One of the most disconcerting experiences of my early trips to China was reading reports of the debate around proposed changes to labour legislation in 2007. The Chinese government was trying to update laws that could only be described as Dickensian.
The official labour union in China was an extension of the Communist Party. It did little to protect workers from exploitation that included, by one account, embezzlement of wages and social insurance payments, wages below the legal minimum, no overtime pay, lack of work safety and denial of responsibility for accidents.
China’s grim employment conditions had been well aired in media across the globe, particularly in countries that had suffered employment losses and felt China’s abusive practices gave it a competitive advantage.
But the Chinese didn’t ‘steal’ US jobs. US companies ‘stole’ those jobs from
US factories
But by around 2004, fears of mounting social agitation moved the Chinese government to look at dragging their law into the 21st century.
Imagine my shock when I discovered that two of the most powerful voices arguing against the changes were the American Chamber of Commerce and its EU equivalent. They warned the Chinese government that the proposed improvements would increase production costs in China and force foreign companies to reconsider new investments and even review existing activities.
In hindsight it was naive to assume these lobbyists would want to see the promotion of anything that would threaten the interests of their members. But I did think European and American companies might want to promote the sort of democratic values their governments had been intent on shoving down the throats of Middle Eastern nations a few years earlier. Surely, I thought in my naiveté, labour standards were core to those values.
Listening to the US president 10 years later, I was reminded of the disconnect between corporate and national interests. Donald Trump appears to be blaming the Chinese (and others) for the loss of US jobs. But the Chinese didn’t “steal” US jobs. US companies “stole” those jobs from US factories and relocated them to China. Back in 2007 their lobbyists were intent on ensuring the spoils from that “theft” were not diminished.
Powerful US companies like Walmart, General Electric and Apple (to name a few) became more powerful and much wealthier by choosing to “steal” jobs from the US and source their product from China. It certainly helped American consumers but it helped American shareholders more.
Things get even murkier. When you consider that Apple’s decision to outsource much of its manufacturing to China has helped it accumulate US$230bn in cash holdings offshore. It is being held offshore to avoid the 35% tax companies face when repatriating profits to the US. This tax avoidance is what is expected of Apple and other companies whose combined foreign stash is around $1.2trillion.
Instead of blaming the foreigners Trump must look closer to home for a solution and in particular to the wealthy businessmen he has gathered around him.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.