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.

In December 2007, for the first time ever, South Koreans, anxious about the economy, elected a businessman as their president. Pro-growth conservative Lee Myung-bak won a resounding victory, with 49 percent of the vote, over left-center candidate Chung Dong-young, who won only 26 percent. Lee's margin would have been even greater had it not been for the late entry into the race by another conservative, Lee Hoi-chang, who finished third with 15 percent.

Korean voters had become tired of ten years of rule by the left-center, and they saw incumbent President Roh Moo-hyun as confrontational and ineffective. By contrast, Lee, a former Hyundai Engineering and Construction CEO, has a reputation for being a pragmatic, can-do leader. As mayor of Seoul (2002-2006), he beautified the city and reformed its mass transit system.

Lee is scheduled to be inaugurated on February 25 for a single five-year term, but he faces two early challenges. First, just before the election, the left-center camp passed a bill establishing a special prosecutor to investigate allegations that Lee had been involved in business fraud and other corruption. The special prosecutor is supposed to announce his findings before the inauguration. A regular prosecutor earlier found the charges to be unfounded, and most observers think that the special prosecutor will not turn up significant new information.

Second, President-elect Lee must counter centrifugal forces in the conservative party ahead of parliamentary elections on April 5. Lee Hoi-chang's defection has already split the conservative camp, and now President-elect Lee and former conservative party leader Park Geun-hye (daughter of the late President Park Chung Hee) are feuding over how much say each should have in choosing candidates for the parliamentary election.

If President-elect Lee is cleared by the special prosecutor and if he successfully manages relations with Park, Lee's party will likely win a very large majority in the parliamentary election, offering him the opportunity to be a strong and effective executive.

As president, Lee will face two long-term challenges. First, as Lee has promised Korean voters, he must strengthen the economy. While the Korean economy has been growing at a rate of about 5 percent in recent years, the average Korean has felt hard-pressed by large increases in housing and education costs. Lee plans to focus on deregulation and attracting foreign investment. He has, however, already been forced to scale back his promise of 7 percent annual growth to 6 percent at least for his first year in office.

Second, although North Korea was not a major issue in the election campaign, due to the apparent progress in Six-Party talks to end North Korea's nuclear weapons program, many experts are skeptical that North Korea will fully abandon its nuclear ambitions. Lee supports engagement of North Korea and continued humanitarian aid, but he has said he will not provide major economic aid to North Korea until it ends its nuclear weapons program. This marks a significant departure from the policy of his predecessors Roh Moo-hyun and Kim Dae-jung. A renewal of tensions with North Korea could threaten South Korean economic growth and Lee's popularity.

Lee strongly supports South Korea's alliance with the United States. He may seek talks with the United States to adjust or delay implementation of agreements reached in recent years to reduce the United States' role in South Korea's defense. Lee also supports early ratification of the U.S.-Korea Free Trade Agreement (FTA), the largest U.S. free trade agreement since NAFTA. (The U.S. Congress has not yet approved the U.S.-Korea FTA.)

Many experts believe that the near coincidence of Lee's election and the inauguration of a new U.S. administration in January 2009 offers a major opportunity to strengthen U.S.-South Korean relations. Shorenstein APARC and the New York-based Korea Society recently announced the formation of a study group of senior former U.S. officials and experts to issue a report and recommendations on how the next U.S. administration can work with President Lee. The study group will travel to Seoul in early February for meetings with President-elect Lee and his economic, foreign policy, and security advisors.

Perhaps the most remarkable aspect of the election of Lee was that Koreans did not think it remarkable. They simply took it for granted that the election would be free, fair, and peaceful. Yet it has only been twenty years since South Koreans literally forced a military-backed government to allow them to vote democratically for their chief executive. In those two decades, there have been five presidential elections, with Lee's victory making the second full-fledged transfer of power between political camps. Moreover, this election was conducted at very low cost, using public funds; companies were not "squeezed" for campaign contributions as in the past. South Korea has demonstrated itself to be, along with Australia and New Zealand, the most democratic country in East Asia and a model of political development for the entire international community.

We are pleased to bring you the third article of the academic year in our series of Shorenstein APARC Dispatches. This month's piece comes from Dr. Phillip Lipscy, FSI Center Fellow and Assistant Professor, Political Science. Lipscy joined Shorenstein APARC in fall 2007 and his research interests focus on international relations and political economy, particularly as they relate to Japan and East Asia. He has been a Shorenstein APARC affiliate since his undergraduate years, when he studied under Professor Emeritus Danial Okimoto. He attended Harvard University for his doctoral studies.

Since the end of World War II, East Asia has often been characterized as a region with weak international organizations. There has been no regional integration project comparable to the European Union (EU). Cooperation on a wide variety of issues has tended to be ad hoc rather than institutionalized. Regional organizations, such as the Association of Southeast Asian Nations (ASEAN), have generally been weak or limited in scope, with some notable exceptions such as the Asian Development Bank.

However, in recent years, there are indications that the pattern of institutionalization in Asia is shifting. Since the end of the Cold War, regional cooperative arrangements have emerged and grown. With the addition of China, Japan, and South Korea, a revitalized ASEAN+3 is becoming a locus of economic cooperation. Many observers believe the Six Party Talks could be institutionalized to manage a broader set of security issues beyond North Korea. The Chiang Mai Initiative, a multilateral currency swap arrangement, might eventually develop into a monetary fund. Bilateral trade agreements are proliferating and could ultimately produce a regional free trade zone.

Under the right circumstances, regionalism can complement the broader global order. However, to a significant extent, recent regional initiatives reflect an underlying dissatisfaction with the global institutional architecture. The Chiang Mai Initiative emerged after the Asian financial crisis, from a widespread sense that the International Monetary Fund (IMF) underrepresented Asian interests and therefore imposed overly harsh conditionality on the affected states. Paralysis at the Doha Round negotiations of the World Trade Organization (WTO) has facilitated the rapid expansion of bilateral trade initiatives. The North Korean nuclear problem is precisely the sort of collective security issue the United Nations (UN) Security Council was envisioned to deal with, but the rigidity of both Security Council membership and its decision-making procedures has rendered this impractical.

Historically, international organizations have often exhibited path dependence, or a resistance to change. For example, the permanent members of the UN Security Council still remain the victorious powers of World War II. The distribution of voting shares in the IMF and World Bank has consistently overrepresented inception members such as Canada, France, and the United Kingdom, at the expense of both the defeated powers of World War II and newly independent and developing states. The Organization for Economic Cooperation and Development (OECD) remains a predominantly European institution despite the rapid growth of Asia. Across a wide range of international organizations, Asian nationals continue to be underrepresented among employees, and in some cases leading positions are allocated to Western nationals by convention, as in the IMF and World Bank.

However, as Asia continues its rapid growth, the active involvement of Asian states in the global order will become paramount. Including India, broader East Asia encompasses more than half of the world's population. The region already accounts for about one-third of global oil consumption and CO2 emissions, and this is only likely to grow in the future. By 2020, in purchasing power parity terms, regional GDP will likely exceed that of the United States and the EU combined. Over the course of the twenty-first century, Asia's economic and geopolitical weight in the world will, in all likelihood, come to rival that of Europe in the nineteenth century. With Asia's dramatic rise, Asian problems will become increasingly indistinguishable from global problems.

Thus, a critical question in the coming decades will be whether the contemporary international organizational architecture will be able to smoothly incorporate the rising states of broader East Asia. Sweeping geopolitical shifts have often created instability in the international system -- the waning of Pax Britannica in the early twentieth century precipitated two world wars and a global depression, as the world lacked a geopolitical and economic stabilizing force in times of crisis. If universalistic institutions such as the UN, IMF, and WTO are seen as unresponsive to Asian concerns, two potentially destabilizing outcomes are likely. First, Asian regional cooperation may further intensify. For example, a full-fledged Asian Monetary Fund that acts independently of the IMF could be formed, or an Asian Free Trade Area established. Such institutions have the potential to undermine existing international organizations such as the IMF and WTO. Eventually, Asian institutions may supersede existing global institutions, but only after contestation and needless replication. A second destabilizing outcome could be that Asian states disengage from the U.S.-backed international order without developing strong regional institutions. This might create a situation akin to U.S. nonparticipation in the League of Nations in the interwar years. Without active involvement of some of the most important players, international organizations will become less effective at facilitating cooperation and resolving major disputes. International relations will become more anarchic and cooperation more ad hoc.

The rise of Asia will likely provide the first major stress test for the global organizational architecture that the United States has constructed and underpinned since the end of World War II. Of course, there are also some grounds for optimism. Among other things, China and Vietnam have joined the WTO, ongoing IMF quota revisions have produced ad hoc increases to South Korea and China, and Asian nationals increasingly play important roles in major international organizations -- e.g. UN Secretary General Ban Ki-moon and former UN High Commissioner for Refugees Sadako Ogata. It is paramount that concerns about Asian representation and interests in universalistic international organizations be addressed so that the rise of Asia contributes to -- rather than undermines -- the stability of the international order.

New York and Stanford, CA., Jan. 10, 2008 -- With South Koreans having elected a new president last month and Americans going to the polls in November to choose a new leader, Stanford University's Walter H. Shorenstein Asia-Pacific Research Center and the New York-based Korea Society today announced the formation of a non-partisan group of distinguished American former senior officials and experts to study ways to strengthen the alliance between the two countries.

The New Beginnings' study group will gather at the end of the month at Stanford University to discuss and analyze the implications of the Korean election for alliance relations. The group will then proceed to Seoul in early February for meetings with South Korean President-elect Lee Myung-bak and his top aides, as well as other leading figures in Korean business, academic, media and policy circles. Based on these meetings, the group will prepare a report in March on their findings and recommendations to present to American policymakers, including those from the leading U.S. presidential campaigns.

Korea Society President Evans J.R. Revere and Stanford University Professor Gi-Wook Shin said group members believe that U.S.-South Korean relations are critically important to the United States' role in East Asia and that the inauguration of new administrations in both the U.S. and South Korea offers a unique opportunity to create "new beginnings" in the alliance relationship.

They also noted that the two presidential elections coincide with a critical phase in multinational talks to end North Korea's nuclear weapons programs and that close U.S.-South Korean cooperation is essential to successful diplomacy in dealing with North Korea.

Shin and Revere said that the Bush and Roh Moo-hyun administrations, after initial policy differences over North Korea especially, had recently significantly improved their cooperation, but that the two countries could do much more to strengthen bilateral relations.

Shin and Revere said they regarded the study project as a continuing collaborative effort by their two institutions. After issuing the report in March, they intend to continue to meet with U.S. and South Korean policymakers and other leaders. They plan to update the report and recommendations after the U.S. presidential election.

Study group members are:

• Michael H. Armacost, former U.S. Ambassador to Japan and former Under Secretary of State for Political Affairs; currently the Shorenstein Distinguished Fellow at Stanford University
• Stephen W. Bosworth, dean of the Fletcher School of Law and Diplomacy of Tufts University, and a former U.S. ambassador to South Korea
• Robert Carlin, a visiting scholar at Stanford's Center for International Security and Cooperation, and a former State Department Northeast Asia intelligence chief
• Victor Cha, director of Asian Studies and D.S. Song Professor at Georgetown University, and former director for Asian affairs at the National Security Council and U.S. deputy head of delegation for the Six Party Talks in the George W. Bush administration
• Thomas C. Hubbard, Kissinger McLarty Associates, a former U.S. ambassador to South Korea
• Don Oberdorfer, chairman of the U.S.-Korea Institute of the Johns Hopkins University School of Advanced International Studies, and former longtime Washington Post foreign correspondent
• Charles L. Pritchard, president of the Korea Economic Institute in Washington, D.C., and former U.S. ambassador and special envoy for negotiations with North Korea
• Evans J.R. Revere, president of the Korea Society, and former principal deputy assistant secretary of state for East Asian and Pacific Affairs
• Gi-Wook Shin, director of Shorenstein APARC; the Tong Yang, Korea Foundation, and Korea Stanford Alumni Chair of Korean Studies; and professor of sociology at Stanford University
• Daniel C. Sneider, associate director for research at Shorenstein APARC, Stanford University, and formerly a foreign affairs correspondent and columnist
• David Straub, Pantech Research Fellow at Stanford's Shorenstein APARC, and a former State Department Korean affairs director