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The Dispossession of Migrants Factory Workers in Contemporary China

Justin Tang

5640478

December 6, 2010

Gphy 365 Term Paper

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China has endured a transformation of incredible proportions since reforms

permitted by Chairman Deng-Xiaoping opened up the Chinese economy in 1979. Since

then, China has becoming one of the fastest transforming economies and one of the world

leaders in manufacturing and exports in the world with an annual growth rate of 9.5%

between 1978 and 2004 (Dunn, 2007). Great change, however, has come at a human cost

for many individuals living in China. Declines in social welfare and the ending of “iron

rice bowl” policies coupled with high levels of rural-urban migration have led to

consequences for the Chinese working class. I will argue that the emergence of neoliberal

policies has stripped social support from a growing lower class population—populations

that are most in need. The processes and outcomes of heavy rural-urban migration will be

linked to this lack of social support. I will frame this issue through David Harvey’s

theory of accumulation by dispossession.

Harvey defines accumulation by dispossession as a practice carried out that

proliferated the rise of capitalism, such as commodification and privatization of land,

expulsion of peasants from such lands, the commoditization of labour power, and

suppression of former methods of indigenous production and consumption. Privatization,

financialization, crisis manipulation, and state redistributions are four key facets

identified as elements of accumulation by dispossession. Privatization entails the opening

up of markets that were previously closed to profit making. This includes the

privatization of aspects of social welfare such as social housing, education, health care,

public institutions, and utilities. State redistributions suggest the lack of state interest in
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redistributing wealth from the upper to lower classes. Harvey argues that this is done

through a joint process of privatization and cutbacks of state expenditures.

Redistributions are also afforded through tax revisions that benefit investors and not

individual incomes and wages (Harvey, 2006). Harvey’s arguments form the theoretical

basis for this essay as I examine China’s development and the dispossession of many

Chinese people.

Harvey pinpoints China’s emergence to the global rise of neoliberalism in the

capitalist world in the late 1970s, as Deng Xiaoping was beginning to open China’s

economy to the global markets (Harvey, 2006). This acceptance through neoliberalism

was met with parallel changes within China; a resulting transformation was necessary

with relation to class and property, leading to much tension and crisis. It became evident

that State Owned Enterprises (SOEs), businesses owned by the government, were not the

major drivers of Chinese growth–rather, the private sector was, justifying the gradual

movement of government owned businesses towards privatization (Harvey, 2006).

It is necessary to understand the hukou system in order to understand a major

source of dispossession and unevenness in China. When the government initiated plans to

industrialize between 1949 and 1978, restrictions were placed on rural-urban migration,

with the fear that such flows would strain the state’s ability to provide resources such as

infrastructure, housing, employment, and education. The government feared these needs

would weaken industrializing efforts and thus imposed the hukou, whereby individuals

were registered by household and migration to cities was restricted. Each citizen is only

permitted to register one residence in one locale – only within that location can a citizen
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claim residence (Zhang & Wang, 2010). This system is akin to how Westerners might

understand international boarders: benefits and rights are limited to those with specific

documentation indicating their residence is legitimate. Individuals wishing to move from

the rural to urban settings must have a certificate by the labour administration of a city,

certificate of admission by a school, or a certificate of approval by a residence

registration administrator. These regulations were put in place in 1954; before then,

citizens were permitted to move, reregistering themselves following migration or

marriage (Thakur, 2002).

The hukou system strictly limited citizens to a specific location; however, as

economic reforms progressed, factories began to seek to hire unskilled and skilled

workers from outlying areas to ease labour shortages. This necessitated the easing of

migration within regions and farther areas. Peasants were free to migrate and in many

cases, sell their produce within urban areas and earn money; however, the lack of full

benefits provided to migrants (that is, in amending hukou information upon migration)

perpetuates a “half free and half closed” system (Thakur, 2002). Nonetheless, rural-

urban migration has been undeniably persistent. Peasant migration exploded between the

1980s and 1990s: in 1982, less than one million peasants were present in large cities; by

1992, this number would be approximately 24 million (Thakur, 2002). Backer’s 2006

article pegged this number at 120 million while Ngai and Huilin reported 200 million in

2010 (Becker, 2006; Ngai & Huilin, 2010). Quality of life is a substantial factor for

relocation as well, with urban standards of living being significantly higher than in rural

settings (Thakur, 2002). Reforms of the central economic system, which had provided
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and organized the rural labour force in the countryside, meant that many farm workers

were no longer needed and were released of their duties. Urban employers seized this

opportunity, and despite underemployment in cities, were eager to take advantage of a

pool of even cheaper labour (Zhang and Wang, 2010).

Zhang and Wang examined urban citizenship for rural migrants, pointing out that

a key issue is entitlement: rural migrants, now permitted to physically migrate, are not

afforded the same entitlements as those with permanent residency in their host cities. This

is problematic since the hukou is used, as the authors demonstrate, in a way that

legitimizes segregation and even discrimination while maximizing the labour and capital

from migrants (Zhang and Wang, 2010). Because they have no responsibility over those

who are not considered legal residents, cities are able to avoid social welfare for

migrants. In Shanghai, a city considered largely to be one of China’s leading global

cities, migrants can apply for residence permits, giving them the right to stay in the city

but not affording them the same rights as those with the hukou. Those with resident

permits do not receive unemployment insurance, minimum living subsidies, and public

housing for low-income families and individuals nor does the state have to pay

employment-related training that is normally afforded to hukou citizens. School fees are

significantly higher for the children of migrants–and formal education is compulsory for

nine years for children in Shanghai. Once students graduate, they are not able to apply to

post-secondary institutions in Shanghai, despite the greater proliferation of universities in

the region (Zhang and Wang 2010). These restrictions and disadvantages are a form of

dispossession: services are only provided to the privileged upper classes, and migrant
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workers are left to fend for themselves or find the funds to pay for services at prices

dictated by market forces.

In the workplace, these disadvantages are multiplied for migrant workers, where it

can be argued that these workers are dispossessed of their availability of labour.

Businesses take advantage of migrant workers, since they require fewer resources while

providing expendable output. Migrant workers are frequently paid significantly lower

wages than local workers. In Guangzhou, where approximately 80 million migrant

labourors work, wages hover around 300-400 yuan as opposed to 600 yuan for hukou

workers. Additionally, by underreporting the number of employees, workplaces can

avoid further social insurance contributions (Lee, 1999). Because of severe unequal

treatment, the central government began issuing requirements for social security. Migrant

workers must pay premiums of 10% of their monthly income account for pension and

medical care while the employer contributes 35% of the average monthly income to a

worker’s social security account. Employers are required to provide unemployment

insurance and housing provident funds to employees with the hukou but not for those

with residency permits only, meaning that employers can make considerable savings by

hiring migrant workers (Zhang & Wang, 2010).

Claiming available benefits is another barrier, since regulation requires 180 days

of continuous work in the same region. This parameter is very difficult to meet, since

workers often divide their employment between two cities and benefits cannot be

transferred between cities. Upon leaving a city, the funds contributed by an employer

would be allocated to the city’s social security fund and not returned to the employee,
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further disadvantaging a mobile migrant worker (Zhang & Wang, 2010).

Sander, Schmitt, and Kuhnle describe a bleaker picture of state withdrawal.

Welfare had previously been organized through work-units, through State Owned

Enterprises in the cities and agricultural communes in rural areas. In the Maoist or Pre-

Reform period, services such as healthcare were provided for free or with large subsidies.

Medical workers were employed by the state and access to healthcare was not limited.

Even the rural areas were provided adequate service through the formation of the

Cooperative Medical Scheme, which was funded by surplus funds gleaned from

collective agriculture, subsidies from the central government, and contributions from

individual families (up to 2% of a farmer’s annual income) (Saunders, Schmitt, &

Kuhnle, 2010). Coverage was nearly universal with approximately 90% of rural villages

participating in the scheme (Carrin, 1999). The World Health Organization even

commented that the services provided by the CMS had been of surprisingly high quality,

despite China’s apparent “backwardness” (Ngok, Chan & Phillips, 2008). However, the

pre-1979 systems of cradle-to-grave services that had come to be expected could no

longer be considered applicable with an economy that was now based on competition and

open markets. The “iron rice bowl” of job security, income, and benefits was cracking.

Sandler and her colleagues place specific blame on the Chinese prioritizations of

economic growth, flexibility, and competitiveness–all policies in line with neoliberalism–

at the cost of those who did not benefit from the opened free markets: the lowest classes.

As a result, government spending on health was dramatically reduced while workers were

forced to pay out of their own pockets to address their own healthcare needs. Healthcare
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was transferred from the central government level to the local level and hospitals were

transformed into profit-oriented firms (Sandler, Schmitt, & Kuhnle, 2010). In rural areas,

some 900 villagers were left without health insurance when Cooperative Medical

Schemes failed; as a result, citizens were forced to turn to private facilities, which many

could not afford (Ngok, Chang, & Phillips, 2008; Saich, 2004). The extended family

often bore the brunt of these new costs and are forced to care for sick and elderly family

members at home since healthcare is too expensive (Lee, 1999; Sandler et al, 2010).

The reduction welfare through State Owned Enterprises and Township and

Village Enterprises must be examined as well. As the Chinese government stripped “non-

productive” responsibilities from State Owned Enterprises in order to make their firms

more competitive with private businesses. Since some SOEs had been allocating around

50% of their total wage bills to pensions, health care, and unemployment and maternity

benefits, the cessation of these services add up to a significant amount of savings (Lee,

1999). Other welfare services have also been commodified. Meals in cafeterias soon

required substantial payments and nurseries that had previously provided childcare for

workers saw a sharp increase in costs when budgeting was no longer provided for this

service. In some cases, workers were stripped of welfare all together and were left with

allowances of 25-30 yuan per year that could be spent on private care, far too little to

actually pay for healthcare at hospitals with skyrocketing costs (Lee, 1999). Some SOEs

covered more than food and health, also providing accommodation, education, and

recreation. Absolute tenure was provided through some firms, and wages were equal.

These would be removed as the burden on SOEs became too high to remain competitive
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in the open market (Webber, 2008). The cost of rent has steadily grown higher for

workers at SOEs in big cities like Guangzhou and Tianjin, with costs such as

management, maintenance, and depreciation being included. SOEs are increasingly

destitute as well, requiring heavy subsides from the central government. This translates

directly to the commoditization of welfare: the worse-off and more inefficient the

enterprise means less welfare can be provided, and ultimately, the workers are forced to

fend for themselves. Situations may be worse in non-state owned firms, where a lack of

enforcement has resulted in the inconsistent delivery of insurance and welfare benefits

(Lee, 1999).

The recent work of Anne Sander and her colleagues outline the Chinese central

government’s current attempts to rectify growing disparity and reduced welfare as

government leaders began to fear the threat of social unrest. A unified health care scheme

was established for urban employees through contributions from both employers and

employees. A pilot program was introduced in 2007 to provide care for those not covered

by the employment healthcare program. A new urban pension system was introduced in

the early 2000s to cover those working in SOEs and all other urban workers who had not

traditionally been covered. Further coverage was extended to migrant workers, although

there has been significant difficulty in implementation due to low compliance. A unified

pension system is lacking for rural areas, where 54 million are currently covered, which

despite being a large number only accounts for 11% of rural workers (Sander et al, 2010).

The gendered division of labour should also be noted. Women are often left to

complete lower paid, labour intensive, and unglorified tasks while men dominate both
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skilled labour and managerial positions. Gender wage gaps are prevalent: a 1990 census

showed that women earned only 77.45% as much as men nation wide and only up to

88.2% in production work. This discrimination has traditional roots: men are considered

heads of families and are thus prioritized in the workforce. The human effect is

compounded when it is noted that women are still expected to take up social reproduction

duties in the home, such as childcare, cooking, and general domestic work. The retreat of

state welfare is made painfully clear, since social reproduction and production services

are now privatized. Services that cannot be paid for fall on the shoulders of women, who

spend an average of 4.66 hours a day–2.5 hours more than men–on housework (Lee,

1999).

In the spring of 2010, the world became aware of a string of suicides in Shenzen,

China at the factory of technology manufacturer Foxconn. The news, initially reported by

the Xinhua News Agency (the official press agency of the government of the People’s

Republic of China), quickly rose to infamy due to the parallel launch of the much

heralded Apple iPad, one of many devices in a wide portfolio of products manufactured

by Foxconn. On November 15, 2010, Reuters reported that another employee had fallen

to his death in an apparent suicide, bringing the number of suicides in 2010 to an

astonishing 14 since May 27, 2010 (Pomfret, 2010). In their article published in late

2010, Jenny Chan and Ngai Pun suggest that the suicides of migrant workers at the

Foxconn factory should not be viewed as an independent series of events, rather as an

extreme form of protest against the global labour regime that has been made possible by

their exploitation and through the Chinese state’s embracement of neoliberal policies
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(Chan & Ngai, 2010).

Chan and Pun highlight a number of injustices in the case study of worker

suicides at Foxconn: unethical purchasing practices from world-leader brands, abusive

practices conducted by Foxconn, and the collaboration between local officials and

Foxconn’s management to deprive workers of their rights and welfare. Like many other

migrant workers, those working at Foxconn lack access to community service and the

recognition as local residents. A major difference in culture exists, however: today’s

workers at factories like Foxconn are part of a second generation of Chinese migrant

workers known as xinshengdai nongmingong. This generation has been criticized for its

apparent weakness and inability to contend with hard work without complaint. Foxconn

blamed the suicides of its 14 workers on rural workers’ fragile states of mind (Chan &

Ngai, 2010).

There is no minimum wage in China; requirements are dictated by cities or

provinces. A shortage of migrants have made wages higher in Shenzen and Shanghai and

firms like Foxconn have moved inland to take advantage of cheaper labour and land.

Following the spring suicide scandals, Foxconn raised wages at its Shenzen factory to be

9% higher than the minimum wage. It is worth noting that hiring was frozen at the

Shenzen factory and employees will be relocated to other regions as the Shenzen factory

downsizes (Chan & Ngai, 2010).

The demand for products at speed places direct pressure on the factory workers. A

pay stub uncovered by the Beijing Youth Daily (Beijing Qingnian Bao) revealed that one

worker was paid a base salary of 900 yuan, the local minimum wage, and 1250 yuan for
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136 hours of overtime work, an average for many factory workers (Chan & Ngai, 2010).

There is little government incentive to protect these migrant workers: without legitimized

status such as the hukou and no standardized wages other than the local wage minimums

there is little hope.

An examination of suicide notes left by the deceased Foxconn workers reveals a

strong theme of hopelessness coupled by a lack of intervention. For example, Lu Xin of

Hainan wrote that he had came to his job in order to support his family. He worked every

day until 9 p.m., exceeding the regional restrictions of 8 hours per day and 40 hours per

week–yet these labour laws were never enforced. Lu had dreamed of being a musician,

yet saw no hope for the future. His job as a quality control technician made him afraid of

mistakes, since any errors would result in the withdrawal of bonuses for him and his

colleagues. Chan and Ngai claim that today’s migrant workers, like those who committed

or attempted suicide at Foxconn, are part of a social phenomenon of young people who

are marginalized and trapped: unable to return to their destitute rural homes and unable to

build a home or even make a wage in the city. With no social support or protection,

workers are left to rebel against their odds with their own lives (Chang & Ngai, 2010).

China’s development has been marked by tensions and conflicts. Neoliberal

policies have helped China become one of the world’s fastest growing markets and a

major source of exports. Privatization and state withdrawal have made China a lucrative

site for investors in the manufacture and service sectors, at the cost of a migrant

population that remains marginalized and constricted by traditional regulations and

contemporary indifference. The suicides at Foxconn’s Shenzhen factory horrified

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consumers around the world and brought to light the realities of modern migrant workers.

The accumulations of wealth made possible through the dispossessions of state services

and welfare have lead to the literal dispossession of the lives of countless migrant

workers.
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