Since China joined the World Trade Organization (WTO) in 2001, its already cheap labor force has been exposed to global market competition. The country’s domestic employment situation, particularly with respect to guarantees of workers’ rights and interests, has likewise come under pressure. In the years from 1999 to 2002, recorded urban unemployment rates regularly increased, from 3.1 percent in 1999 and 2000, to 3.6 percent and 4.0 percent in 2001 and 2002, respectively. At the end of March 2003, they rose again to 4.1 percent. The number of labor disputes received by labor dispute arbitration committees at every level reached 184,000 by 2002, with the number of participating workers climbing to 610,000, numbers that were 19.1 percent and 30.2 percent higher, respectively, than the previous year. In short, while China’s participation in the WTO propelled economic development, trade system reform, adjustments to the economic structure, and privatization of enterprise, it also resulted in an uneasy state of affairs for labor and management relations. For instance, in October 2004, at Shenzhen’s Hong Kong-owned Meizhi Haiyan Electronics Factory, four thousand people went on strike and blockaded the roads to protest low wages.

In November 2004, amid concerns about deteriorating working conditions at foreign-funded enterprises, the All China Federation of Trade Unions (ACFTU) confronted Chinese locations of WalMart, which is well known for obstructing the establishment of trade unions. The ACFTU declared: “They [WalMart] are in violation of the Trade Union Law, and we are prepared to sue them.” WalMart yielded, conceding that, “[i]f workers ask to establish a trade union, we will respect that request, [and] fulfill our duties and responsibilities under the Trade Union Law.” This landmark event demonstrated not only the ACFTU’s power in a direct confrontation, but also its opposition to the intensifying WTO-driven competition in the Chinese labor market. Thus far, the power of trade unions in general and the ACFTU in particular has been felt primarily at foreign-funded enterprises. But what about locally owned and operated enterprises?

In order to understand the actual level of autonomy that trade unions enjoy at the grassroots level, the chairmen of 1,811 trade unions in major cities and provinces—including Liaoning, Beijing, Shanghai, Zhejiang, Guangdong, Gansu, Guizhou, and Henan—completed a questionnaire survey. The Chinese Institute of Industrial Relations (Beijing) facilitated the survey, which was carried out between March 2004 and June 2006. The major findings confirm that, although the independence of trade unions at foreign-funded enterprises has increased, the unions’ autonomy at local level enterprises remains fairly low. According to survey results, China continues to be a predominantly state-corporatist system, between the Chinese Communist Party (CCP) on the one hand and workers and state-owned/state-held enterprises on the other.

The survey revealed other data about the leadership of China’s state-owned/state-held enterprises. Most notably, the Party organization was still appointing 24.5 percent of the chairmen of these work units. Even in cases where chairmen assumed their posts through election or open selective examinations, 35.1 percent of them participated in the election or examinations after the Party recommended them to the work unit in question (see figure 1). The ratio of chairmen who are CCP members to those who serve concurrently as a “secretary,” “vice-secretary,” or member of the Party committee at a corresponding level reached high percentages, of 90.0 percent and 46.4 percent, respectively. In addition, 72.1 percent of the chairmen of state-owned/state-held enterprises answered in the survey that their union committee had established a Party group or Party branch at their workplace. These data clearly indicate that, unlike their counterparts at foreign-funded companies, the trade unions of state-owned/state-held enterprises not only lack autonomy, and but that their management also often remains subject to Party control.