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The Politics of Economic Reform in Chinese Industry: The Introduction of the Labour Contract System*

Published online by Cambridge University Press:  17 February 2009

Gordon White
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Extract

This article sets out to further our understanding of the politics of economic reform in China by focusing on just one area - labour - and within that, one specific policy-the attempted introduction of a “labour contract system” into state industrial enterprises. The general aim of China's reformers is to create a new system of labour allocation and employment which will improve productivity and increase the flexibility and dynamism of state industry. To these ends various reforms have been introduced, the most important of which are:

Type
Research Article
Information
The China Quarterly , Volume 111 , September 1987 , pp. 365 - 389
Copyright
Copyright © The China Quarterly 1987

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References

1. I have discussed these first two areas of reform in detail in “The changing role of the Chinese state in labour allocation: towards the market?”, Journal of Communist Studies, Vol. 3, No. 2 (June 1987).

2. For analysis of labour allocation in other socialist contexts see Alec, Nove, The Soviet Economic System (London: Allen and Unwin, 1977), Ch. 8Google Scholar and Peter, Galasi and György, Sziraczki, “State regulation, enterprise behaviour and the labour market in Hungary, 1968–83,” Cambridge Journal of Economics, No. 9 (1985), pp. 203–219.Google Scholar

3. See Gordon, White, “Urban unemployment and labor allocation policies in post Mao China,” World Development, Vol. 10, No. 8 (1982), pp. 613–32.Google Scholar

4. For a discusssion of the evolution of “big collectives,” see Martin, Lockett, “Small business and socialism in urban China,” Development and Change, Vol. 17, No. 1(01 1986), pp. 35–67.Google Scholar

5. This figure was supplied by Professor Wu Dingcheng of the CASS Institute of Economics: see Gordon, White, Labour Allocation and Employment Policy in Contemporary China (Brighton: University of Sussex. China Research Report, No. 2. 1985), p. 7.Google Scholar

6. See Janos, Kornai, Economics of Shortage (Amsterdam: North-Holland, 1980), Vol. A, p. 254.Google Scholar

7. This pun was related by Madame Feng Lanrui of the CASS Institute of Marxism-Leninism-Mao Zedong Thought, cited in Gordon, White, Industrial Planning and Administration in Contemporary China (Brighton: University of Sussex, 1983), transcript of a research trip, June–July 1983.Google Scholar

8. For “intellectuals,” highly-trained technical/professional workers, another system based on the same contractual principles has been proposed, euphemistically dubbed the “invitation system” (pinrenzhi). For example, this has been tried in certain university departments and research institutes. If an academic is not treated as an “invited worker,” he (or she) may keep his job formally and continue to receive a salary, but he loses face and will not be given responsible work – as a result, he will want to leave.

9. See Huang, Shilin, “Several problems to be solved in the implementation of the labour contract system,” Jingji guanli (Economic Management), No. 7 (5 07 1983), pp. 17–20.Google Scholar

10. White, , “Urban unemployment,” p. 615.Google Scholar

11. “Deng Xiaoping's 16th January report on the current situation and tasks,” Zheng Ming (Hong Kong), No. 29(1 March 1980), in British Broadcasting Corporation (BBC), Summary of World Broadcasts: Far East (hereafter SWB), FE/6363.

12. For an official report of the conference, see New China News Agency (hereafter NCNA), domestic service in Chinese, 12 August 1980, in Foreign Broadcasts Information Service (hereafter FBIS), 13 August 1980; for a commentary on the decision, see “The fundamental way to solve the labour employment problem,“ Renmin ribao (People's Daily), 13 August 1980, in FBIS, 20 August 1980.

13. For these decisions, see NCNA domestic, 23 November 1981, in SWB FE/6891.

14. E.g., see Zhao, Lukuan, “Several problems of labour and employment in our country,” 19 August 1980, in FBIS, 4 09 1980;Google ScholarZhong, He, “Some views on reform of the “iron rice-bowl,”” Beijing Daily, 16 01 1980,Google Scholar in Joint Publications Research Service, China Report: Economic Affairs (hereafter CREA), No. 49 (21 March1980); Huang, Zhengshen, “Some thoughts on the origins of the ‘iron rice-bowl,’”Google ScholarIbid.

15. E.g., in mid 1981 Zhuang, Qidong and Sun, Keliang from the State Planning Commission published an article in the authoritative magazine Hongqi (Red Flag) (1981),Google Scholar arguing that the employment situation had reached manageable proportions, allowing scope for productivity oriented reforms in the labour system. Shandong province was singled out as a success story in the struggle against unemployment. For the Shandong “model,” see Zhuang, Qidong et al, “A long-term employment policy is needed…,” Guangming ribao (Glorious Daily), 16 08 1985, in FBIS 169. A number of cities, particularly in Jiangsu, also became models: see NCNA, 17 March 1982.Google Scholar

16. E.g., see Chu, Ruiyan, “On “rice-bowls,”” Yangcheng wanbao (Canton Evening News) (Guangzhou), 16 08 1981;Google ScholarYue, Guangzhao, Renmin ribao, 23 11 1981, in WSFE/6898.Google Scholar

17. Lei, Qingsheng, “The necessity of practising two labour systems in coal-mines as seen by the experience of Fengfeng Mining Bureau,” Hebei ribao (Hebei Daily), 21 11 1981, in FBIS, 233. It should be noted, that in this case the workers on contract were referred to as “rotation workers” and were drawn from the countryside not the urban labour force.Google Scholar

18. For discussions of Liu, Shaoqi's “two labour systems” and conflict over it during the Cultural Revolution,Google Scholar see Colina, MacDougall, “Second-class workers,” Far Eastern Economic Review (Hong Kong), 9 05 1968, pp. 306–308;Google Scholar and White, Lynn T., III, “Workers“ politics in Shanghai,” Journal of Asian Studies, Vol. 36, No. 1 (11 1976), pp. 99–116.CrossRefGoogle Scholar

19. , Zhao's article was in Renmin ribao, 2 March 1982. The forum was reported in Jingji yanjiu (Economic Research) (Beijing), 20 May 1982. This association is probably the same as the Chinese National Society of Labour Science which was set up in January 1982 (NCNA, English, 15 January 1982). Its institutional members included the Ministry of Labour (whose director Kang Yonghe was its first president), the Economics Institute under the State Planning Commission, the Institute of Economics of CASS and the All-China Federation of Trade Unions. It also had several prestigious academic advisers such as the economists Yu, Guangyuan, Xue, Muqiao and the sociologist Fei, Xiaotong.Google Scholar

20. E.g., see Zhuang, Qidong et al, “An investigation of urban employment in Liaoning province,” Jingji yanjiu, No. 12, 20 12 1981.Google Scholar

21. E.g., see the article by a local labour bureau official in Hebei in Hebei ribao (Hebei Daily), 13 April 1982, in FBIS, 26 April 1982.

22. Agence France Presse, Hong Kong, 22 April 1981.

23. Yan, Gai, “Unemployment, prostitution, murderers, and dividing up the farmland among households,” Zhengming Daily, Hong Kong, 24 04 1981, in FBIS, 27 July 1981.Google Scholar

24. E.g., see the article by an unnamed “Commentator” in Gongren ribao(Workers' Daily), 15 07 1981, in FBIS, 28 July 1981.

25. One provincial Party secretary put it as follows: “Some people think that only working in state-run enterprises is real employment, working in collective enterprises is semi-employment and engaging in private and household occupations is no employment at all.” The source is the Heilongjiang Party secretary, Yang, Yichen, in Heilongjiang Daily, 2 05 1981Google Scholar, in FBIS, 4 May 1981. For a further criticism of dualism, see the article by Zhao, Lukuan of People's University in Beijing in Renmin ribao, 19 08 1980: “The system of the ‘iron rice-bowl’ makes workers and staff members of collectively owned units and individual labourers in cities and town restless at their jobs because they are always trying to find an ‘iron rice-bowl. It creates contradictions between the workers and staff of several thousand units owned by the whole people on the one hand [i.e. state enterprises] and hundreds of millions of labourers on the other, and causes factors of instability among them.”Google Scholar

26. Bernard, Schaffer, “Towards responsibility: public policy in concept and practice,” in Clay, E. and Schaffer, B. (eds.), Room for Manoeuvre (London: Heinemann, 1984), p. 154.Google Scholar

27. E.g., the contract system itself and the use of public advertisements for cadres and specialists; see “Initial step in advertising for professionals,” NCNA, English, 11 January 1983.

28. He identified 28 “small and medium cities,” including cities in Jiangsu, Anhui, , Shandong, , Hubei, , Guangdong, , Hebei, and Heilongjiang, (NCNA, 12 11 1982).Google Scholar

29. For an expression of official encouragement of experimental use of the contract system, see the “commentary” carried by NCNA, Chinese, 3 January 1983, which foresaw “problems” and “resistance in all forms.” For reports on local experiments, see the followińg: Shenzhen: Guangdong Radio, 12 January 1983; Jilin: NCNA, Chinese, 29 January 1983, in CREA, 319; Hunan: Hunan Provincial Radio, 30 January 1983, in CREA, 319.

30. Zhao, Shouyi, “Consolidate the labour organization of enterprises in the spirit of reform,” Gongren ribao, 30 01 1983.Google Scholar

31. NCNA, English, 3 March 1983.

32. E.g., see ribao, Gongren, 18 February 1983, in CREA, 347, Zhongguo xinwenshe (China News Agency), 21 February 1983: Ban yue tan (Fortnightly Talks), 25 February 1983, in SWB, FE/7284.Google Scholar

33. NCNA, English, 3 March 1983.

34. White, , Industrial Planning, p. 17.Google Scholar

35. Renmin ribao, 27 March 1983, in CREA, 332.

36. NCNA, English, 17 June 1984.

37. For one such call, see Li, Yangzhi, “We should enforce the labour contract system generally,” Guangming ribao, 5 08 1984, in FBIS, 156.Google Scholar

38. A symposium, “Discussion of problems concerning the labour contract system” was published in the Ministry of Labour and Personnel's house journal Zhongguo laodong kexue (Chinese Labour Science), No. 6 (June 1986), pp. 1–95:63112.

39. E.g., see the “debate” organized jointly by the Guangdong, Labour Society and the Guangzhou Evening News in Guangzhou, reported in China Daily, 16 06 1983.Google Scholar The named speakers criticized the “iron rice-bowl” but admitted that there were at least three views on the issue. For a more convincing debate, see the articles by Zheng, Yonghui (anti) and Yi, Duming (pro) in the Guangzhou Evening News, 23 02 1986, in CREA, 337.Google Scholar

40. Yi, Duming, “In defence of the ‘iron rice-bowl system,’” Yangcheng wanbao (Guangzhou Evening News), loc cit.Google Scholar

41. Compare “On the debate about the ‘iron rice-bowl’ question,” Wen hui bao (Shanghai),4 April 1983, in CREA, 347.

42. For expressions of these views, see Li, Yangzhi, “We should enforce the labour contract”;Google ScholarWei, Jie, “We ought to set up a socialist job market,” Guangming ribao, 10 08 1985;Google ScholarXiao, Liang, “Switch from pure placement to the development and utilization of labour,” Renmin ribao, 9 09 1985;Google ScholarLuo, Ruigang, “Socialism also needs a reserve army of labour power,” Guangming ribao, 2 11 1985;Google ScholarLiang, Tianming, “A preliminary investigation of our country's market in labour power,” Zhongguo laodong kexue. No. 5 (05 1986), pp. 7–9.Google Scholar

43. For this position, see certain of the contributors to the ministry's symposium on the issue in Chinese Labour Science, No. 6 (1986), notably Wang, Jianxin (Labour Power Planning Bureau in the Ministry of Labour and Personnel), Hu, Xinshi(Investigations and Research Unit of the Hubei Provincial Labour and Personnel Burea) and Xia Jizhi (Labour Science Research Institute in the Ministry of Labour and Personnel).Google Scholar

44. “An inquiry into certain problems concerning a comprehensive implementation of the contract system,’ loc cit., pp. 10–12.

45. This prècis of Jiang's views is based on an interview with him in Beijing in June 1985 (White, , Labour Allocation, pp. 58–60) and his article “If all workers and staff are on the contract system, it will not be conducive to the socialist character of the enterprise,” Jingji tizhi gaige (Economic Structural Reform) (1985), No. 1, pp. 11–13.Google Scholar

46. E.g., in April 1984, 65 members of the Guangdong Provincial Society of Factory Directors and Managers sent a 10-point proposal to the provincial Party and government authorities asking for greater powers over their own finances and personnel, including “the power to recruit or dismiss personnel in order to appoint those most fit for jobs” and to reject “unnecessary personnel assigned to them” (Guangdong, Radio, 13 April 1984, in FBIS, 074). Similarly in Fujian province, 55 plant directors and managers published an appeal in the local newspaper (later given national publicity in People's Daily), asking to be “untied” [Fujian ribao (Fujian Daily), 13 April 1986, in SWB FE/7635]. For a report on the lack of follow-up due to bureaucratic recalcitrance, see Renmin ribao, 1 June 1984, in FBIS, 118. For a similar expression of the views of reformist managers in Heilongjiang, see the report on Heilongjiang, Radio, 10 December 1984, in SWB FE/7826.Google Scholar

47. E.g., see the commentary by Liaoning, Radio, in SWB FE/7671.Google Scholar

48. White, , Labour Allocation, p. 32.Google Scholar

49. Ibid. p. 47.

50. Ibid.Ibid. p. 37.

51. White, , Industrial Planning, p. 120.Google Scholar

52. White, , Labour Allocation, p. 49.Google Scholar

53. E.g., see White, , Industrial Planning, p. 147; “Why it is so difficult for people of ability to change their jobs,” NCNA (Chinese), 8 March 1983, in FBIS, 051; “We should have a more flexible system of managing people,” Renmin ribao, 22 April 1985, in FBIS, 081; “We should analyse the resignation of scientific and technical personnel,’ Renmin ribao, 25 May 1985.Google Scholar

54. This is usually unspoken or referred to obliquely, e.g., when managers talk of the importance of seeing the factory as “one family”: see Cheng, Jizhong, “An inquiry.” For reference to the potential problem of differences between fixed and contract workers, see the interview at the Nanjing Steam Turbine Factory in White, , Labour Allocation, p.47, and the comment by Feng, Lanrui,Google ScholarIbid. p. 3.

55. For a more detailed discussion of differing attitudes to economic reform among workers, see Shirk, S. L., “Recent Chinese labour policies and the transformation of industrial organization in China,” The China Quarterly (hereafter CQ), No. 88 (12 1981), pp. 575–93.CrossRefGoogle Scholar

56. E.g., see the comments by Feng, Lanrui in White, , Industrial Planning, pp. 147–48.Google Scholar

57. The situation in regard to the welfare net apparently varies from area to area. The Dalian Municipal Labour Bureau urges this point very strongly, e.g., in “Do a good job of complementary reforms in labour, wages and security systems; actively carry out the labour contract system,” Chinese Labour Science, No. 6 (June 1986). pp. 13–15.

58. White, , Labour Allocation, p. 10.Google Scholar

59. Professor Chen, Naixing himself holds the second view and thinks that most enterprises managers agree with him (White, , Labour Allocation, p. 10): “The contract system is interpreted differently in different enterprises. Some see it as the fixed system; most, in fact. There has been a little progress because [enterprise and worker] are choosing each other, the ‘two freedoms,’ and spheres of responsibility are defined. In the past, these were not clarified, except insofar as they were defined by the state (e.g. the central determination of wages).”Google Scholar

60. Cheng, Jizhong, “An inquiry,” p. 11.Google Scholar

61. All the more so for collective enterprises which face the danger of losing their workers to the state sector. An official of the Taiyuan City Labour Service Company put the problem thus (White, , Labour Allocation, p. 30): “Many people who go to work in collective enterprises do not want to become fixed workers there because they wish to retain the option of getting a state job later. Sometimes the collective enterprise wants them to be a fixed workers, but they refuse. If the enterprise is not so good, workers want to retain flexibility, but enterprises do not want labour turnover. For [their managers], the contract is a way to keep a hold over labour.”Google Scholar

62. Chinese Labour Science, No. 6 (June 1986), p. 1.

63. See Goodman, David S.G., “The National CCP Conference of September 1985 and China's leadership changes,” CQ, No. 105 (March 1986), pp. 123–30.Google Scholar

64. The State Council issued a set of “Interim Provisions on the Implementation of the Labour Contract System in State-Run Enterprises” in mid 1986, reported by Wen wei po (Hong Kong), 15 August 1986, in SWBFE/8342.

65. See Shirk, , “Recent Chinese labour policies,” pp. 575–93.Google Scholar

66. Andrew, Walder, “Wage reform and the web of factory interests,” in Lampton, D.M. (ed.), Policy Implementation in Post-mao China (Berkeley, Calif.: University of California Press, 1980), fn. 2.Google Scholar

67. See Harry, Harding, “Competing models of the Chinese Communist policy process: toward a sorting and evaluation,” Issues and Studies, Vol. 20, No. 2, pp. 13–36.Google Scholar There is also evidence of a (subordinate), “factional” element to leadership behaviour (cf. Harding, , “Competing models,” pp. 26–28), i.e. evidence of the close personal affiliations between the labour minister, Zhao, Shouyi, and key members of the top CCP reformers.Google Scholar

68. Leslie, Holmes, The Policy Process in Communist States: Politics and Industrial Administration (London: Sage Publications, 1981), p. 279.Google Scholar

69. See Bob, Arnot, “Soviet labour productivity and the failure of the Shchekino experiment,” Critique, No. 15, pp. 31–56.Google Scholar

70. Holmes, , The Policy Process, p. 279.Google Scholar

71. Walder, , “Wage reform.”Google Scholar