The implications of industrial disputes in China in the first half of 2010 Essay Example

Zedong attempted to develop agriculture and industry through the Great Leap Forward in 1958. The goal was to rival the USA, but the plan failed. Deng Xiaoping introduced economic reforms in 1978 to transform China's stagnant planned economy into a market economy, which significantly contributed to its status as a major global power.

China's global significance is reflected in its active participation in various organizations and the recognition of its workforce worldwide. However, while many companies move their production to China, the labor force experiences mounting pressure. This investigation scrutinizes the repercussions of industrial conflicts that occurred during the first half of 2010 in China, emphasizing both the country's ascent and the sources of these disputes. Furthermore, we will assess their influence. Despite enduring wars, changes in government and high poverty rates, China adopts a Greenfield heavy industrialization model along its coast that parallels Japan's.

In 1978, economic reforms were implemented in two stages. The initial phase, which happened in the early 1980s, permitted a more de-centralized technique to farming and foreign investment. It also provided entrepreneurs with an opportunity to establish their own companies. Nonetheless, this move did not result in significant growth for most enterprises and some even experienced a reduction in growth.

The second stage of economic reform transpired during the late 1980s and focused on privatizing and outsourcing state-owned industries. Additionally, price controls, regulations and protectionist policies were eliminated.

Although state monopolies still exist in certain industries such as banking and petroleum, the private sector has experienced significant growth. In fact, by 2005, it accounted for approximately 70% of China's GDP. Following Mao Zedong's death and the end of the Cultural Revolution, Deng Xiaoping and

his administration pursued a mixed economy model that relied on market forces but was controlled by a single political party. Despite this shift towards capitalism, the Communist Party aimed to establish economic marketplaces through development zones and export bases in specific regions – an approach that had been previously attempted during the 1960s with limited success.

SEZs were first established in Shenzhen, China but later expanded to other cities within the country. The devaluation of the Yuan was instrumental in promoting export growth and resulted in a rise from $10 billion to $25 billion between 1978 and 1985 due to its value plummeting by almost half against the US dollar from 1980 to 1985. SEZs were created with targeted advantages such as tax reductions and incentives to draw foreign investment, technology, and expertise.

With their latest economic strategy, China has accomplished a remarkable achievement by maintaining a growth rate of about 9.5% per year, positioning themselves as the world's fastest growing major economy. Additionally, China is acknowledged as the largest global exporter and ranks second only to the USA as the most significant importer of goods. In nominal GDP terms, China boasts the second-largest economy worldwide with a value of 34.06 trillion Yuan (approximately US$4.99 trillion).

Despite being ranked lower than about 100 other countries in terms of average income, China is still a significant global power as a member of the United Nations Security Council and G-20. This success can be attributed to several factors such as favorable government policies, advanced infrastructure and technology, competent medium-level skills, high productivity rates, an undervalued exchange rate, and low-cost labor advantages. By using strategies like subsidies and maintaining low exchange

rates to boost exports - based on Michael Porter's Course Notes - China has surpassed Germany in this area. Additionally, after Japan, China is the world's second-largest consumer of luxury goods with over 25% market share.

Despite experiencing negative effects, China remains a significant player in global trade and ranks 29th in the Global Competitiveness Index. It is home to some of the most valuable companies worldwide such as PetroChina (the leading oil company globally), Industrial and Commercial Bank of China (the most valuable bank worldwide), China Mobile (the top telecommunications company globally), and China Construction Bank (ranked 7th). Furthermore, despite only achieving first semester growth of 10%, China retains its prominent position as an influential actor in international trade.

In the last 20 years, several industries have experienced significant growth. Nonetheless, negative outcomes have resulted due to three factors that the government links with economic expansion and a labor law enforced on January 1st, 1995 to safeguard workers' rights. There is proof of an increase in disputes between collective firms and foreign-backed enterprises.

According to a European lawyer, the primary issue causing conflict is the departure of skilled staff from state-owned companies. He believes that these individuals are lured away by mixed-ownership enterprises that offer more competitive salaries. However, employment law is ill-prepared to handle this matter since contracts and legal precedents are limited.

The work conditions in China are a concern due to the high productivity but low wages of workers from disadvantaged provinces who make up the workforce in the "Special Economic Zones" located in southern China. Tragically, a factory in Shengzen experienced a fatal fire where 87 employees were locked in their dormitory

built into the factory because their employer, a native of Hong Kong, feared they would steal toys during the night.

The presence of discomfort and ill-being within Chinese factories is illustrated, and can be attributed to various reasons. One such reason is the shift in mentality and aspirations among young workers who were born after the opening reforms, and are no longer willing to endure the same hardships as their parents. Additionally, advancements in communication technologies have enabled these workers to be much better informed about their precarious situation and aware of their own strength, thereby contributing to the emergence of social conflicts.

According to Lai Desheng, a labour economics professor at Beijing Normal University, the newest generation of workers is less satisfied with unfulfilling jobs and low wages, as reported by "Christian Science Monitor". Additionally, Jim Leininger, a human resources employee, noted that as factories aim for better quality and productivity, skilled workers become necessary and are able to request higher wages. Furthermore, the desire for access to China's wealth motivates employees to seek higher pay; however, if companies raise wages too much, China may lose its competitive edge in employee compensation.

The importance of a country having a comparative advantage to stay competitive in international trade is emphasized by Ricardo and Smith. Failing to maintain this advantage can lead to reduced participation in global trade due to internal conflicts and external pressure. Currently, China finds itself under such pressure from the G20 and the US, urging it to reevaluate its currency, the Yuan. This has strained relations between these countries as the EU and Japan support US efforts to rebalance trading nations' deficits

and surpluses. Moreover, some US lawmakers and think-tanks contend that China's currency is undervalued by as much as 40%, causing imbalances in bilateral and worldwide trade flows.

From January to June 2010, industrial conflict in China increased and led to protests that went beyond the boundaries of factories. Even though there is no legal recognition for the right to strike, more than 100 collective actions were carried out as a means for workers to push their government into making choices that would be advantageous and prioritize their welfare. An illustration of this was seen on May 17, 2010 when hundreds of Honda employees joined together in protest to demand increased wages and better work conditions. Along with these events, there was also a noteworthy increase in suicides near Hong Kong during the same period.

Foxconn, a major supplier for Apple, Dell, Sony, Nokia and Acer, reportedly experienced a high number of employee suicide threats. To address this issue they installed anti-suicide nets on the roof and seal bars on the windows and promised wage increases based on performance. Foxconn made an announcement that it would no longer hire new employees and relocate to regions where labor costs are lower. China is well known for poor working conditions, education levels, and uneven wage distribution with its most developed areas located along the eastern coast. The government plans to introduce policies aimed at promoting development throughout the country.

Some workers choose to remain in rural areas close to their families instead of seeking job opportunities in cities. Moreover, some businesses also move to rural areas.