The China challenge

Hazard lights are flashing worldwide, especially in developed countries like the US, over the effect that the massive growth in China’s auto industry could have on jobs and working conditions.

Since 1990, China’s production of passenger vehicles has grown by 33% each year. At 30%, growth in the exports of Chinese manufactured car components has been equally impressive. Although initially concentrated in labour intensive parts like brake, parts recent massive investments by such big players as VW, Toyota, General Motors have seen a switch to the production for export of engines for their plants in developed countries.

In 1994, the Chinese government set itself a target for local motor industry production to meet 90% of local demand by 2000. The country easily met this target.

And it has moved up the world ranks in the auto industry. By 1999 it was already way ahead of its closest rival, the US, with 1.8 million workers employed in the motor vehicle manufacturing industry. The US had 1.3 million and numbers have continued to drop since then. China has the third biggest internal market for cars – 4,4 million cars were sold in 2003 – and it is the fourth largest producer of cars after the US, Japan and Germany.

At the recent IMF auto conference, the international trade union federation’s president, Jurgen Peters, warned that companies wanting to take part in the “Chinese blast off” are not considering the consequences of their actions – “overcapacity and re-importation onto the western markets”.

This will cause a pressure on prices and profits that will ultimately impact on workers – “companies are quick to transfer the pressure generated by this process to the workforce”, Peters told the conference delegates.

Adding pressure to the overcapacity problem are the conditions under which Chinese workers work. Although economic growth has boomed in their country, workers have not been the beneficiaries. Most factory workers earn $50 to $70 per month – no more than they did 10 years ago. Their trade unions are state-controlled and choosing to join an independent trade union could land you in jail!