaintaining strict control of collective ac -tion and organization outside the ccp.

China’s reliance on individualized legalmobilization ful½lls the state’s goal tomitigate some of the ill effects of the re -form era on employment security andworking conditions. Informal and formalbarriers to collective mobilization remain,enhancing the regime’s stability and re -ducing the likelihood of a political chal-lenge from aggrieved workers. As Ben-jamin Liebman points out, the state’s em -phasis on populist legality has connectionsto China’s revolutionary past.32 Whilemass mobilization of the Maoist era is nolonger possible or desirable, individual-ized legal mobilization does play a criticalrole in bottom-up implementation of lawsand regulations. As political scientistsElizabeth Perry and Sebastian Heilmannar gue, mass mobilization has been muchreduced in the reform era, but the ccpretains many of its governing practicesfrom that era.33 While the legalistic as -pect of workers’ mobilization is new anda product of the reform era’s emphasis onlaw, the campaign of “legal dissemination”and the unleashing of populist grievancesagainst powerful actors like ½rms and localgovernments do have precedents in theMaoist period.34 This type of mobilizationmay be effective in increasing the law’sresponsiveness while limiting politicalchallenges from organized interests. More -over, in the resolution stage, the state hasbeen careful to retain a signi½cant degreeof discretion and flexibility. This has par-ticularly been the case since 2008, whenthe dual force of the Labor Contract Lawand the global ½nancial crisis hit Chi neselabor relations.

In the period after the passage of the1994 Labor Law, labor dispute resolutionmoved toward greater formalization andadversarial settlement in the courtsthrough channels ranging from more in -formal mediation to court litigation. Ar -bitration, the middle stage, is compulsory

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before litigation. Mediation is, by centrallaw, voluntary but encouraged. Litigationis possible whenever one side of an arbi-tration suit does not agree with the arbi-trated judgment.35 This system was ½rstput into place in 1993, and initially thenumber of people using it was very low.But as China’s labor legislation becamemore complex and comprehensive, labordisputes through these channels increased.Campaigns to increase labor law knowl-edge and general legal awareness and toexpand legal aid opportunities have alsocontributed to widened use of these insti-tutions. It is perhaps not completely sur-prising, then, that with the passage of the2008 Labor Contract Law and the 2008Labor Dispute Mediation and ArbitrationLaw, the number of labor disputes dou-bled in a single year. Civil courts were inun-dated with labor cases and local govern-ments scrambled to keep pace.

Even before the burst of disputes afterthe 2008 Labor Contract Law, the Chinesegovernment under General Secretary HuJintao and Premier Wen Jiabao began toshow signs of ambivalence toward theadversarial, legalistic resolution of labordisputes.36 With the immense increase inlabor conflict after 2008 and the increas-ing propensity for migrant workers tomobilize collectively, the government pur-sued a dramatic increase in the number ofdisputes to be settled via informal settle-ment, often through mediation.37 The gov -ernment’s strategy was designed to re ducepressures on the courts and labor arbitra-tion committees, as well as to dampendown labor conflict during a period ofglob al economic instability.

While individual disputes were increas-ingly processed through mediation at var-ious levels, the government took a moreinterventionist stance to handle collectivedisputes, which were far more problematicfor local stability and were potentiallythreatening to the promotion chances of

local cadres. This hands-on approach tolabor conflict resolution involved intra -government coordination to manage thetwo sides, encourage compromise, threat -en extremists or leaders with repression,and buy off disputants whenever possiblein the hopes of an early, peaceful resolu-tion. Sociologist Yang Su and legal scholarXin He label this “street as courtroom”: amode of government and judicial settle-ment of the dispute that prioritizes quicksettlement and can often lead to compen-sation and resolution in favor of workers.38

For both individual disputants and largecollective disputes, the state since 2008has moved to intervene more directly tomake up for the weak legal system’s in -ability to enforce judgments, and for thelengthy time needed to resolve disputesvia the multi-tiered process. Mediatedcases now outnumber disputes goingthrough formal arbitration and litigation,covering 58 percent of all disputes in2012. Mediation is also decentralized andcan be practiced at a number of differentinstitutional levels and units. For the large-scale strikes and demonstrations that haverocked Chinese development zones overthe past few years, the state’s central rolehas been even more apparent. “Stabilitycommittees” have stepped into the fray,shifting the dispute between workers andemployers by putting the state front andcenter as the target of workers’ hopes anddemands.

The move to informal settlement andstate-directed settlement may be prob-lematic for the rule of law and the fledg-ling legal system since more and more dis -putes now bypass the recently created for-mal system in favor of direct managementby state of½cials. The formal and informalrestrictions on collective organizationoutside the of½cial trade union, and thesporadic repression of civil society actors–including labor ngos, legal aid centers,and law ½rms–prevent workers’ individual

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and spontaneous collective action fromgelling into anything long-term, program-matic, or institutional.39 As Ching KwanLee, in her essay for this issue, shows ofcontemporary Chinese protest in general,activists respond to the state’s involve-ment with repertoires that emphasize mo -rality and use extreme behavior to bet tertheir chances of an advantageous settle-ment. Violence, other-directed and self-inflicted, and other forms of extreme be -havior are critical both for heighteningpressure on the state to respond and forattracting media attention that will in -crease social support and sway public opin -ion.40 With the state’s overarching desireto maintain social stability, the potentialfor instability becomes critical to the mo -bilization and resolution process. Chinalooks unstable from the outside becauseinstability is built into the system.

Some observers of the current labor sit-uation in China see a vicious circle of stateintervention and worker reaction.41 Giventhe government’s reluctance to create in -stitutions to manage the rising collectivedemands and expectations of workersthat are increasingly not bound by the legalminimums of the labor laws, China maybe caught in an instability trap.42 Reformsto the of½cial trade union, the acftu,have also failed to solve these problems.43

During strikes and protests, the tradeunion is either marginalized or ridiculed.In the case of the 2010 Honda strikes, thelocal district trade union not only failedto assist workers to negotiate collectively,but union cadres took pictures of strikingworkers and got into a scuffle with of -fended workers. The dilemma of collectiverepresentation has not been solved.

China’s labor dilemma in part reflectsthe broader global trend of labor’s decline.Weakened labor movements and declin-ing union density are not only common-place in the developed world, but can also

be seen in many post-socialist and devel-oping economies. The acftu’s limited rolereflects the weakening of collective laborpower against the state and against em -ployers who are united in their desire tominimize the bargaining power of workers.But unlike its counterparts in many othercountries, the acftu enjoys a monopolyon representation and an im portant, albeitsubordinate, role in the Chi nese state’shandling of labor issues. After declining inthe 1990s, its membership has grown whileunion density has de clined globally. Whilethe acftu remains mostly ineffective atthe workplace, its pursuit of enhanced leg -islative protection of workers has con-tributed to the empowerment of workers,serving as a symbol of the state’s legit-imization of workers’ mo bilization.

The institutionalization of labor conflictand its inherent risks to authoritarian re -gimes pose a second dilemma for China.As political scientists Graeme Robertsonand Emmanuel Teitelbaum have found,democratic regimes often do better ininsulating labor conflict via institutionalchannels.44 Other researchers have foundthat democratization tames labor by en -veloping unions and activists into partypolitics and their crosscutting cleavages.Authoritarian regimes, fearful of the po -tential externalities of autonomous la -bor, seem to prefer ad hoc and reactive re -sponses to spontaneous forms of workeraction, such as wildcat strikes, traf½c block -ades, and episodic violence. Like an oldgeneral in a new war, the ccp ½ghts thespecter of the Polish example: Solidarity,repressed in 1981, but politically victoriousin 1989. While post-revolutionary Solidari-ty proceeded to pursue market reforms andun dermine the power of labor, the politi-cal lesson of 1989 remains critical.45 Thisis particularly the case for the ccp, whichmanaged to do what others could not: thatis, adopt liberalizing reforms and maintainpolitical power.

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The true test of the state’s ability tomanage discontent directly, with limitedreliance on institutionalization and no tol-erance for autonomous organization, willbe in the next period of Chinese develop-ment. As the new Chinese leadership hasalready acknowledged, growth in the nextperiod will be slower while the govern-ment attempts to deal with the hangoversymptoms of rapid growth: inequality;air, land, and water pollution; and thepublic’s lack of con½dence in the regula-tory system. With slower growth and po -tential important reforms to speed up ur -banization, management of labor conflict

will be more complex. Migrant workersshould bene½t from reforms that allowthem to reside legally and permanently incities. These reforms, however, could alsoreduce segmentation in Chinese labormar kets, intensifying competition be -tween migrants and protected urban work-ers and reducing employment discrimi-nation of rural migrants. In the next periodof China’s development, we will continueto see conflict between aggrieved workersand an activist state, but we are also likelyto see new types of conflict between differ-ent classes of workers, ½ghting for a pieceof a smaller pie.

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endnotes1 For in-depth analysis of rural migrants and the hukou system, see Fei-ling Wang, Organizing

through Division and Exclusion: China’s Hukou System (Stanford, Calif.: Stanford UniversityPress, 2005); Dorothy Solinger, Contesting Citizenship in Urban China: Peasant Migrants, theState, and the Logic of the Market (Berkeley: University of California Press, 1999); K. W. Chan andL. Zhang, “The Hukou System and Rural-Urban Migration in China: Processes and Changes,”The China Quarterly 160 (1999): 818–855; K. W. Chan and W. Buckingham, “Is China Abol-ishing the Hukou System?” The China Quarterly 195 (2008): 582–605; and Wenfang Tang andQing Yang, “The Chinese Urban Caste System in Transition,” The China Quarterly 196 (2008):759–779.

2 Barry Naughton, Growing Out of the Plan: Chinese Economic Reform, 1978–1993 (Cambridge:Cambridge University Press, 1996).

3 Ching Kwan Lee, “From Organized Dependence to Disorganized Despotism: Changing LabourRegimes in Chinese Factories,” The China Quarterly 157 (1999): 44–71; Ching Kwan Lee,Against the Law: Labor Protests in China’s Rustbelt and Sunbelt (Berkeley: University of CaliforniaPress, 2007); and Anita Chan, China’s Workers Under Assault: The Exploitation of Labor in aGlobalizing Economy (Armonk, N.Y.: M.E. Sharpe, 2001).

4 Chris King-chi Chan and Elaine Sio-ieng Hui, “The Dynamics and Dilemma of WorkplaceTrade Union Reform in China: The Case of the Honda Workers’ Strike,” The Journal ofIndustrial Relations 54 (2012): 653–668; and Keith Bradsher, “A Labor Movement Stirs inChina,” The New York Times, June 10, 2010.

5 David Barboza and Keith Bradsher, “In China, Labor Movement Enabled by Technology,”The New York Times, June 16, 2010; and Andrew Batson and Norihiko Shirouzu, “ChineseWorkers Win Wave of Raises,” The Wall Street Journal, June 7, 2010.

6 Chan and Hui, “The Dynamics and Dilemma of Workplace Trade Union Reform in China”;Chris King-chi Chan, “Class or Citizenship? Debating Workplace Conflict in China,” TheJournal of Contemporary Asia 42 (2012): 308–327; and Florian Butollo and Tobias Brink,“Challenging the Atomization of Discontent: Patterns of Migrant-Worker Protest in ChinaDuring the Series of Strikes in 2010,” Critical Asian Studies 44 (2012): 419–440.

7 China Labour Bulletin, Unity is Strength: The Workers Movement in China, 2009–2011 (October2011), http://www.clb.org.hk/en/½les/share/File/research_reports/unity_is_strength_web.pdf.

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8 Mary Gallagher and Baohua Dong, “Legislating Harmony: Labor Law Reform in Contem-porary China,” in From Iron Rice Bowl to Informalization: Markets, Workers, and the State in aChanging China, ed. Sarosh Kuruvilla, Ching Kwan Lee, and Mary Gallagher (New York: CornellUniversity Press, 2011); and Mary E. Gallagher, “Changes in the World’s Workshop: TheDemographic, Social, and Political Factors Behind China’s Labor Movement,” in Dragon vs.Eagle: The Chinese Economy and U.S.-China Relations, ed. Wei-Chiao Chung and Huizhong Zhou(Kalamazoo, Mich.: W.E. Upjohn Institute for Employment Research, 2012).

9 Emmanuel Teitelbaum, “Mobilizing Restraint: Economic Reform and the Politics of IndustrialProtest in South Asia,” World Politics 62 (2010): 676–713.

10 Graeme Robertson and Emmanuel Teitelbaum, “Foreign Direct Investment, Regime Type,and Labor Protest in Developing Countries,” American Journal of Political Science 55 (2011):665–677.

11 Mathew D. McCubbins and Thomas Schwartz, “Congressional Oversight Overlooked: PolicePatrols versus Fire Alarms,” American Journal of Political Science 28 (1984): 165–179.

12 From Cai Yongshun’s comments at the Conference on Chinese Society and Public Safety,East China University of Political Science and Law, School of Public Administration, May2013.

13 Mary E. Gallagher, Contagious Capitalism: Globalization and the Politics of Labor in China,(Princeton, N.J.: Princeton University Press, 2005).

14 Xin Meng, “Labor Market Outcomes and Reforms in China,” Journal of Economic Perspectives26 (4) (2012): 75–102; and Fang Cai, Albert Park, and Yaohui Zhao, “The Chinese LaborMarket in the Reform Era,” in China’s Great Economic Transformation, ed. Loren Brandt andThomas Rawski (Cambridge and New York: Cambridge University Press, 2008).

15 William Hurst and Kevin J. O’Brien, “China’s Contentious Pensioners,” The China Quarterly170 (2002); and William Hurst, The Chinese Worker after Socialism (Cambridge and NewYork: Cambridge University Press, 2009).

16 Mary E. Gallagher, “China’s Older Workers: Between Law and Policy, Between Laid-Off andUnemployed,” in Laid-Off Workers in a Workers’ State: Unemployment with Chinese Characteristics,ed. Tom Gold, William Hurst, Jaeyoun Won, and Qiang Li (New York: Palgrave McMillan,2009).

17 Stephen Crowley, “Barriers to Collective Action: Steelworkers and Mutual Dependence inthe Former Soviet Union,” World Politics 46 (1994): 589–615; Paul Kubicek, “Organized Laborin Postcommunist States: Will the Western Sun Set on It, Too?” Comparative Politics 32(1999): 83–102; and David Ost, “The End of Postcommunism: Trade Unions in East Eu -rope’s Future,” East European Politics and Societies 23 (2009): 13–33.

18 Teri Caraway, Maria Cook, and Stephen Crowley, eds. Working through the Past: Labor andAuthoritarian Legacies in Comparative Perspective (Ithaca, N.Y.: Cornell University Press, forth-coming); Paul Kubicek, Organized Labor in Postcommunist States (Pittsburgh, Pa.: University ofPittsburgh Press, 2004); and Teri Caraway, “Pathways of Dominance and Displacement: TheVarying Fates of Legacy Unions in New Democracies,” World Politics 64 (2012): 278–305.

19 David Ost, “The Weakness of Strong Social Movements: Models of Unionism in the EastEuropean Context,” European Journal of Industrial Relations 8 (1) (2002): 33–51.

20Gordon White, “The Politics of Economic Reform in Chinese Industry: The Introduction ofthe Labour Contract System,” The China Quarterly 111 (1987): 365–389.

21 Ajit K. Ghose, “Employment in China: Recent Trends and Future Challenges,” EmploymentStrategy Working Paper (International Labor Organization, October 2005).

22 Mary E. Gallagher, John Giles, Albert Park, and Meiyan Wang, “China’s 2008 Labor ContractLaw: Implementation and Consequences for Chinese Workers,” Human Relations (February27, 2014).

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23 Zai Liang, “Recent Migration Trends in China: Geographic and Demographic Aspects andDevelopment Implications,” prepared for presentation at UN Expert Group on New Trendsin Migration: Demographic Aspects, December 3, 2012.

24 Gallagher et al., “China’s 2008 Labor Contract Law.”25 Biqiang Wang, “Building a Fence: Labor Subcontracting,” Caijing, May 21, 2012.26 The Labor Contract Law was revised in 2012 to restrict the expansion of labor subcontracting,

which had expanded after 2008 in response to the law’s tighter restrictions on short-termcontracts.

27 Tim Pringle, Trade Unions in China: The Challenge of Labour Unrest (Abingdon, U.K., and NewYork: Routledge, 2011).

28 Daniela Stockmann and Mary Gallagher, “Remote Control: How the Media Sustains Authori-tarian Rule in China,” Comparative Political Studies 44 (4) (2011).

29 Yang Su and Xin He, “Street as Courtroom: State Accommodation of Labor Protest in SouthChina,” Law & Society Review 44 (1) (2010): 157–184; Feng Chen and Xin Xu, “‘Active Judici-ary’: Judicial Dismantling of Workers’ Collective Action in China,” The China Journal 67(2012): 87–107; and Jieren Hu, “Grand Mediation in China,” Asian Survey 51 (2011): 1065–1089.

30 Danielle Venn, “Legislation, Collective Bargaining and Enforcement: Updating the oecdEmployment Protection Indicators,” oecd Social, Employment and Migration WorkingPapers, No. 89 (oecd Publishing, 2009), www.oecd.org/els/workingpapers.

31 McCubbins and Schwartz, “Congressional Oversight Overlooked.”32 Benjamin Liebman, “A Return to Populist Legality? Historical Legacies and Legal Reform,”

in Mao’s Invisible Hand, ed. Sebastian Heilmann and Elizabeth Perry (Cambridge, Mass.:Harvard University Press, 2011).

33 Heilmann and Perry, eds., Mao’s Invisible Hand.34 Elizabeth J. Perry, “‘Sixty is the New Forty’ (Or is It?): Reflections on the Health of the Chinese

Body Politic,” in The People’s Republic of China at 60: An International Assessment, ed. WilliamC. Kirby (Cambridge, Mass.: Harvard University Press, 2011).

35 Virginia Harper-Ho, Labor Dispute Resolution in China: Implications for Labor Rights and LegalReform (Berkeley: University of California Press, 2003).

36 Hualing Fu and Richard Cullen, “From Mediatory to Adjudicatory Justice: The Limits ofCivil Justice Reform in China,” in Chinese Justice, ed. Margaret Woo and Mary Gallagher(Cambridge and New York: Cambridge University Press, 2011).

37 Mary E. Gallagher, “Mobilizing the Law in China: ‘Informed Disenchantment’ and theDevelopment of Legal Consciousness,” Law and Society Review 40 (2006): 783–816; Gallagher,“Changes in the World’s Workshop”; and Carl Minzner, “China’s Turn Against Law,” Ameri-can Journal of Comparative Law 59 (2011).

38 Su and He, “Street as Courtroom”; and Chen and Xu, “‘Active Judiciary.’”39 Butollo and Brink, “Challenging the Atomization of Discontent”; Joseph Y.S. Cheng, Kinglun

Ngok, and Wenjia Zhuang, “The Survival and Development Space for China’s Labor ngos:Informal Politics and Its Uncertainty,” Asian Survey 50 (6) (2010): 1082–1106.

40 Pun Ngai and Huilin Lu, “A Culture of Violence: The Labor Subcontracting System and Col-lective Action by Construction Workers in Post-Socialist China,” The China Journal 64 (2010):144–158.

41 Baohua Dong, “Discussion on the Legislative Mindset Regarding Labor Subcontracting,”paper prepared for Prospects for the Implementation of the Revisions of the Labor ContractLaw Conference, Shanghai University of Finance and Economics, April 28, 2013.

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42 Benjamin Liebman, “China’s Law and Stability Paradox,” paper prepared for the conferenceChina’s Challenges: The Road Ahead, Center for the Study of Contemporary China, Uni-versity of Pennsylvania, April 25–26, 2013.

43 Chan and Hui, “The Dynamics and Dilemma of Workplace Trade Union Reform in China.”44 Robertson and Teitelbaum, “Foreign Direct Investment, Regime Type, and Labor Protest in

Developing Countries.”45 David Shambaugh, China’s Communist Party: Atrophy and Adaptation (Berkeley: University of

California Press, 2008).