[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
WORKING CONDITIONS AND WORKER RIGHTS IN CHINA: RECENT DEVELOPMENTS
CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA
ONE HUNDRED TWELFTH CONGRESS
JULY 31, 2012
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CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA
LEGISLATIVE BRANCH COMMISSIONERS
CHRISTOPHER H. SMITH, New Jersey, SHERROD BROWN, Ohio, Cochairman
Chairman MAX BAUCUS, Montana
FRANK WOLF, Virginia CARL LEVIN, Michigan
DONALD A. MANZULLO, Illinois DIANNE FEINSTEIN, California
EDWARD R. ROYCE, California JEFF MERKLEY, Oregon
TIM WALZ, Minnesota SUSAN COLLINS, Maine
MARCY KAPTUR, Ohio JAMES RISCH, Idaho
MICHAEL HONDA, California
EXECUTIVE BRANCH COMMISSIONERS
SETH D. HARRIS, Department of Labor
MARIA OTERO, Department of State
FRANCISCO J. SANCHEZ, Department of Commerce
KURT M. CAMPBELL, Department of State
NISHA DESAI BISWAL, U.S. Agency for International Development
Paul B. Protic, Staff Director
Lawrence T. Liu, Deputy Staff Director
CO N T E N T S
Opening statement of Hon. Christopher Smith, a U.S.
Representative from New Jersey; Chairman, Congressional-
Executive Commission on China.................................. 1
Brown, Hon. Sherrod, a U.S. Senator from Ohio; Cochairman,
Congressional-Executive Commission on China.................... 3
Kernaghan, Charles, Executive Director, Institute for Global
Labour and Human Rights........................................ 6
Li, Qiang, Executive Director and Founder, China Labor Watch..... 8
Wu, Harry, Founder and Executive Director, Laogai Research
Foundation and Laogai Museum................................... 11
Lee, Thea, Deputy Chief of Staff, AFL-CIO........................ 20
Gallagher, Mary, Associate Professor of Political Science and
Director, Center for Chinese Studies, University of Michigan... 23
Brown, Earl, Labor and Employment Law Counsel and China Program
Director, Solidarity Center, AFL-CIO........................... 26
Kernaghan, Charles............................................... 36
Li, Qiang........................................................ 108
Wu, Harry........................................................ 113
Lee, Thea........................................................ 116
Gallagher, Mary.................................................. 119
Brown, Earl...................................................... 129
Smith, Hon. Christopher.......................................... 138
WORKING CONDITIONS AND WORKER RIGHTS IN CHINA: RECENT DEVELOPMENTS
TUESDAY, JULY 31, 2012
Commission on China,
The roundtable was convened, pursuant to notice, at 2:30
p.m., in Room 2200, Rayburn House Office Building, Hon.
Christopher Smith, Chairman, presiding.
Also present: Senator Sherrod Brown.
OPENING STATEMENT OF HON. CHRISTOPHER SMITH, A U.S.
REPRESENTATIVE FROM NEW JERSEY; CHAIRMAN, CONGRESSIONAL-
EXECUTIVE COMMISSION ON CHINA
Chairman Smith. The Commission will come to order.
I want to welcome our very distinguished witnesses to this
hearing on the important topic of the appalling state of
working conditions and worker rights in China, a significant
human rights abuse that requires greater examination, analysis,
and, certainly, bolder action.
Worker rights are systematically violated and are among the
many human rights abuses committed by Chinese Government
officials at all levels.
Today, the Commission hopes to continue to draw attention
to these critical issues in order to push the Chinese
Government to reform and to respond to the legitimate concerns
of its own citizens, all of whom are entitled to well
established, universally recognized labor rights.
As a member of the World Trade Organization, China has
experienced tremendous economic growth and integration into the
global economy. But as this Commission's most recent annual
report documents, China continues to violate the basic human
rights of its own people and seriously undermines the rule of
Workers in China are still not guaranteed, either by law or
in practice, fundamental worker rights in accordance with
international standards. Despite legislative developments that
purport to ensure some labor protections in China in recent
years, abuse and exploitation of Chinese workers remains
Conditions in Chinese factories continue to be incredibly
harsh. Workers are routinely exposed to a variety of dangerous
working conditions that threaten their health and their safety.
Low wages, long hours and excessive overtime remain the norm.
Chinese workers have few, if any, options to seek redress
and voice grievances under these harsh conditions. If workers
step out of line, they may be fired without payment of back
wages. Workers have no collective bargaining power, no
collective bargaining rights whatsoever to negotiate for higher
wages and a better working environment.
The Chinese Government continues to prevent workers from
exercising their right to freedom of association, and strictly
forbids the formation of independent unions. Attempts to
organize are met with dismissal, harassment, torture,
punishment, and incarceration.
Workers are ``represented'' by a government-controlled
union, known as the All-China Federation of Trade Unions
[ACFTU], a phony, fake, and fraudulent workers organization.
The recent crackdown on authentic labor, non-governmental
organizations in Shenzhen in 2012 and the mysterious death of
labor activist and 1989 Tiananmen Square demonstrator Li
Wangyang in June are but a few examples of Chinese authorities'
continued attempts to crush labor activism.
While touting itself as an economic superpower, China
continues to violate workers' rights with impunity. With no
institutions capable of protecting their interests, Chinese
workers are nevertheless taking matters into their own hands.
In the past few years, there has been a dramatic rise in
the number of labor-related protests in China, an estimated
30,000 labor-related protests in 2009 alone, and there are no
signs that this positive trend has or will abate.
The increase in labor-related demonstrations not only
represents the glaring lack of institutional capacity for fair
labor negotiation, but also reflects the rise of a new
generation of workers in China who are better educated, tech-
savvy, rights conscious, and more willing to protest and endure
The deplorable state of worker rights in China not only
means that Chinese women, men, and children in the workforce
are exploited and put at risk, but it also means that U.S.
workers are severely hurt by profoundly unfair labor practices,
an advantage that goes to those corporations who benefit from
China's heinous labor practices.
As good corporate citizens, multinational corporations such
as Apple and Microsoft, must ensure that international labor
standards are being implemented in their factories and supply
chains in China.
In the glaring absence of Chinese Government efforts to
bring its labor laws and enforcement up to International Labour
Organization standards, multinational corporations can and must
play a unique role in advancing labor rights and industry
standards throughout their operations in the People's Republic
Again, I want to welcome our very distinguished witnesses.
I yield to my friend and colleague, Cochairman Senator
[The prepared statement of Chairman Smith appears in the
STATEMENT OF HON. SHERROD BROWN, A U.S. SENATOR FROM OHIO;
COCHAIRMAN, CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA
Senator Brown. Thank you very much, Chairman Smith, for
your work in this commission. And thanks especially to the
staff for the terrific work they do on this commission to
prepare the annual report, which they are working on now, which
is, in many ways, both a guide and sort of a clarion call for
what this commission needs to do and what our government needs
to do and what U.S. businesses ought to be doing.
Special thanks to both panels. On this first panel, I
appreciate the work of all three of you and what you have done
to advance labor rights in China and really all over the world.
Mr. Kernaghan, Mr. Wu, thank you. And, Mr. Qiang, thank you
very much. And the second panel, too, thanks very much.
When Congress debated permanent normal trade relations with
China more than a decade ago, concerns about human rights and
labor conditions were met with expert opinion that conditions
would improve with more unrestricted and unfettered trade. That
is what we were told by CEOs and editorial writers and pundits
and economists and so many people in this institution over and
over as Congressman Smith and I were working on this.
But we know that any improvement in labor conditions have
not kept pace--even close to keeping pace with the
extraordinary trade deficits we have mounted with China. More
and more of the goods we buy are made by Chinese workers. In
2011, our trade deficit--our bilateral trade deficit reached an
all-time high of $295 billion. The first five months of 2012,
the trade deficit was $118 billion, on pace to exceed last
The trade deficit has cost American workers millions of
jobs. Chinese workers are not just making our iPads and our
iPhones and our laptops, but, also, innovating on the shop
When the innovation happens here and is outsourced for
production somewhere else, the innovation, both in terms of
process and in terms of the product, happen somewhere else, and
we, as a Nation, tend to lose our innovative edge.
They are making our auto parts, our food, our drugs, even
our Olympic uniforms.
We learned a few weeks ago, of course, that the
accomplished athletes of Team USA would be wearing Chinese-made
uniforms at the opening ceremonies. Members of both parties,
including those who had voted for PNTR [permanent normal trade
relations], were outraged. I was joined by a number of other
Members of both Houses and sent letters to the U.S. Olympic
Committee. I met with the CEO, who promised that by 2014, these
uniforms will be made here.
These products should be made here. Hugo Boss has a
facility in Cleveland, Ohio. They make high quality and
affordable clothing for Americans and for export.
It is not because American workers cannot compete, but
American workers do not often stand a chance against Chinese
workers who are underpaid and overworked, who are victims of
non-enforcement even of Chinese labor law, and workers who have
Chinese workers making some of our most popular products--
cordless phones, iPhones, iPads--toil under the harshest
conditions, as Chairman Smith said. They make a little over $1
an hour. They stand all day. They work overtime that far
exceeds Chinese law. Management humiliates them, sometimes
forcing them to clean toilets as punishment. They live and they
work in far too squalid and dangerous environments.
We learned from a labor rights group in Hong Kong that
Chinese workers making Olympic merchandise worked excessive
overtime, were docked a half-day's wage for being a few minutes
late, and had to bring their own masks to work.
Fundamentally, why do these injustices continue? Because
Chinese workers have no bargaining power. In China, there is no
freedom of association; there are no independent trade unions.
Instead, workers are represented by a state union that, to
quote a worker from one report, ``everybody knows is controlled
by the company.''
Like our workers, Chinese workers are willing to fight for
their rights. Strikes in China have grown, as Chairman Smith
said, to an estimated 30,000 a year. The new generation of
Chinese workers is better educated, more tech savvy, more
willing to stand up against injustice. All encouraging
developments, of course, but imagine how much more Chinese
workers could gain if they had the right to organize freely and
We call on the Chinese Government to abide by international
law and guarantee freedom of association, including organizing
and bargaining collectively. We call on China to follow the
rule of law by strengthening its labor laws and enforcing the
laws on the books.
Let us continue to do all we can here to support our
workers against China's unfair labor and trade practices. That
is why I have introduced three bills over the last couple of
years--the Wear American Act of 2012, the All-American Flag
Act, and, the most important, of course, the Currency Exchange
and Reform Act.
We have great responsibility in this. We must hold U.S.
companies accountable for working conditions in their supply
chain, something that Mr. Kernaghan has particularly shown a
lot of leadership in pushing.
That is why today I sent a letter to Apple regarding
factories in China. I urged Apple to fulfill the promises it
made following that New York Times story and, since, following
an investigation by the Fair Labor Association.
I have asked Apple to keep us informed, this commission, my
office, and the American public informed and updated on its
progress. I have urged Apple to strengthen its engagement, if
you will, with the U.S. Department of Labor.
Companies like Apple are in a unique position to improve
working conditions in China, while maintaining their bottom
line. I hope they will do the right thing.
Thank you, Mr. Chairman.
Chairman Smith. Thank you very much, Senator Brown.
I would like to now introduce our first panel, beginning
with Charles Kernaghan, who is the Executive Director of the
Institute for Global Labour and Human Rights, a prominent anti-
sweatshop advocate and director of the nonprofit organization.
He has published a number--or the institute that he heads--
a number of in-depth investigative reports on labor abuses,
including a 2006 report on the trafficking of foreign guest
workers under the U.S.-Jordan Free Trade Agreement, and a 2012
report on factory conditions in Microsoft supplier factories in
I welcome back Mr. Kernaghan. He may recall that back in
the 1990s, I had invited him and he did a tremendous job,
first, in exposing what was going on with Kathie Lee Gifford's
line of clothing. She herself testified at that hearing, but he
was the one who really got the ball rolling on those sweatshops
in Honduran factories for Wal-Mart.
So, welcome. It is great to see you, Mr. Kernaghan, again.
We will then hear from Li Qiang, who is the labor activist
and founder of China Labor Watch, a New York-based independent
nonprofit organization that works to protect factory workers in
China Labor Watch provides the international community with
in-depth information and analysis on the labor situation in
China through the publication of investigative reports and
Working with a network of labor activists in China and the
assistance of scholars, lawyers, and others around the world,
China Labor Watch has published over 80 investigative reports
covering more than 200 companies.
Mr. Li has also established labor nongovernmental
organizations [NGOs] in China that provide free legal advice
and offer community training classes to Chinese workers in the
Pearl River Delta region. These labor NGOs, additionally,
cooperate with the multinational companies to ensure
implementation of corporate responsibility standards in their
supply chains in China.
Mr. Li has written frequently on Chinese labor issues and
has been published in major Chinese and international media
outlets, including China Youth Daily and the New York Times.
In 2004, Mr. Li was a visiting scholar at the Center for
the Study of Human Rights at Columbia University.
Then we will hear from a man who is no stranger to this
Commission nor to the Foreign Affairs Committee nor to the
Congress, and that is Harry Wu, the great Harry Wu, who is the
founder and Executive Director of the Laogai Research
Foundation, a foundation established in 1992 to gather
information on and raise public awareness about the Chinese
Mr. Wu has firsthand knowledge of the conditions in the
laogai system. He was imprisoned at the age of 23, in 1960, for
criticizing the Communist Party, and he subsequently spent
almost 20 years in the factories, mines, and fields of the
Mr. Wu came to the United States in 1985 after his release
in 1979, but went back a number of times, including getting re-
arrested on at least one of those occasions. Harry Wu
actually--I will never forget, I would say to my friend, Mr.
Brown, we had a hearing that Harry helped arrange on the laogai
that featured six survivors.
And I will never forget when he brought in Palden Gyatso,
who was also a man who had been incarcerated in the laogai
system, who brought in these cattle prods and the other things
that were used routinely by the Chinese Government to compel
compliance inside the prison gates.
Palden Gyatso, downstairs in this building, could not get
through security--and that was before 9/11. We had to go down
and escort him through. And when he held up those instruments
of torture used in the laogai system, which incarcerates
millions of people, you could have heard a pin drop in that
So welcome back, Harry Wu, to the Commission.
Mr. Kernaghan, if you would proceed.
STATEMENT OF CHARLES KERNAGHAN, EXECUTIVE DIRECTOR, INSTITUTE
FOR GLOBAL LABOUR AND HUMAN RIGHTS
Mr. Kernaghan. Thank you for this opportunity to testify on
this incredibly important issue of worker rights in China.
As of 2008, phones are no longer made in America. The
reason is pretty simple. Telecommunication workers in the
United States earn $16.85 an hour, which is 15.5 times higher
than wages at the VTech phone factory in China, where workers
are paid $1.09 an hour, which is a below subsistence wage, and
with very few rights or any benefits.
VTech is the world's largest manufacturer of cordless
phones, and it controls 51 percent of the market in North
America for corded phones and cordless phones. VTech produces
for AT&T, Motorola, Philips, German Telekom, and Australia's
What I want to do now is put a human face on what happens
with these workers at the VTech factory. Suppose your daughter
went to work at VTech. She would work from 7:30 in the morning
until 7:30 or 10:30 at night. She would work 12 to 15 hours a
day. She would work 6 and 7 days a week. She would be at the
factory 70 to 85 hours each week. And she would be forced to do
overtime up to 37 hours, which exceeds China's legal limit by
345 percent. Your daughter would be forced to stand all day.
Her back would hurt. Her legs would ache.
The production line never stops. Every 11.25 seconds, a
circuit board goes down the assembly line. The workers have to
plug in four or five parts into the circuit board. That means
they have 2.25 seconds to 2.8 seconds to do every operation. In
one hour, they do 1,600 operations. In 1 day, in the 11-hour
shift, they do 17,600 operations. And in the week, they do
105,000 operations, the same over and over again. The pace is
relentless, furious, mind-numbing, exhausting.
Workers who fail to meet the production goal have to remain
working without pay until they reach the goal. Workers say they
feel like they are in prison, as security guards roam the lines
and often beat the workers.
The workers are fed some horrible food. They call it awful,
slop. Indeed, we smuggled some pictures out of the factory that
showed this coarse yellow rice and visibly rotten potatoes, and
this is what they were being fed.
Eight workers share each primitive dorm room. They sleep on
narrow plywood bunk beds, often without mattresses. The workers
told us, ``It's filthy, like a pigsty.''
Workers told us that when they want to wash, they have to
get a small bucket, a plastic bucket, fetch some water, bring
it back to their dormitory and splash water on themselves. This
is how they wash. Right now, the temperature would be 96
degrees and it would be extremely humid.
Workers are instructed to spy on each other. According to a
manual from the VTech factory, ``Those who report others'
mistakes would be rewarded monetarily.''
One young woman told us, ``Sometimes I want to die. I work
like hell every day for a dull life. I can't find a reason to
live. Given that living is so tiring, seeking death might not
be a silly thing.''
After just one month of work, back on December 27, 2009, a
20-year-old man at VTech jumped to his death from the sixth
floor dormitory. His supervisor had constantly attacked him and
Less than a month later, on January 20, 2010, a young woman
took an overdose, a fatal overdose of sleeping pills because
she was constantly badgered and harassed by the management.
Conditions are so miserable for the 30,000 workers at
VTech, at VTech's factories in Dongguan that 80 percent of the
workers try to flee the factory each year.
To keep the workers from fleeing, management withholds one
month's back wages, including overtime, to try to control the
workers and keep them in the factory.
VTech also cheats their workers on their legal social
security benefits which are due them. Millions of dollars are
going into the pocket of management at the cost of the workers.
There is some small good news in that improvements are
beginning to be made at VTech. Under enormous pressure, the
corporations like Philips and Motorola, they sent auditors, put
them on the ground in the factory, and produced some of these
studies over the last several weeks, and they have just
reported back to us that they have confirmed many of the
violations that the institute had documented.
VTech now is responding to the audits and is saying that it
is going to come up with a remediation plan to improve
conditions. I am not sure if we can believe that.
But one slightly maybe positive action here is the
Sustainable Trade Initiative's electronics program, which was
funded by the government of the Netherlands and by several
corporations, such as Philips, and they have moved beyond the
monitoring, auditing of just a factory, and now they are saying
that it is only when there is a worker-management dialogue in
place that a company can possibly improve labor conditions.
And Philips has asked VTech to join the Sustainable Trade
Institute. This may be something that the U.S. Government would
like to look into or U.S. corporations, for that matter. But
even having said that, nothing will change in the global
economy without enforceable labor rates.
I want to especially thank the Chairman and the Cochairman
for your leadership. You do so many bills, maybe you do not
remember, but for your leadership and commitment back in 2007
when you introduced the Decent Working Conditions and Fair
Competition Act, which, when it passes, it is not, of course,
going to pass now, but someday, when that passes, it will amend
the Tariff Act of 1930 to prohibit the import and export of
sweatshop goods to the United States--the import, the export,
or sale of sweatshop goods in the U.S. Nothing will change.
Multinational corporations have demanded and want all sorts
of enforceable laws to protect their products, intellectual
property rights, copyright laws, backed up by sanctions.
Microsoft is protected, Apple is protected, VTech is protected,
Barbie Doll is protected, the NFL is protected.
But when we say to these corporations, ``Can't we have
similar laws to protect the rights of the human being, as you
have to protect your products,'' the corporations say, ``No, no
The corporations claim that extending protections similar
to those currently afforded to products to defend the rights of
human beings would be an impediment to free trade. So we have
laws to protect Barbie Doll and Apple, but no laws to protect
the human beings who make them.
Nothing will change unless there is some change in policy
and we have enforceable laws. Otherwise, China will keep
dumping the sweatshop goods in the United States. Right now,
$34 million an hour are coming in from China products, $810
million a day is coming in in terms of a trade deficit with
I want to end the statement with a remark from an
undercover labor leader in China, and I will go through this.
This is quite short.
He just wrote us yesterday and he said, ``We think opposing
the current authoritative regime in China and encouraging
transformation toward democracy conformed to benefits of
Chinese workers, all human beings, we call upon all just
countries around the world, especially the United States to
oppose the Chinese Government, a government that suppresses its
people's demand for democracy. Ask the Chinese Government to
protect human rights to grant these people freedom of
association and to let workers organize unions freely.''
In the meantime, the United States should boycott sweatshop
products from China and broaden support for grassroots
organizations in China and American organizations that deal
with labor issues in China.
We oppose sacrificing human rights in exchange for short-
term economic gain. This is not only harmful for the
improvement of working conditions in China, but also
unfavorable in terms of the long-term interest of other
I want to thank you, again, for this incredibly important
work that you do with this Commission, because some changes
have to come for the workers in China.
Chairman Smith. Thank you very much, Mr. Kernaghan.
[The prepared statement of Mr. Kernaghan appears in the
STATEMENT OF LI QIANG, EXECUTIVE DIRECTOR AND FOUNDER, CHINA
Mr. Li [through an interpreter]. I would like to take this
opportunity to thank the Commission for giving me the
opportunity to testify here today.
Back in 2000, when the U.S. Congress was debating whether
PNTR should be granted to China, I testified, as well, by
saying that the Chinese workers would be working like machines.
Charlie just gave you a very vivid description of what was
happening in the VTech factory. As a matter of fact, I myself
worked in factories like that, and conditions were even worse.
It was because of my experience working in factories like
what Charlie was describing that I came to this country and
founded China Labor Watch. The conditions that he described
just now do exist in most plants and most factories throughout
We did an investigation on 10 supplier plants supplying
parts to Apple, and we found that most of them would have
conditions as Charlie was describing.
The workers have to endure very long work hours, making
very low wages, and doing very extensive--extraneous work.
The second topic I would like to touch on today is the
audit system employed by multinational corporations. What I
would like to say here is that the systems, these audit systems
are not very effective and they are actually corrupt.
Third, substantial advances in labor conditions in China
are far more likely to occur only if two things happen. First,
the multinational corporations operating there must push for
appropriate improvements; and, additionally, the Chinese
Government will have to take a more aggressive role in
enforcing its own labor laws.
As Charlie was describing, the poor and harmful working
conditions in the VTech factories, in our investigation, we
found that the working conditions exist in factories throughout
China, not just in Foxconn.
While we were putting together this report, another
accident took place, last Friday, at one of the Apple factories
in China in which one worker died and four were left in a coma.
By the same token, last year, accidents took place in Apple
supplier plants in which 4 people died and over 50 workers got
What I would like to say here is that in the audit report
vis-a-vis working conditions at Apple plants, they did not talk
about things that were not favorable to them. One factor, for
example, throughout the supplier plants supplying parts to
Apple, they extensively used dispatched labor, and these
workers have even worse working conditions than regular
employees of these plants and they work even longer hours. And
sometimes they have to put in 180 hours in overtime. And when
we look at injuries, on-the-job injuries, most of the injuries
happened to these dispatched laborers.
In addition to what we found in Apple-supplied plants, bad
working conditions exist in supply plants for HP, for Dell, and
for Samsung. These multinational corporations do have an audit
system. However, I think the audit systems are severely flawed.
According to my very conservative estimate, some 30,000
plants--over 100,000 audits are conducted for over 30,000
plants. Normally, recommendations in the audit reports would
require the investment of millions of dollars. So the
multinationals would, more often than not, bribe the auditing
companies by giving them, like, $3,000 or so, so as to avoid
making the investment to make the improvements.
I have a very specific example, and that took place in
2007. The toy factories exporting toys containing lead to the
United States passed the quality audits from the auditing
companies. Again, in 2009, we came across another incident in
which the International Council of Toy Industries [ICTI]
commissioned an auditing company to audit one of the toy
manufacturers in China.
We learned that the toy manufacturer bribed one of the
auditors by giving him $3,100, and we reported this incident to
ICTI and the toy industry association. In response, ICTI did
another audit and they found that fraudulent deeds did occur.
So they canceled the certification.
Well, I can give you an example. For a typical toy
manufacturer, it may employ 200 workers for the low seasons and
the number may go up to 500 for high seasons. In order to
implement recommendations in audit reports, they may have to
spend $20 per head, per worker.
Take this particular manufacturer, for example. If we did
not report this incident to ICTI, the manufacturer would have
to come up with $45,000 to implement the recommendations in the
audit report. Instead, they bribed the auditor.
We came across nine incidents like this in our
Now, after we reported the dishonest audit result to ICTI,
they published the identity of our informant in its compliance
newsletter. The audit firm is Intertek, a U.K.-based company,
and they have over 30,000 auditors.
In order to protect its own interest, Intertek went back on
its promise to keep the informant anonymous. What I would like
to point out is that the same company does audit reports--does
audit inspections for many U.S. companies. Big American firms,
such as Costco, are their clients.
In my estimate, about one-third of U.S. corporations are
clients of this particular auditing firm. And, of course, the
auditor reports would be made up of facts. However, they ignore
some of the facts.
It is my view that it is the responsibility of the
multinational corporations to change the labor, bad working
conditions in China, in addition to urging the Chinese
Government to do something in this area. We need to put
pressure on multinational corporations, as well.
The very reason for Apple to have hired this auditing firm
to do audits is that it got bad publicity and it came under
We know that Apple's profits amount to $13.1 billion for
the net profit for the first quarter of its 2012 fiscal year,
and that would amount to the annual wages for 300,000 Foxconn
workers for 11 years. And the stock awards worth $380 million
Tim Cook received when he was appointed as the new CEO amounts
to the total wages of 300,000 workers.
Corporations like Apple do have resources to change the
conditions, and I think we should start with Apple to really
change the conditions on the ground.
Again, I would like to thank the Commission for giving me
the opportunity to testify today, and I hope that hearings like
this will make a difference so that the working conditions in
China will be improved.
Chairman Smith. Thank you very much, Mr. Li.
[The prepared statement of Mr. Li appears in the appendix.]
STATEMENT OF HARRY WU, FOUNDER AND EXECUTIVE DIRECTOR, LAOGAI
RESEARCH FOUNDATION AND LAOGAI MUSEUM
Mr. Wu. I want to add something to what we are talking
about. In 1999, when the Motorola CEO, when he went to China,
he met the Chinese Prime Minister, Zhu Rongji. Here is the
The CEO of Motorola said, ``I want to set up a factory in
China to produce the iPad.'' And you know, until today,
Motorola, all their iPads were made in China. And the CEO said,
``I want to produce the iPad in China.'' And Zhu Rongji said,
``No problem. What do you want? '' And the CEO said, ``Nothing.
I don't want anything. But I care about one thing. I hope the
Chinese workers are not going to organize a union.'' And the
Chinese Prime Minister said, ``So do I, no problem.''
You see, that is why China does not have unions. And all
the iPads right now are produced in China, now all made cheap.
And every big factory, big company in China, they have a
Communist Party office, Voice of America reported.
There is very little cooperation there. So what do you want
to do? You have a hearing, you want to stop it? I hope so, but
I do not think so, because China is China, China is not the
Soviet Union. If this happened in the Soviet Union, they
probably would say, ``No, we can't do it. We are not going to
share our technology, investment, whatever, with Soviet
devil.'' But the Chinese Communist Party supposedly is not a
devil, because they are honored guests in our White House.
I do not know. Fidel Castro cannot come to the United
States, but Fidel Castro can meet Roman Catholic Pope. The
Chinese say Roman Catholic in China is illegal. This is the
environment in China. But today, I was very happy to be invited
to this Commission to talk about labor rights. But I want to
narrow, very narrow, only concentrate on maybe 3 million, maybe
around this number--the prisoners--because if you have a chance
to visit Chinese prison camps, all the prisoners are forced
Laogai, that means forced to labor and forced to reform.
That means you have to forget your political ideals, religions.
No, no way. You have to think about you having to support
Communism. This is so-called reform. And every factory is very
I was in a camp. I was in a coalmine working two shifts a
day, 12 to 12 hours. I was on a farm, early every morning we
get up. When the sun is setting down, we return. Are they going
to pay? Forget it. The forced labor is a way to reform. You
become a new socialist person.
And now the Chinese separate so-called enterprises from the
prison camps. But by Chinese law, in the last 50 years, every
prison camp has two different names. One is Judiciary No. 5,
Laogai Detachment, or No. 7 Prison Camp, and another name is a
coalmine, is a construction company, is a farm, is a
manufacturer of machine tools, or is the biggest rubber boots
factory. They can manufacture 80 million pairs of rubber boots,
and you can find them in Wal-Mart, in Home Depot. I bought
rubber boots on the prison camp--exactly the same in the Wal-
Mart. But I heard, in 1985, when I came to the United States,
Wal-Mart said, ``Our enterprises order products made in the
United States. We are patriotic.''
But today, the report says 91 percent of the Wal-Mart
products are made in China.
But do you really care about the products made in China? So
far, I have heard that in California, there is a company that
imports brakes. Because the quality is not good, not strong
enough, they cannot stop the car, they cause an accident. They
want to return it, stop the contract, and the Chinese know.
That is why the Communists say, ``Oh, I want to tell you; this
is from No. 3 prison camp in Shaanxi Province.'' So there is a
Another company from Texas is making mugs. Next to the
company, another factory, the Maolong prison camp. Two mugs
manufacturers, export the products to the United States.
But who cares? If this is cheap, we do it.
So I do not know what should we do. American economy
involved with China too much.
On the Dun & Bradstreet, there are 314 enterprises.
Actually, it is a prison camp. But what should we do? I do not
Chairman Smith. Mr. Wu, thank you very much.
[The prepared statement of Mr. Wu appears in the appendix.]
Senator Brown. Thank you. Thanks to all three of you for
your testimony. Mr. Yan, thank you, too.
Mr. Li talked about the audit systems, called them
ineffective, corrupt, mentioned bribery, mentioned other--sort
of other elements of how all this works.
Could all three of you just talk to me briefly about--each
of you give your thoughts on what we can do here with U.S.
corporations that contract with these auditors, these auditing
Sometimes companies in the United States contract with them
for purposes of answering media inquiries and relieving the
pressure that they get from stories in the American media.
Other times, some America companies want to do the right
thing here. Some American companies, I think, do care that the
work conditions are perhaps not as good as they could be.
Starting with Mr. Kernaghan, if you would give me your
thoughts on what we do to encourage companies, not just Apple,
but companies like Apple and others to upgrade, if you will,
the auditing system to make sure that the auditors are neither
bribed or do the bribing or that the reports that they get back
are legitimate and that the conditions that they audit will
improve as a result of the audit.
Mr. Kernaghan. I think the auditing process is very
difficult, especially in a place like China, where workers are
very frightened to speak truthfully, and they separate the
workers. They are all from different--these are migrant
workers. They are all from different areas. They do not even
let them be in the same dormitory together. So they put them
out, so they are always alone and they can never build, like,
I think what happened with VTech, they came back to us
immediately and they said, ``No, everything is fine.'' And
VTech said, ``Well, they're going to sue us and bring a legal
suit against us. We just kept pounding them with the facts
about what is really going on in the factory, and it was not
until then that the monitors actually took it seriously.
At the beginning, they said, ``No problems, you've got it
completely wrong. And then all of a sudden, they started to
back away. When we did not chicken out, they started to back
away a little bit from VTech and then they confirmed that they
did find these violations. But I do not think they worked very
hard to find those violations. They would rather not find the
So one of the ways to--I am not a believer in monitoring.
It is much more important, I think, to have the laws,
enforceable laws. But if the monitoring is to work at all,
there is going to have to be outside pressure put on the
corporations and there is going to have to be research coming
out of those factories to keep pushing and pushing.
Without these undercover people in China, we would not know
a single thing. There would be nothing and it would just be the
monitors going in and talking to management and talking to some
workers who are already trained to lie.
So this is really going to have to be driven by unions in
the United States, by Members of Congress, by activists, by
If we do not keep pressure up on these companies in China,
and their buyers, they will do nothing. That is our experience.
Senator Brown. Mr. Li?
Mr. Li. Well, once an audit report is submitted, I think
the recommendations would have to be implemented. Otherwise,
the things will go back to square one. And in the wake of
Charlie's report, VTech, I am sure, did something to make some
improvements on a temporary basis. However, one or two years
down the road, it will go back to square one.
I think one of the ways to alleviate the bad working
conditions is really to set up hotlines accessible to workers.
Groups should be allowed to access the workers on the floors to
make them aware of the labor laws and, also, to set up hotlines
so that workers could just pick up the phone and dial the
number whenever they have a complaint.
Senator Brown. Will workers believe that their privacy is
protected if there is some way of establishing some hotline,
their confidentiality and privacy is protected?
Mr. Li. Well, this is what we did in China last year. We
set up hotlines in 35 plants in China by which Chinese workers
would call our China office via those lines. And, in turn, we
will talk to the supplier plant, to the supplier factory.
Afterward, we would follow up on their implementation. And
I think there are organizations other than us in China having
hotlines. However, only a fraction of factories in China have
hotlines like this, because after all, for multinational
corporations, this would increase their costs.
For instance, because of the hotlines, maybe the plant
would have to provide better housing, better food, and would
pay more on workers' behalf into the healthcare system, and all
these would add up.
However, on the other hand, the companies, the plants, and
factories themselves stand to benefit in that better working
conditions would see lower turnover rates among workers. The
workers would tend to stay with their jobs.
And, in turn, the factories and plants would spend less in
training, and I think this would be--again, setting up the
hotlines in these plants and factories would be a very good
first step to take, and this would be acceptable to the plants.
This year, the number of our hotlines will increase to 110
Senator Brown. Good. Thank you.
Mr. Chairman, thank you very much.
Chairman Smith. Thank you very much.
Just a few questions. In her testimony, Thea Lee from the
AFL-CIO will say that she would like to see both the
Administration and the Congress put protecting workers' rights
at the center of the U.S. and Chinese Governments' dialogue,
not as an afterthought behind other trade and foreign policy
Is that being done? Has that been done?
Mr. Kernaghan. No, not at all. There will have to be
tremendous pressure from the United States and from U.S.
corporations to finally respect the local labor laws in China
and the internationally recognized worker rights standards.
They are in complete 100 percent violation at this point.
So the pressure has to continue. We are only at the very first
Mr. Li. The problem in China in enforcing and implementing
the labor law is that there are no advocates. There are a few
so-called advocates, and these are unions, and unions are
controlled by state.
Chairman Smith. My question, Mr. Li, is has the United
States, President Obama, the Secretary of State, the U.S.
Congress, they are the leads; they are the Executive Branch.
Have they done what Ms. Lee has asked; have workers' rights in
China been made a priority?
Mr. Li. There is a lot they can do. For instance, as a
first step, they can put pressure on companies like Apple and
if Apple has done something, then probably the other
corporations will follow suit.
And that, indirectly, would have some impact on labor law
legislation in China.
Chairman Smith. But to date, they have not.
Mr. Li. Right.
Chairman Smith. I ask that--it has been my experience--I
have been in Congress 32 years and when the trading
relationship with China was emerging in the 1980s and then,
certainly, took off in the 1990s, we had an opportunity, in my
view, to seriously put fundamental human rights, the broad
spectrum of human rights, including and especially labor
rights, at the core of that relationship.
President Clinton, when he linked most-favored-nation
status with human rights, included labor rights. One year after
linking it, he delinked it in an infamous reversal of policy
that happened on May 26, 1994.
Our trade deficit was peanuts then. As, again, Ms. Lee
points out in her testimony, in 2011, it was $295 billion. We
talk about foreign sourcing as being a problem. It seems to me
that there is a magnet that is huge and enormous, causing those
jobs that used to be in the United States to relocate to China.
Yet, under Clinton, under Bush, and now under Obama, we
have made workers' rights a non-priority. Is that correct or do
I have something wrong here?
Mr. Kernaghan. Correct.
Chairman Smith. Thank you. Can any of you tell us why the
U.S. Trade Representative [USTR] has not initiated the crushing
of worker rights as an unfair trading practice? Have any of you
had any ability to pierce that organization's unwillingness?
I would point out that a few years ago, again, working with
the AFL-CIO, a very serious complaint--a request--it was a mere
request filled with documentation that was filed with the U.S.
Trade Representative to launch an investigation of the
violation of workers' rights as an unfair labor practice, and
they refused and they refuse to this day.
Do any of you have any thoughts as to why that might be the
case? Why does the USTR not undertake that initiative?
Mr. Kernaghan. They are much more concerned for their
corporations that that comes first and in any way promoting the
rights of workers, the legal rights of workers, if that would
damage the economic relationship with China, they will not go
But on the other hand, just like you said, we are having
our clocks cleaned as the stuff just flows into the United
States made under illegal conditions.
But, no, no one has been able to stand up to that yet
within the Administration.
Chairman Smith. Mr. Li, you bring out a very good point in
your investigation of 10 of Apple's suppliers that the auditors
appear to have corruption issues, and you mentioned that one
whistleblower was exposed.
Could you tell us what happened to that whistleblower?
Mr. Li. Well, they disclosed the name of the informant and
death threats were made to him. So he was forced to leave his
job to go back to his hometown.
Before this, Intertek actually had entered into an
agreement promising anonymity. However, out of their own
interest, they selectively used the information that was
favorable to them.
Chairman Smith. Could I ask you--Mr. Kernaghan, you might
want to answer this, or any of you. Chinese companies not only
pay their workers 10 to 50 cents per hour, but they also do not
have OSHA protections, occupational health and safety; they
ignore or have inferior environmental protections.
What has been the impact? Has anyone ever been able to
quantify it? I know it is a dictatorship, so getting
information is hard. But what has the impact on the workers'
health been? We know that, or at least we believe that,
according to official numbers, something on the order of
125,000 people die in work-related accidents, and that number
perhaps has gone up. That was a few years ago. The official
number usually is a mere shadow of what the real number is.
And I am wondering, has anybody looked at the health
consequences attributable to this outrageous worker rights
abuse network in the PRC?
Mr. Kernaghan. Just from the little research we did with
the VTech company, they did not pay social security benefits to
the workers for at least the first six to eight months. So you
are talking about $8 to $12 million went into the pocket of the
company by not paying for social security, which would cover
work injury insurance and some medical insurance.
When they force the workers, what they do at VTech is they
keep one month's back wages. So, for example, your wages at the
end of June will not be paid until July 31. Well, that is the
way they keep the workers in the factory, because the worker
tries to leave these miserable conditions, they will lose a
whole month's worth of wages.
So they have them, and it is all manipulation. And, no,
again, just concretely, in VTech, there was absolutely no
knowledge of the thinners that they were using and what was
affecting them. All they knew is they got paid an extra, like,
10 cents if they did the dangerous work, if they worked at
night, and they worked with the thinners. But I think the AFL-
CIO would know a lot more.
Chairman Smith. Mr. Li?
Mr. Li. I would like to add one thing, and that is most of
these workers work under very strenuous conditions and a lot of
them work for only a few years before they have to leave. And
when they do leave, they are not fairly compensated by their
Chairman Smith. Can I ask you, how integrated is the laogai
system and its use of gulag labor with feeders and supply
chains in China?
Right after Tiananmen Square, Congressman Frank Wolf and I
visited Beijing Prison No. 1, where jelly shoes and socks were
being made for export. We saw factory workers' heads shaved,
very gaunt, and at least 40 Tiananmen Square activists in large
vats with dye all over their bodies. Obviously, the dye is
penetrating their skin and being absorbed into their systems.
And we complained to the Administration that we knew,
because we brought back the socks and the jelly shoes, that
were being made by convict labor, including political
prisoners, and it was showing up on our shores. An import ban
was imposed and that place shut down, although I am sure they
We have a memorandum of understanding that I believe is not
worth the paper it is printed on. It is like Swiss cheese--with
exceptions, big holes--which says that if we suspect gulag-made
goods, we tell the Chinese and then they do the investigation
and tell us what they found. That is like telling the drug
dealer that you are going to do a drug bust or you are going to
be looking at a certain location for illegal drugs.
It is absurd, and yet that is our policy. But my question
goes to the heart of, how integrated are these feeder parts
that end up perhaps in something that is being produced by
those 10 factories. Do they have any convict labor?
We know that all throughout Africa, we have grave
suspicions that convict labor is being exported to build roads
and bridges and buildings throughout Africa.
So how integrated is it, Mr. Wu?
Mr. Wu. In the 1990s, American Customs Service issued more
than 30 of those products for import to the United States, and
five to six American companies were sued by American Customs
and went to the court. But you never heard anything from
Customs Service in 2000 and even today.
I just do not know why. Have the Chinese really stopped
prison-made products for exportation? Actually, they are very
busy. All the prisoners are working overtime. For example, in
Shandong Province, you are working 13 hours a day today. And in
Guangdong Province, all the prison camps right now are almost--
they transferred farming into working indoors making garments.
Where are the garments, only for domestic? No, they are for
So the national trading companies sell it to Americans or
the company and they indirectly sell it, that is it. But
anyway, if the product partially or wholly is made by the
prisoners, it is illegal. So I want to say these are the kind
of things that today, the American Customs Service really cares
or does not care.
For this insurance process and training program and
workers' rights, I think basically there is one point. The
workers do not have the rights for association or for free
speech. This is the problem.
Chairman Smith. Mr. Li, in your testimony about the 10
factories that were investigated, you point out that most of
the factory workers are young females.
In a hearing here in this room just a few months ago, we
heard from a woman who had been forcibly aborted because the
enforcement of the one-child-per-couple policy is done at the
I am wondering if you or perhaps any of our other witnesses
have looked into U.S. corporations' complicity in that barbaric
policy that relies on forced abortion to implement its one-
Have you looked into that? And before you answer, on one
trip to Beijing, I met with the U.S. Chamber of Commerce in
Beijing and asked that question, and only one corporate head or
government person who was in that room said they insisted that
the language to enforce that barbaric policy was taken out of
Do you find that that is the case here? Are these women--
this woman who testified told us that one of her factory
workers noticed that she was pregnant and informed on her. And
so informants who comply with that policy, we are told, are
Did you find this in any of these factories or did you even
look for it?
Mr. Li. Well, I did not--we did not come across things like
that in our investigations.
Chairman Smith. But did you look for it? Did you inquire?
Mr. Wu. I got information, in Hunan Province, there is more
than 1,100 high school teachers fired because of violating the
so-called population control.
Chairman Smith. In Hunan.
Mr. Wu. 1,100 in Hunan Province, because by law, if you
violate the population control, you definitely were fired.
Chairman Smith. Mr. Li?
Mr. Li. This would be something that we will be looking
Chairman Smith. I appreciate that very much.
We recently had Nicholas Eberstadt testify here from AEI
[American Enterprise Institute]--and this will be my next to
last question--and he said China has to grapple with a coming
implosion economically and otherwise, because of its
increasingly male population because of the one-child policy--
they are missing about 100 million girls, the numbers vary on
both sides of that equation, and an increasingly older
population, as he said, increasingly male and increasingly
Does that have any impact on the push by these courageous
activists who are trying to form labor unions? As I said
before--and I have met some of them inside of Beijing--they are
amazing. They want to form labor unions, and they are willing
to take the consequences.
But China will soon face, I believe, a huge economic
upheaval directly attributable to the missing girls and the
senior population that will soon be almost the equivalent of
the number of people that are working.
How will that affect labor rights? This is a mega-trend we
are talking about.
Mr. Wu. China has a national policy, so-called population
control. That very clearly is the number-one policy. It means
above all the other policies. So if the local Communist
secretary cannot care about the policy, he will be fired.
So this is the number-one policy, and the population
control policy until today, they say, ``Well, we reduce
probably 400 million population.'' And this is a large number
and this number is confirmed by the Chinese Government. And I
really hope this serious problem is related to the workers'
Chairman Smith. Mr. Kernaghan, on child labor, do you find
that China is using more children or less? Is there a trend
line that is positive at all, because, obviously, worker rights
are non-existent for everyone else, but they are certainly even
worse for them?
Mr. Kernaghan. I think that one thing that is maybe
changing slightly would be the child labor, because that is the
one thing that U.S. companies are afraid of. So in some ways,
the workers--just an hour of experience when we were doing this
work, it seems to have gone down significantly, but that is
just anecdotal information from the few factories we have been
able to investigate. So they may know much more.
Mr. Li. In our investigations, we did come across child
laborers, and their products are sold into the United States.
And in our latest investigations, we, by the same token, came
across child laborers.
When plants and factories are running shortages of labor,
they would definitely hire child laborers in order to fill
their orders from the United States.
Chairman Smith. Let me ask the final question, Mr. Li. Did
you convey your findings to the U.S. Labor Department and U.S.
Department of State, with regard to Apple and, if so, what was
their response? Did they take this and say--as well as the
Human Rights Bureau at the U.S. Department of State?
Mr. Li. I have. We had contacted the U.S. Department of
Labor, U.S. Customs and Border Protection, and U.S. Department
of Homeland Security. We sent the report to the officials in
the Department of Labor, but did not submit an official report
according to their procedures.
Chairman Smith. How long ago was that?
Mr. Li. Last year.
Chairman Smith. What time last year?
Mr. Li. In the August-September timeframe.
Chairman Smith. And still no word a year later. Did they at
least enter it on an interim basis, get back to you, and say we
found this to be credible or not credible? Do you know if our
mission in Beijing or our embassy is investigating this?
Mr. Li. No. I have not heard from them.
Chairman Smith. That speaks volumes.
I thank you so very much and appreciate your insights and
your testimony. We all do, and it gives us a great basis for
going forward. It also helps us with the human rights report
that the staff is working doggedly on. So thank you so very
I would like to now invite to the witness table Thea Lee,
the Deputy Chief of Staff of the AFL-CIO, who has also served
as a policy director and chief international economist.
Previously, she worked as an international trade economist
at the Economic Policy Institute in Washington and as an editor
at Dollars & Sense magazine in Boston. She received her BA from
Smith College and MA in Economics from the University of
Ms. Lee is co-author of ``A Field Guide to the Global
Economy.'' Her research projects include reports on the North
American Free Trade Agreement, the impact of international
trade on U.S. wage inequality, and the domestic steel and
She has appeared on a number of TV and radio shows, and she
has been before the House on many occasions to testify.
She also serves on advisory committees, including the State
Department Advisory Committee on International Economic Policy,
the Export-Import Bank Advisory Committee, and the board of
directors of the National Bureau of Economic Research.
We will then hear from Mary Gallagher, who is an Associate
Professor of Political Science at the University of Michigan,
where she is also the Director of the Center for Chinese
Studies. She is also a faculty associate at the Center for
Comparative Political Studies at the Institute for Social
Professor Gallagher received her Ph.D. in Politics in 2001
from Princeton and her BA from Smith College in 1991. She was a
foreign student in China in 1989 at Nanjing University. She
also taught at the Foreign Affairs College in Beijing from 1996
She was a Fulbright Research Scholar from 2003 to 2004 at
East China University of Politics and Law, where she worked on
her current project, ``The Rule of Law in China: If They Build
It, Who Will Come,'' which examines the legal immobilization of
Her book, ``Contagious Capitalism: Globalization and the
Politics of Labor in China,'' was published by Princeton
University Press in 2005. She has published articles in World
Politics, Law, and Society Review, Studies in Comparative
International Development, and in Asian Survey.
She is the co-editor of several new volumes of Chinese Law
and Politics, including Chinese Justice: Civil Dispute
Resolution in Contemporary China and From Iron Rice Bowl to
Informationalization: Markets, Workers, and the State in a
We will then hear from Mr. Earl Brown, who has represented
trade unions and employees in U.S. labor and civil rights
litigation since 1976. Mr. Brown is now Labor and Employment
Law Counsel for the American Center for International Labor
Solidarity, and International Workers' Rights, an NGO
affiliated with the U.S. labor movement.
Mr. Brown previously served as General Counsel,
International Brotherhood of Teamsters, Associate General
Counsel, United Mine Workers of America, and a partner in a
U.S. labor and employment law firm.
He is a fellow of the College of Labor and Employment
Lawyers, and is union co-chair of the International Labor Law
Committee of the Labor Law and Employment Law Section of the
American Bar Association.
A graduate of Yale University and the University of
Virginia Law School, Mr. Brown has taught labor, employment,
and discrimination law, and labor history at both U.S. and Thai
universities, and has published on U.S. and international labor
He is a member of the Alabama and District of Columbia Bar
Associations and numerous Federal court bars. He served as a
law clerk to the honorable James C. Turk, Chief Judge, U.S.
District Court, Western District of Virginia.
Ms. Lee, if you would proceed.
STATEMENT OF THEA LEE, DEPUTY CHIEF OF STAFF, AFL-CIO
Ms. Lee. Thank you, Chairman Smith. I would like to thank
you and commend you for your leadership on this topic and for
holding this hearing today. This is an important issue that
does not get enough attention, in my opinion, both in terms of
the economic impact on American workers and American business,
and, also, the moral issue that is at stake here.
I will summarize my testimony and go straight to the heart
of what I think is the issue at hand here, which is how the
U.S. Government does or does not use its leverage with respect
to the Chinese Government to bring about change.
The violations of workers' rights in China are very well
documented, including by many of the people who spoke on this
panel before you just now, as well as the U.S. Government, the
State Department, and various nongovernmental organizations.
And, yet, so little happens, as you say. You and I both have a
long history of frustration at the inaction on this topic, but
I think that change is possible.
As I said in my written testimony, we would like to see our
own government, both the Administration and the Congress, put
protecting workers' rights at the center of the U.S. and
Chinese Government dialogue, not as an afterthought behind
other trade and foreign policy concerns.
You asked the first panel whether this has happened or not.
This, obviously, does not happen. The U.S. Government has
several formal dialogues with China that happen several times a
year, both the Strategic and Economic Dialogue and the Joint
Commission on Commerce and Technology [JCCT].
Workers' rights could easily fall in either one of those
areas. They are all about trade and they are about the economic
relationship between China and the United States. While
dialogue is not the most powerful way for the U.S. Government
to raise the workers' rights issue, it certainly is the first
way. We would think that as a starting point, whatever we think
about the other stronger measures that could and should be
taken, the very least that our government could do is to shine
a spotlight on this issue.
Yet, when you see the agenda for the Strategic and Economic
Dialogue, or the JCCT, actually, I think workers' rights is
never one of the prime topics. I am often informed by somebody
in the U.S. Government that, in fact, workers' rights will be
discussed, it is just not important enough to actually put on
the published agenda.
The same goes for when many members of the Administration
visit China and make speeches. There are a lot of issues that
come to the top, whether it is foreign policy concerns or
intellectual property rights concerns or market access
concerns. But we very seldom hear a top official of the U.S.
Government raise workers' rights, unfortunately, and that goes
for both Republican and Democratic administrations.
Why not? Well, there are a couple of reasons. One is there
are other priorities, like a burning foreign policy issue or
other trade issues that are important. The second issue is
often that it is irritating to the Chinese Government. That is
very likely the case. I can believe that it is not welcome to
the Chinese Government to raise some of these issues around
workers' rights, and, yet, I do not believe that that should be
the deciding factor for our own government.
Actually, I think what I would like to say about freedom of
association is that, as you heard from the first panel, there
are many, many, many problems that workers in China face. There
is a failure to enforce basic Chinese labor laws, whether it is
with respect to maximum hours, minimum wage, safety and health,
prison labor, or child labor.
But the pivotal worker right is freedom of association and
the right to organize. And if workers do not have the right to
form their own associations at the workplace and to bargain for
themselves with their employers, free of interference from
either their government or their employer, nothing else falls
into place. And it is a cornerstone of democracy and it is a
cornerstone of fairness at the workplace.
One of the things that I find interesting and frustrating
about the way multinational corporations engage in China, and I
go into this a little bit in my testimony, is that I think you
would be hard-pressed to find a multinational corporation that
would welcome the union at the workplace or welcome labor laws
that facilitated the formation of unions.
And, yet, many of these multinational corporations are
suffering in China. They are suffering from a dilemma, and the
dilemma is that they are in a competitive environment where the
labor laws are not enforced, unions are illegal, workers are
routinely treated badly. They cannot get a straight answer from
their own auditors that they hire, they cannot get a straight
answer from their own compliance forces that they send out to
monitor. They spend millions and millions of dollars monitoring
their factories, and, yet, the monitors come back with
inaccurate, inadequate, lame, untrue reports.
The answer, actually, is a union. The thing that these
multinational corporations are missing is a union, because only
a union is on the ground every day. It is of the workers, by
the workers, and for the workers, and that is the only kind of
monitor that a multinational corporation needs. And, yet, we
have this dilemma that they resist that with all their might,
and I think that is unfortunate.
The Chinese Government is also facing a dilemma. The
dilemma that the Chinese Government faces is that it is not a
democratic government and what it fears above all is loss of
political power. So giving workers democratic rights at the
workplace is contrary to the political goal of maintaining
power and maintaining autonomy for the Chinese Communist Party.
So the Chinese Government is also in a bind, because, on
the one hand, I think the Chinese Government can see that
workers need more purchasing power, they need more voice. They
have a situation which is chaotic right now, where, as you
mentioned, there are 30,000 incidents of labor unrest. You also
have worker shortages in certain parts of the country, and you
also have other governments complaining constantly that the
Chinese Government runs these enormous current account
imbalances and that that is taking a toll on other countries,
it is unfair, and so on and so forth.
So there is pressure on the Chinese Government to fix these
issues, and, again, the answer is a union and freedom of
association. And, yet, the Chinese Government is not in a
position to grant freedom of association, because that would
threaten its own political power.
So you have this problem. And how can we solve this
problem? Well, the U.S. Government could solve this problem
because of the very trade imbalance that the U.S. Government
runs with China, which is, as you know, $295 billion a year.
It is an extraordinary imbalance. It is the source of our
weakness. We import much more than we export to China, and that
costs us jobs and puts us in debt to China, both literally and
figuratively. Yet it is also the source of our strength, or it
could be if the U.S. Government chose to use it, because the
truth is that the Chinese Government's economic strategy
depends on maintaining access to the U.S. market.
Multinational corporations are very motivated to maintain
access to the U.S. market from China. And so the U.S.
Government has something that the multinational corporations
and the Chinese Government need, which is control over market
access. And, yet, our government has chosen not to use that.
So let me just end there, because I am anxious to hear from
my co-panelists, but to put that on the table as the key thing.
You raised the issue of the Section 301 workers' rights case
that you cosigned with the AFL-CIO several years ago. This is a
tool that is in the reach of the U.S. Government, but has been
left on the table.
The tool does not work if you do not use it, if you do not
apply it. The Bush Administration twice rejected the Section
301 petition that the AFL-CIO filed, with your support, and,
yet, the U.S. Government could, any day, initiate on its own a
Section 301 case to bring China to the World Trade
Organization, to insist that China live up to its own
obligations to respect international workers' rights.
I thank you for your time and attention. I thank you for
holding the hearing. I look forward to the discussion.
Chairman Smith. Thank you.
[The prepared statement of Ms. Lee appears in the
STATEMENT OF MARY GALLAGHER, ASSOCIATE PROFESSOR OF POLITICAL
SCIENCE AND DIRECTOR, CENTER FOR CHINESE STUDIES, UNIVERSITY OF
Ms. Gallagher. Thank you, Chairman Smith. And thank you for
convening this hearing on this important topic and, also,
inviting me to participate.
In the early summer of 2010, more than a dozen workers at
Foxconn, a Taiwanese-owned electronics conglomerate, committed
suicide by jumping off the roof of the factory dormitories.
In the same few months, workers at a Honda automotive parts
factory went on strike for higher wages and better working
conditions. And these events are related, but I want to point
out that they are also different.
The Foxconn suicides depict the isolation and alienation
that young migrant workers feel as they leave their hometowns
in rural China for industrial or low-level service employment
in China's coastal cities.
The Honda strikers represent a more optimistic trend, the
successful collective mobilization of workers and the emergence
of proto-collective bargaining between labor and management
that led to significant increases in wages for many automotive
These events highlight the transformative changes that have
occurred in Chinese labor over the past decade, both the
negative and the positive trends. And while these changes are
the result of economic and demographic changes and shifts in
China, they are also considerable political and legal changes.
The Chinese state's motivation for these reforms are
grounded deeply in its own fear of instability and worker-led
political unrest. Therefore, these changes are not all in one
direction toward greater liberalization and rule of law
institutionalization. In fact, these changes are really more in
the other direction.
Although they include new progressive legal codes to
improve working conditions, they also include initiatives to
strengthen the role of the party state to manage labor
In my written testimony, I go through these demographic
shifts, including the labor shortage that had been mentioned by
other panelists. China's working-age population will peak in
2015 and fall from 973 million people in 2010 to a predicted
870 million in 2050.
The change in China's demographic trajectory has enlarged
the political and economic space for Chinese workers as
diminishing returns to labor-intensive industrialization and
creates domestic political support for changes to China's
economic growth model.
I think it is important to highlight that in addition to
concerns about social unrest and inequality, this political
shift and greater support for labor protection is linked to the
government's economic strategy and its long-term economic
goals, including increased domestic demand, moving up the
production cycle toward higher end goods, making China not the
workshop of the world, but the laboratory of the world and the
R&D center of the world.
These demographic shifts are then highlighted in the social
context of Chinese migrants. The new generation of migrant
workers is better educated, they come from smaller families,
and they desire to become permanent urban citizens.
Given this generation's higher levels of education, their
better access to technology, the increased integration into
urban culture, they have a greater potential to articulate
collective interests and to act collectively to press for their
interests and rights. These are the employers and the
government alike. This was apparent in the 2010 Honda strikes
and has been apparent in strikes since then.
As I argue in my concluding remarks, however, the
government has not responded effectively to this new bottom-up
push for collective representation.
In response to these economic and demographic and social
changes, the Chinese state has moved since 2003 to pass labor
laws and regulations that strengthen worker rights, enhance
employment security, and widen access to social insurance.
As I show in my written testimony, the law, particularly,
the Labor Contract Law of 2008, has improved some aspects of
employment relations in China. This does not mean that
widespread violations do not continue to occur. They do, as
other panelists have already attested.
But there have been some significant shifts in the right
direction. In the written testimony, I discuss the reduction in
informality and the increase in access to social insurance, as
well as the increasing awareness of Chinese workers themselves
of their own protections and in the labor laws and regulations;
and, also, a diminishing gap between what a real migrant knows
and what an urban worker knows.
Despite these positive changes, one glaring trend is the
marked increase in labor subcontracting, already discussed by
Li Qiang, through middlemen employment agencies that then serve
as the formal employer. This cuts labor costs, allows
subcontracted workers to be paid less to receive little or no
social insurance, and to be dismissed at will.
The NPC, the National People's Congress, has announced this
year that it will revise the Labor Contract Law and focus on
abuse of labor subcontracting. Labor subcontracting also gets
to the issue of child labor, since many subcontracted workers
are student interns.
However, successful revision of the Labor Contract Law will
not be enough to curtail abuse of labor subcontracting.
Improved implementation and enforcement of the changes are also
required, as with all Chinese labor laws.
Finally, I want to get to the issue--well, it is not quite
finally, but I first want to get to the issue of labor disputes
and talk about how these increased expectations by workers at
the workplace and the new laws has resulted in a massive
increase in disputes since 2008 when the laws went into effect.
Labor disputes increased by nearly 100 percent nationwide,
with some localities reporting increases of 300 percent.
Disputes tax the capability of local arbitration committees and
civil courts to settle disputes fairly and quickly.
While the number of strikes is not openly available in
China, it is safe to say that strike activity has also
continued to increase since that time.
In 2010, there were nearly 1.3 million labor disputes
overall, with 70 percent of the disputes mediated, which shows,
also--which is my next point--that the government has been
successful in keeping disputes out of the court and into
Greater reliance on mediation and informal settlement is
especially pronounced when labor conflict threatens local,
social, or political instability, or when it threatens
stability. Those negotiated settlements rely on cooperation
between intergovernmental departments and Communist Party
units, acting as stability preservation committees, going
directly to the site of the conflict to encourage both sides to
end the dispute and to compromise.
Researchers have noted that while individual leaders and
activists may be dealt with harshly, striking workers may
receive some compensation in exchange for ending the strike and
returning to work. This return to mediation and turn away from
the rule of law has been roundly criticized by legal scholars
and has been discussed at previous hearings held by this
Commission. It is not surprising then that we see it also in
the labor realm.
It underscores the Communist Party's ambivalence toward its
recent legal reforms that open up channels for formal legal
resolution and private disputes.
While mediation might appear to be more harmonious, it
often relies on very active government intervention into
disputes, violence or the threat of violence to force
negotiated settlements, and violates the spirit and letter of
China's own procedural codes.
One challenge revealed that the post-2008 increase in labor
conflict that had not been solved by this heavy-handed push of
mediation and the new legal protections is the lack of
institutional capacity in China for labor capital bargaining
around interest disputes.
The vast majority of the nearly 700,000 labor disputes in
2009 were rights disputes, violations of Chinese law. However,
Chinese workers, with their rising expectations, have many
disagreements and conflicts over their interests, such as wage
increases, working conditions, and quality of the cafeteria
Interest disputes simmering over a long period of time are
likely to continue to lead to increased labor conflict in
China, because there are no institutions in China to handle
them preemptively, particularly as the government has shown
little change in its opposition to freedom of association.
Reforms to the All-China Federation of Trade Unions, the
only state-sanctioned trade union, have failed. The trade union
remains severely constrained in its dual role as representative
of labor and as the eyes and ears of the local party state at
The failure is a political one. Liberalizing the forums
related to freedom of association have been rejected. In their
place, the government has decided to inject itself more deeply
into the dispute resolution process through the promotion of
government-run mediation and other measures that maintain and
even strengthen the role of the government in managing labor
relations at the expense of the rule of law and civil society.
As with other aspects of China's political economy since
2008, this greater reliance on the state and the empowerment of
state actors at the expense of civil society, the market, and
the legal system are additional signs of China's retrenchment
and retreatment from reform.
Thank you. I am happy to answer questions.
Chairman Smith. Thank you, Professor Gallagher.
[The prepared statement of Ms. Gallagher appears in the
STATEMENT OF EARL BROWN, LABOR AND EMPLOYMENT LAW COUNSEL AND
CHINA PROGRAM DIRECTOR, SOLIDARITY CENTER, AFL-CIO
Mr. Brown. Thank you, Chairman Smith, for this opportunity.
I am going to try to be brief and summarize things in my
testimony and focus on some aspects that have not yet been
I want to thank the Chair and this Commission for
demonstrating continuing interest and attention to Chinese
labor law. It is a very important topic. We are witnessing
right now in Chinese labor law, how Chinese workers have
agency. They are becoming actors now in the dialogue about
labor policy and labor standards like nowhere else in the
Chinese workers are acting outside an institutional
framework that works, as Professor Gallagher and others have
pointed out, outside a true labor relations framework that
represents workers, addresses grievances, provides for
collective bargaining from an equal, or at least, a position of
some power, and comes up with credible solutions that will
persuade the workers to go back to work. That stable
institutional framework is absent. Therefore, workers in China,
many of them who are, in fact, excluded from Chinese labor law,
by very crabbed interpretations of Chinese labor law, are
forging their own direct bargaining relationships with
Now, I think it is very dangerous to make universal
perscriptions for any country, particularly a country as huge
and diverse as China. But, I also do not believe that any
industrial country can escape the need to have a democratic
grassroots voice at the workplace to solve interruptions of
production in a vast economy with hundreds and hundreds of
thousands of employers. No government bureaucracy, however
adequately funded, could begin to do that.
These young Chinese workers, completely without the benefit
of law, in any way, but with a rights-consciousness deriving
from rights discourse are forging industrial relationships. We
can see that in the Honda strikes in the summer of 2010.
So Chinese workers acted and created a collective
bargaining relationship. They forced the company to bargain, to
throw out the stale law books and deal directly face-to-face
with grassroots workers to forge solutions. What a novel
The second aspect I would like to focus on about these
workers is that the real activists in that strike, about a
third of the Honda workforce at this particular factory, were
interns. Now, in 2008, China passed comprehensive labor
legislation, not to set up an industrial relations system, but
merely to establish some basic rights for workers and to cover
Professor Gallagher has aptly described in a prior book of
hers the ad hoc nature of Chinese labor law that made it almost
impossible to decide who was covered and what was stipulated.
At Honda, many of the striking workers were interns. The
employer took the position, vetted by agencies of the Chinese
Government, that somehow these interns could not be workers
because they are from technical schools, although they are
receiving no particular educational training and are not,
indeed, acquiring any particular educational benefits. They are
simply working on the line. Empirically, they are workers. Yet,
because they do not fit some ontological Marxist category of
worker, they are deemed ontologically to be students and,
therefore, not covered by labor law.
These student workers are a lot of the industrial
workforce. They make up a third of this factory that struck. A
third of the workforce of this Honda factory that struck in
2010 were interns. That is a sizeable proportion of any
workforce. The interns are getting less than standard wages.
They are working right next to other Chinese workers who are
getting better wages, and Japanese workers who are getting even
Anybody with a glancing acquaintance to human relations or
common sense would tell you that that is a recipe for labor
disputes, yet they are excluded.
So I think that if we look at the broad thrust of Chinese
labor law, it is an effort to stage Hamlet without the Prince
of Denmark, without the union. No auditing system works alone.
Factory inspection does not work without unions; no one system
will ever work in that diverse Chinese economy without
including all workers in a workable system of industrial
dispute resolution to secure uninterrupted production.
So I think the remedy for this is simply, as many Chinese
propose and many Chinese recognize, to start off with what the
workers at Honda asked for in 2010--let us elect our grassroots
I would now like to move to visualize this. I have three
pictures here today that I want to show some of the deficits of
Chinese labor law. They are taken from video feeds, so I could
not enlarge them too much.
We have heard people talk about Foxconn, and this here is
the Foxconn factory. Foxconn is a major supplier of Apple. I do
not know if you can see here some nets, some very close, dense
factory dorms and some netting [holds up poster]. This netting
is Foxconn's answer, to workers so pressed by speed-up, by
intolerable production quotas that we heard Mr. Kernaghan talk
about, that they are diving to their death from dorm balconies.
So instead of improving wages, hours, and working
conditions or even talking to the workers, let us set up some
The next picture is from a PR extravaganza staged by the
Foxconn company, a Taiwanese corporation, to turn its bad image
around. When workers dive out of factory dormitories to their
death, people tend to have a bad view of it. So Foxconn's
answer: ``Let's put on a PR extravaganza.''
We have had a big debate at our office whether some of the
people in these pictures [holds up poster] are professional
actors or actresses. The signs say ``I love Foxconn.''
And, finally, in an era where we want to get away from the
culture of personality, here we have the owner of Foxconn, Mr.
Gou, and people parading around with homemade--perhaps or
perhaps not--pictures of himself.
Now, I bring these pictures to show the conditions and to
show that workers need a net of protection of labor law and not
nets to prevent suicide. If you want to equalize trade
advantages and a global economy that works for all workers in
every country, we have to pay attention to Chinese labor and we
have to pay attention to the agency of Chinese workers.
And I want to make two very brief final comments. One is
there is a tendency in the United States to look for
substitutes to worker voice. Just as Mr. Gou of Foxconn is
looking for substitutes, setting up nets and PR extravaganzas,
so too multinational employers and governments who do not want
to face the issue of workers agency, want to put in mediation
techniques instead. Mediation between unequals is not always a
They want to put in these techniques. But, if you
compromise and mediate a minimum wage law and the worker walks
away with a third of the minimum, you have just lowered the
minimum wage of any country by two-thirds. Techniques do not
work without context.
So they are using HR resources, corporate social
responsibility techniques to avoid the obvious need to simply
sit down, recognize workers, talk to them and bargain with
Finally, Cochairman Brown asked a question which I want to
just jump in and answer here, and that is what could Congress
legislatively do? One contribution would be to really entrench
the due diligence requirements for compliance with Chinese and
international labor law standards in U.S. law and to make that
a hard enforceable obligation that directors and corporations
had to pay attention to.
It worked with civil rights law. We were a segregated
country in our workplace. The civil rights laws made employers
pay attention and desegregate. Entrenching these in U.S. law
and in U.S. Federal law, and not shying away from them because
they involve conditions overseas, would go a long way.
A second way to do it and a second element would be the
vast purchasing power of the U.S. Government and requiring that
supply chains be monitored and inspected, and that
representations be made by people who subcontract in those
Thank you very much, Chairman Smith.
[The prepared statement of Mr. Brown appears in the
Chairman Smith. On that last point, Mr. Brown, the new law
going into effect in California on supply chains, do you
think--and virtually every large corporation I would say will
be swept up in that due diligence standard that they have
established--do you have hope that these Chinese corporations
or those multinationals that are in China, that this will lead
to some positive outcomes?
Mr. Brown. I think it will lead to more information, but it
is largely a law of transparency. I think we need to go a bit
further, Chairman Smith, if I may say so, to entrench it as an
obligation with some financial consequences for employers that
violate it, not to make it too onerous.
And in this respect, I would say American lawyers in China
are insisting that their multinational clients obey Chinese
labor law, which is a very good thing and helps enforce labor
But I think insisting that all employers, who sometimes may
not follow their lawyer's advice, comply with applicable labor
law standards would be very important.
Chairman Smith. Would a code of conduct--but, obviously,
calibrated and focused on China, similar to the MacBride
principles for Ireland and the Sullivan principles--be helpful
in advancing worker rights?
Ms. Lee. I am not sure it would if it is a voluntary code
of conduct. There are two problems with a voluntary code of
conduct. One is that it is self-enforcing, and in many cases,
corporations, as I think we have heard some testimony here, do
not really want to know the truth. They want to get off the
hook. They want somebody to report to them that everything is
fine so that they are no longer to blame for it.
Chairman Smith. They are as good as your auditors.
Ms. Lee. The auditors work for you and they do not want to
give you news that is unwelcome. But I think the other problem
is that not every company will sign up to the voluntary code of
conduct. And so you always have the problem of the bottom
feeders, the companies that do not have a big brand name that
they care about. These are the folks who are subcontractors and
buy things without putting their name on it, and they do not
particularly care. If they get caught violating their own code
or the labor law, they can just close down and open up the next
day under a different name.
Chairman Smith. Let me just ask you. Approximately 155 or
over 155 students come to the United States and study here from
China every year. As a matter of fact, it is up--it grew 23
percent in one year, and that includes undergraduates and, of
course, those who go for even higher credentials.
Do they take back any of this? Is there any evidence that
it gets to the workplace--maybe they are not to the point of
forming a union, but in terms of treating people with respect.
They go to our best business schools. Are they learning that it
is not just making money and profits, it is also how you treat
your workers? Is any of that being brought back?
Mr. Brown. I co-taught a course at Rutgers in your State,
sir, for at least 20 Chinese master students in industrial
relations. And we played an NPR [National Public Radio]
documentary that took China's history and included Tiananmen.
And I watched these students watch film about Tiananmen for the
first time in their life and listened to the discussion that
came out after that.
I cannot believe that it does not help and that the
interchange helps us relate to a very complicated country of
China and China relate to us. I cannot believe it is harmful in
Chairman Smith. I would not say it is harmful, but does it
Mr. Brown. I think it has to.
Chairman Smith [continuing]. Has anybody ever been able to
quantify any of it? We know that in the health professions,
particularly in places like Africa, those who come here and
learn public health management and bring those skills back. It
has an enormous, almost disproportionately positive influence.
Ms. Gallagher. If we take a longer term perspective, I
think there have been a lot of improvements related to
workplace conditions in China and particularly related to
public health, because so much more research is being done in
China on public health and workplace safety.
But you have to take a very longer term perspective and
look back to the very beginning of the 1990s when conditions
were, I would argue, worse than they are today.
But one of the reasons I think why you see both improving
conditions and, also, worsening conditions at the same time
even now is that these benefits are accruing to workers who
have education and skills and are industries that have the need
for workers with education and skills.
When we are talking about labor-intensive manufacturing
that really requires workers with very low skills, these are
the areas where we do not see improvement and, in fact, in some
cases, we see things getting worse as these factories move
inland to poorer places in China, with lower standards, with
lower wages, and with just--even if the government officials
had the will, they certainly do not have the capacity to
enforce the central laws.
Also, at the same time, you have local governments in China
that see industry moving to other places, either inland in
China or to other countries, and they have, again, very little
incentive to enforce laws that will hurt their local economy
and that will hurt themselves professionally.
Ms. Lee. I think that last point is really important. I
think international exchanges are a wonderful thing and they
have immeasurable benefits to both countries and in both
I had an intern from China several years ago and he was
actually from a very well-off family, with highly placed
parents. But I like to think that his summer at the AFL-CIO was
a good education for him and that maybe he is the next
generation of leader in China.
But on the other hand, you also cannot substitute for
change in the laws and a change in the institutions. And so
having a few high-minded or well-intentioned individuals, I
think, is definitely not enough if you have a competitive
system where everybody is scraping for that last penny, and the
accepted norm is to beat down your workers and squeeze the last
hour or minute out of their work.
So we need a more systematic answer, as valuable as those
Chairman Smith. Honda decided to give in and provide
additional wages to the Honda workers. Was that under any
corporate guidance from its main headquarters or was it a
China-specific decision, made inside of China by the Chinese?
Ms. Gallagher. My understanding of what happened with the
bargaining is that it rose to a very high level within Honda in
China and that the major negotiations were done by the chairman
of the joint venture, the assembly joint venture between Honda
and its Chinese joint venture partner, although I would imagine
that given that its entire production supply in China was shut
down, that the Japanese--the officials in Japan for Honda would
also have a large say in what happened.
But, again, it really underscored--the Honda strikes
underscored a lot of different aspects of what is happening in
China. They underscored, in particular, the complete failure of
the union to do anything positive during the negotiations, such
that they had to draw in very high-level management officials,
government officials in order to manage the strike, which is
the mode of these large conflicts--the mode of resolution for
these large conflicts, which is incredibly ad hoc and subject
to a lot of abuse.
Chairman Smith. You mentioned the conflict resolution, the
groups that meet, stability preservation committees, you named
it, I think, or maybe that is the name. But do they take sides?
Do they go with the management or is there a propensity to be
on management's side? Because the worker is, unfortunately,
subjected to other kinds of coercion in this society, why not
Ms. Gallagher. Well, it is because it is an ad hoc process.
It depends on the issue at stake, it depends on the level of
conflict and violence that has already occurred. It depends on
the actors involved.
Certainly, the fact that Honda is a Japanese company had
something to do with the fact that it was so widely publicized
in China and that the strike was allowed to go on for a long
period of time.
So it allows the government--this kind of resolution system
allows the government a lot of discretion in how it chooses to
handle those. So in some cases, it does come down on the side
of workers. But in most cases, it comes down on the side of
But it allows the government a discretion that violates a
lot of the procedural issues related to disputes.
Mr. Brown. One major critique that has been heard here is
the link of the union to the government. But one of the
problems with that link is that the link is to the local
government. You can bet employers have an outsized influence in
So when the union and then the labor institutions, the
mediation and arbitration committees meet, I would bet, but I
do not have the empirical data to back it up, but I would bet,
as a labor lawyer, the universal rule is that the local
government is not your friend if you are a trade union. For
obvious reasons--unions up the costs of going in there and set
a floor and resist the race to the bottom.
So these many mediation projects are designed to get rid of
these disputes. I think, at this point, the Chinese Government
has made a bet that they can disaggregate and manipulate
industrial unrest and avoid the need to have autonomous unions,
and I think, over time, that this will not work.
Chairman Smith. Professor Gallagher, you pointed out that
the Labor Contract Law would be revised this year with a focus
on labor subcontracting, and you gave that number of 10 to 28
million--estimates, I should say--of workers who are
Is there any breakout into what industries where that is
more likely to happen? And do the people who really put
together these policies at the National People's Congress, do
they take inputs from the ILO, do they take it from the United
States, do they--I mean, how do they form their view of what
these reforms should look like?
Ms. Gallagher. With the Labor Contract Law, even when it
was first passed in 2007, there was a wide--there was wide
input received from domestic actors, international actors, the
ILO [International Labour Organization], certainly, business
associations, both the American Chamber of Commerce, the U.S.-
And in the revisions, the revisions are also relatively
public, more transparent than they had been in the past, and so
these actors are, again, allowed to comment or to submit
suggestions to how this law should be revised.
The interesting aspect of labor subcontracting which would
make it very difficult for the law to be revised successfully
is that although we see labor subcontracting of labor-intensive
manufacturing, we see student interns in Honda and other
places, labor subcontracting is used very widely by state-owned
enterprises, by government units, by hospitals, by universities
It has simply run amok and the government's attempt to
revise it will really threaten some very important interests
within the government and within the state sector itself.
Chairman Smith. Ms. Lee, if I could ask you. Does the AFL-
CIO contemplate asking the U.S. Trade Representative to
initiate an investigation of worker violations, worker rights
violations as an unfair trading practice?
Ms. Lee. Thank you for the question, Mr. Chairman. We
actually have been contemplating it and we have been working
with folks to update the Section 301 case that we filed several
It has been a little bit slower process than we would have
liked. We have raised this issue a lot in our dialogue with the
U.S. Government, whether it is at the U.S. Trade
Representative's office or the State Department or the Labor
But we have been frustrated by the failure of our own
government to raise this issue in a bilateral context, in an
effective way, and to move forward on it.
And given that frustration, I think the next step is
logically to press for some more concrete trade action.
Chairman Smith. I appreciate that. Please count on me to
support that in any way. And I appreciated you including me as
a part of that complaint or request, whatever it might be
called, last time.
Do you know if it was raised, worker rights, in the most
recent, just concluded, U.S.-China dialogue on human rights,
commenced by Michael Posner, our Assistant Secretary for
Democracy, Labor and Human Rights?
Ms. Gallagher. I am not sure, but there has been a worker
rights component and it has been fairly narrow. I think that
there has been an attempt on the part of the U.S. Government
not to put on the table issues that are too irritating or
challenging to the Chinese Government, and that is how they got
agreement to keep meeting over and over again.
So that, for example, they do not talk about freedom of
association. They have not really talked about collective
bargaining. They do talk about hours and I think they certainly
do talk about safety and health. As you mentioned, the
memoranda of understanding from several years ago, those are
sort of these safer areas of discussion.
But as I said, the pivotal, the core worker right on
freedom of association, I think, is a little bit too
threatening to the Chinese Government. So to my knowledge, it
has not been raised yet.
Chairman Smith. Would any of you like to make any
Ms. Gallagher. Just in relation to this issue, I think in
regard to the human rights dialogue, it is my understanding
that they do raise--at last when I had meetings with them
earlier, not for this most recent one, but that there was a
discussion of collective bargaining and collective
negotiations, maybe not directly about freedom of association.
The Chinese Government has talked a lot about collective
bargaining and negotiations and reviving certain practices, but
never with the intention to allow that to occur with unions
that have been independently established.
So most people who study this are quite pessimistic about
freedom of association. But, again, I would say that the U.S.
Government should not shy away from raising that issue. I think
what we have seen with this kind of institutional vacuum, this
lack of capacity to solve disputes before they become strikes
is a sign that China's current situation is not tenable over
the long period of time, and that some kind of independent
organizations--maybe they will not be called unions for a
while--are necessary in order to reduce the degree of conflict
that is currently.
Mr. Brown. I would only like to sweep in within the embrace
of freedom of association grassroots worker centers and
grassroots worker rights advocacy networks that are springing
up all over China and are being forced under the umbrella of
the official trade union. Many people fear just for control and
suppression. If it is important that the U.S. civil society
attempt to keep up a discussion with these Chinese grassroots
civil society elements that are worker voice, as well.
Chairman Smith. I do have one final question. Do we have
any indication that the Obama Administration has picked or
raised individual cases of labor union activists who are
currently incarcerated, and that means torture, by definition?
Is it on a list that we are saying we want so-and-so to be
released? They should not be in jail simply because they wanted
a labor union.
Mr. Brown. I do not think so.
Chairman Smith. I appreciate that.
Thank you so very much for your very detailed testimony and
information. It certainly helps our Commission do a better job,
and your recommendations will be very helpful going forward.
So thank you so much. The hearing is adjourned.
[Whereupon, at 4:34 p.m. the meeting was concluded.]
A P P E N D I X
Prepared Statement of Charles Kernaghan
july 31, 2012
China's Workers Stripped of Their Rights and Locked in a Race to the
I want to thank you for the opportunity to testify regarding worker
rights before this important public hearing of the Congressional-
Executive Commission on China.
i. as of 2008, phones are no longer made in america
The reason is simple. The mean hourly wage for telecommunications
workers in the U.S. is $16.85 an hour, which is 151/2 times higher than
what VTech pays its phone workers in China. VTech pays just $1.09 an
hour, which is well below subsistence level, and the workers have
precious few if any legal rights.
VTech is the world's largest manufacturer of cordless phones and is
the leading supplier of corded and cordless phones in North America.
VTech produces goods for AT&T, Motorola, Philips, Deutsche Telekom and
Telstra in Australia. Vtech, which makes 172,800 products a day, posted
revenues of $1.785 billion in fiscal year 2012.
What I hope to do today is to put a human face on the workers at
VTech in China.
Suppose your daughter worked at VTech. She would work 12 to 15
hours a day, from 7:30 a.m. to 7:30 or 10:30 p.m., six and seven days a
week. She would be at the factory 70 to 85 hours a week, while working
63 to 77 hours, including 23 to 37 hours of mandatory overtime. This
would exceed China's legal limit on permissible overtime by 178 to 345
Your daughter would be forced to stand for the entire shift. Her
feet would swell up.
The production line never stops. Every 11.25 seconds a circuit
board moves down the assembly line and each worker must plug in four to
five parts. The workers have to complete one operation every 2.25 to
2.8 seconds, producing up to 1,600 operations an hour, 17,600
operations during the 11-hour shift and 105,000 operations a week. The
pace is furious, mind-numbing and exhausting. Workers who fail to reach
their production goals are forced to keep working without pay until the
goal is met.
Workers say they feel like they are in prison, as security guards
patrol the lines as if they were police, sometime beating the workers.
Workers are body-searched on the way in and out of the factory.
Bathroom breaks are strictly monitored. According to the workers,
the factory cafeteria food is ``awful.'' Indeed, pictures smuggled out
of the factory show coarse yellow rice and visibly rotten potatoes
Eight workers are housed in each primitive dorm room. They sleep on
narrow plywood bunk beds, often without mattresses. ``It's filthy, like
living in a pigsty,'' workers told us. To wash, workers must fetch hot
water in small plastic buckets to splash on themselves.
Management hands out ``Employee Criminal Records'' to punish
workers who make a mistake on the production line, which can lead to 29
hours wages being docked from their pay.
Workers are instructed to spy on one another. ``Those who report
others' mistakes would be rewarded monetarily.''
One young woman told us: ``Sometimes I want to die. I work like
hell every day for such a dull life. I can't find a reason to live.
Given that living is so tiring, seeking death might not be a silly
After just one month of work, on December 27, 2009, a 20-year-old
young man jumped to his death from his 6th floor dormitory. His
supervisor had constantly scolded him.
On January 20, 2010, a young woman took an overdose of sleeping
pills, as she could no longer stand the abuse.
Conditions are so miserable for the over 30,000 workers at VTech's
three factories in Dongguan, that 80 percent of them try to flee VTech
each year. To keep the workers from fleeing, management withholds one
month's back wages, including overtime. Instead of being paid at the
end of June, for example, VTech withholds June wages until July 31.
Workers can leave when they want, but they will lose a full month's
VTech management also cheats their workers of the legal social
security benefits due them, and in the process pockets millions of
dollars owed the workers.
Since there is no avenue for the workers to voice their grievances
publicly, they write down their hatred and anger on the bathroom walls.
The so-called All-China Federation of Trade Unions is moribund and
does nothing to represent the workers or lead the workers to fight for
ii. some good news-improvements are being made at vtech
Most of the major customers at VTech--Philips, Motorola, Deutsche
Telekom and Telstra in Australia--have conducted in-depth on-site
audits over the last several weeks at VTech and have confirmed many of
the serious violations the Institute documented.
VTech is now responding to the audit recommendations and is working
on its remediation plan to improve working conditions at the company's
three plants in China. The corporate customers along with VTech are in
agreement that concrete, positive changes must be made.
The Sustainable Trade Initiative's Electronics Program, which is
funded by the government of the Netherlands, along with private
partners Philips, Hewlett-Packard and Dell, is attempting to go beyond
traditional audits. Their goal is to build worker capacity and
involvement so as to improve worker-management communications in
China's factories. Their belief is that only when a worker-management
dialogue is in place can a company work on improving labor conditions.
Philips has asked VTech to join the Sustainable Trade Initiative.
The United States Government and corporations should consider
partnering with the Sustainable Trade Initiative.
iii. right now, throughout guangdong province, local chinese government
authorities and police have launched a witch hunt to suppress
independent labor rights ngos
Independent non-governmental labor rights organizations are being
spied on. Local authorities are shutting down these NGOs, forcing them
to leave, tearing up rental leases, while cutting off their water and
electricity. After local government authorities visit the landlords,
the NGOs find out they now have no lease and must move immediately.
We have always been aware that the Government of China has its own
way of operating, which is often outside the margins of international
law. But this is an ominous development, which will only further weaken
and disenfranchise China's workers.
iv. a human and labour rights leader in china has requested that his
statement be introduced at the hearings of the congressional-executive
commission on china
``The deprivation of the freedom of association severely
infringes the basic freedom of the Chinese people, making the
working class lose its ability to bargain with employers. This
is beneficial for the government because they make production
costs low and retain strong competitiveness in the world. This
harms the rights of not only Chinese workers but also workers
around the world.
``We think opposing the current autocratic regime in China and
encouraging transformation toward democracy conform to the
benefits of Chinese workers and all human beings. This we call
upon all justice countries around the world, especially the
United States, to oppose the Chinese Government--a government
that suppresses a demand for democracy from its people. Ask the
Chinese Government to protect human rights; grant its people
freedom of association; let workers organize unions freely. In
the meantime, [the U.S. Government] should boycott sweatshop
products from China and broaden support for grassroots
organizations in China and American organizations that deal
with labor issues in China. We oppose sacrificing human rights
in exchange of short-term economic gains. This is not only
harmful for the improvements of working conditions in China but
also unfavorable in terms of long-term interests for these
countries. Also, [the U.S. Government] should pressure the
Chinese Government to grant Chinese workers a right to strike,
freedom for association and press freedom, letting Chinese
workers freely express their demands.''
v. only enforceable laws, backed up by sanctions, can protect workers'
legal rights and end the race to the bottom in the global economy
On January 23, 2007, then-Senator Byron Dorgan of North Dakota
along with 25 co-sponsors including Senators Sherrod Brown, Lindsey
Graham and then-Senators Barak Obama, Joe Biden and Hillary Clinton,
introduced the Decent Working Conditions and Fair Competition Act (S.
367) which when passed will amend the Tariff Act of 1930 to prohibit
the import, export or sale of sweatshop goods in the U.S.
On April 23, 2007, Representatives Michael Michaud of Maine and
Chris Smith of New Jersey, along with 175 co-sponsors introduced the
companion bill (HR 1992) in the House.
I want to especially thank both the chairman of this Commission,
Representative Chris Smith, and co-chair, Senator Sherrod Brown, for
your leadership and commitment to introduce the Decent Working
Conditions and Fair Competition Act in 2007.
Workers must have at least the same legal protections as are
currently afforded to corporate products.
Seventy-five percent of Americans agree, according to a Harris Poll
in June 2006.
``We keep hearing now, from just about everywhere, `monitoring
doesn't work,' said U.N. expert John Ruggie. `Just about
everybody, at least off the record, will tell you that
monitoring of suppliers factories doesn't work because people
--Women's Wear Daily, June 4, 2009
Multinational corporations have demanded and won all sorts of laws
in the global economy--intellectual property and copyright laws, backed
up by sanctions--to defend their corporate trademarks and products. But
there are no similar laws to protect the rights of the human beings who
made the product. Indeed, corporations claim that extending protections
similar to those currently afforded products to defend the rights of
human beings would be an impediment to free trade! So, as things stand
now in the global economy, the corporate trademark is protected, but
not the rights of the worker.
The Decent Working Conditions and Fair Competition Act is largely
based on the Dog and Cat Protection Act of 2000, which prohibits the
import, export or sale of dog and cat fur in the U.S. The Dog and Cat
Protection Act was passed in response to public outcry over the fact
that the Burlington Coat Factory jackets were being made in China with
dog and cat fur on the collars. The bill was passed by the House by an
overwhelming 411 votes and was approved unanimously in the Senate.
Congress has shown their commitment to animal rights with the passage
of the Dog and Cat Protection Act. It is time for us to let our
Congress members know that we expect them to show equal commitment to
human rights with the passage of the Decent Working Conditions and Fair
supplementary materials (see below)
(1.) ``VTech Sweatshop in China''; AT&T, Motorola and Wal-Mart and
others Endorse the China Model,'' Institute, June 20, 2012
(2.) Update/Response: ``VTech is Not `A Responsible and Caring
Employer','' Institute, July 12, 2012
(3.) Independent Worker Rights NGO's under Attack in China,
Institute, July 28, 2012
(4.) ``Decent Working Conditions and Fair Competition Act'' to
legally protect local and internationally recognized worker rights
standards. (House Bill HR 1992; Senate Bill S.367)
Prepared Statement of Li Qiang
july 31, 2012
I appreciate the opportunity to speak before the commission today.
My testimony is informed by 20 years of experience with advancing labor
rights for Chinese workers, first as a worker and activist in China and
since 2000 as director of China Labor Watch. Over the past dozen years,
China Labor Watch has conducted a series of comprehensive assessments
of a wide range of factories in China, relying on researchers based
there as well as in the United States. In May 2000, the U.S. Congress
debated giving China permanent normal trade relations (PNTR) status. I
testified before Congress then and said that Chinese workers work like
machines and that trade cannot be viewed simply in its own right, but
that it is intimately linked to issues of human rights. So initiatives
that facilitate trade need to be accompanied by efforts that advance
worker rights. Clearly, voices like mine did not win out at that time.
Let us hope that this hearing helps lead to the right approach.
Today, I will cover three major issues.
First, today, a full 11 years since China joined the WTO, labor
conditions in Chinese factories remain unacceptably harsh, with long
hours, low pay, and severe conditions in the norm. Here I will
highlight the findings of our new report on 10 of Apple's suppliers in
Second, the main response from multinational corporations to these
severe working conditions has been the establishment of supplier
auditing systems. These systems, however, contain serious defects,
including what is apparently rampant corruption, thereby leading at
best to marginal improvements in working conditions.
Third, substantial advances in labor conditions in China are far
more likely to occur only if two things happen: the multinational
corporations operating there must push for appropriate improvements
and, additionally, the Chinese government will have to take a more
aggressive role in enforcing its own labor laws. Companies such as
Apple have the resources and influence to assure that necessary changes
are made. Consequently, it is imperative, to encourage these companies
to act as responsible corporate citizens.
i. the labor conditions
Over this past year the worldwide media has directed particular
attention to the working conditions at the Apple supplier Foxconn. This
attention, culminating in high-profile stories in major papers, has its
basis in reports about abusive working conditions dating back to 2006
as well as in the tragic events of 2010, when 13 workers committed
suicide by jumping to their death out of Foxconn dormitories in China.
My organization has just released a 135-page analysis of working
conditions at Foxconn and nine other Apple suppliers in China. We found
that Foxconn is hardly an exception, as deplorable working conditions
characterize all the factories examined, with conditions often even
worse than those uncovered at Foxconn.
Specifically, the report found the following problems to be common
in the ten factories:
1. Excessive Overtime: The average overtime in most of the
factories was between 100 and 130 hours per month, and rising
to as high as 150 to 180 hours per month during peak production
season. These figures are well above China's legal limits.
2. In most factories, workers generally work 11 hours every
day, including weekends and holidays during peak seasons.
Frequently they are permitted to take just one day off every
month, while in the peak seasons employees may go as long as
several months without even one day of rest. (Under China's
labor law, the official working hours are 8 hours/day and 36
hours/month for overtime hours, but the workers in the
factories examined now typically work as much as a shocking
150-180 hours overtime each month.)
3. Low wages compel workers to accept long overtime hours.
Most of the factories pay a basic salary equal to the minimum
wage stipulated by the local law (around $200/month), a rate
that is so low that workers have to work long hours simply in
order to support a bare livelihood for themselves.
4. Workers are exposed to a variety of dangerous working
conditions. Workers in all the factories reported safety
concerns such as metal dust and hazardous working environments.
5. All too often, workers find the food offered in the
factory cafeterias unsanitary. Besides that, their housing
conditions are frequently overcrowded, dirty, and lacking in
6. Most factory workers are young females who are not
familiar with unions and their functions. Nor are they aware of
their legal rights under Chinese labor laws. They have little
ability to push for reasonable working conditions.
7. Some factories do not pay for workers' social insurance,
work injury insurance, and other insurance required by law.
The Riteng factory stands out for its particularly poor working
conditions, even in comparison to Foxconn. On average the 20,000 Riteng
workers are on the job nearly 12 hours a day, compared to 10 hours a
day at the Foxconn factory. The Riteng workers get only about one day
of rest each month. Their overtime hours dwarf those of the Foxconn
workers, which themselves are well above the legal limit set in China.
For Riteng workers, the average hourly wage is 8.2 RMB or $1.30, well
below the still-meager average hourly wage of Foxconn workers of 10.2
RMB or $1.62. A full half of Riteng workers rated its safety and health
as `bad' compared to just 2% of workers giving this rating to the
Serious problem of Labor Dispatching has been overlooked by Apple
Labor dispatch companies are employment intermediaries similar to
temporary employment agencies in the United States. Whereas workers
typically enter into a contractual relationship directly with their
employer, labor dispatching introduces a third-party into the
arrangement. Workers are contractually obligated to their dispatching
company, and the company sends its workers to work in factories on an
as-needed basis. Factories have no formal relationship with the
dispatched workers and can send them back to their dispatch companies
at any time.
Our research revealed that Apple's Social Responsibility Reports
have entirely neglected the fundamental problems caused by the
prevalent use of dispatched labor in Apple's supply chain. Except for
Foxconn in its Shenzhen operations, which transferred all dispatched
workers to direct-hire status in 2011, all of the other factories
investigated overused dispatched labor, including the Jabil factory in
Shenzhen where dispatched labor made up almost 70% of the workforce.
The use of dispatched labor creates a series of problems for workers,
as listed below:
1. Factories can use dispatched labor to employ people short-
term without having to pay severance compensation.
2. Factories can use dispatched labor to shift responsibility
for worker injuries onto another party.
3. Factories can use dispatched labor to prevent workers from
organizing into unions or establishing democratic management
4. Factories can reduce other forms of worker compensation,
and thus their labor costs, by hiring dispatched labor. For
instance, when companies do contribute to social insurance
programs for dispatched workers, they pay a smaller percentage
of the wage bill to insurance companies or sometimes do not
sign workers up at all. Such practices mean that employers'
labor costs can be reduced by 10% to 15%.
5. Dispatched workers have no limitation on the amount of
overtime that they work. Some have to work more than 150 hours
of overtime every month, exceeding the 36 hours per month
allowed under Chinese law.
6. Dispatched workers often have to pay sizable fees to the
In short, our study shows that 11 years after China joined the WTO,
labor right violations are rampant in the factories supplying one of
the largest companies of the world. Beyond this study, the available
evidence indicates that labor rights violations are also common in
Chinese factories that supply companies like HP, Dell, and Samsung,
where the conditions may be even worse than they are at Apple's
ii. the problematic auditing system
To improve labor rights in China, beyond exerting pressure on the
Chinese government, it is appropriate and critical to demand change
from the multinational corporations themselves, a method that has borne
fruit in the past. For instance, under pressure from negative media
coverage, Apple requested that the Fair Labor Association investigate
Foxconn, and subsequently said it would implement the report's
recommendations (the verdict is out on whether Apple will fulfill this
Nonetheless, the central mechanism currently deployed by
multinational corporations to advance labor rights is fundamentally
flawed. Corporations will usually audit a factory, then call for the
factory to meet its social responsibility standard, before placing an
order there. In China, there were more than 100,000 audits of at least
30,000 factories last year. When labor rights organizations criticize
the supplier factories of those multinational corporations, the
corporations typically respond that they are addressing any deficient
conditions through their auditing process. Yet over the past ten years
the audits have produced little if any changes or improvements in labor
There are efficacy issues in those doing the auditing, and even
serious corruption in the execution of audits. For example, an accurate
audit could require a factory to spend tens of thousands of dollars to
increase its workers' wages or to buy safe equipment, in order to
satisfy the social responsibility standard of multinational
corporations. However, bribing an auditor to give the factory high
marks may cost only a few thousand dollars. After the bribe yields an
excellent report on that factory, a corporation could satisfy its
public critics, and the Chinese factory would get its usual orders.
China Labor Watch has itself found strong evidence of corruption in
the auditing process, a discovery that led to positive results. After
one of our reports about corruption in the auditing system, in 2010 an
auditing company laid off two thirds of its auditors of social
responsibility Department (around 300) in China. Also, the problem that
toys manufactured in China too often contain lead in part reflects
deficient auditing of the safety of toy factories,\1\ as those toys
were exported to the U.S. after they passed the quality audits from the
\1\ This piece of news mentioned how rampant corruption is
undermining safety standards in mainland China's toy factories.http://
The experience of China Labor Watch in fighting against audit
corruption in China illustrates the problems with the audit process.
In 2009, the International Council of Toy Industries authorized
Intertek to audit the Hang Fat factories in Dongguan. ICTI CARE
PROCESS, as its name suggests, is a toy industry association. More than
75% of the exported toys produced in China have to pass its social
responsibility audit. The international corporations will only place
orders from factories passing their audit.
Intertek is a large multinational corporation with more than 30,000
employees around the world. It helps other multinational corporations
conduct social responsibility and safety audits in industries like
toys, electronics, garment, sporting and automobiles. It has branches
and offices in the United States, China and Hong Kong. Intertek's
clients include ConocoPhillips, Costco Wholesale, the Gap and many
According to China Labor Watch's informant, the Hang Fat factory
paid Intertek's auditor $3,100 so that that plant could pass the audit.
We reported the bribery to Intertek and ICTI CARE PROCESS. ICTI CARE
PROCESS rechecked the audit result and found that the factory had in
fact fraudulently reported its working hours and salaries. ICTI CARE
PROCESS then cancelled the certification of the factory.\2\
\2\ The ICTI program is primarily for the toy industry and a
cancelled certification precludes purchases in the toy industry, but it
does not preclude other retailers from purchasing from the factory.
The factory employed about 200 workers during the low season and
500 workers during the peak season. ICTI CARE PROCESS's own study found
that every worker lost $20 per month due to the defective audit of
Intertek. If we use the number of workers in the low season, the
monthly salary loss for the 200 workers is $4,000 and the yearly loss
is $48,000. It cost the factory a mere $3,100 to pass the audit by
bribing the auditor. So if the factory had not been caught it would
have saved at least $45,000 by bribing the auditor.
We found nine questionable audits like the Hang Fat factory audit.
Given that we are only a small NGO that can investigate just a modest
number of factories, we believe there are many more questionable audits
conducted by Intertek.
After we reported the dishonest audit result to the ICTI CARE
PROCESS, Intertek published the identity of our informant in its
Compliance Newsletter. He and his family subsequently received a death
As a famous international audit company, Intertek claims that
integrity, transparency, and accountability are its core values.
However, its description of the case is troublesome. Everything in the
Newsletter was technically true, but the story given there omitted some
key facts. It did not mention that its audit was voided by ICTI CARE
PROCESS. Intertek also concealed the fact that its auditors violated
the confidentiality agreement with our informant and put his life in
Intertek's version of the events The Truth
Intertek omitted that CLW reported the
corruption case to ICTI CARE PROCESS.
March 4th, 2010, CLW
Intertek omitted the salary and working
hours fraud at the Hang Fat factory.
On March 16th, ICTI CARE
In its report, Intertek published Yuan
Chaowen's name and his relationship with
Intertek agreed that it
By using information selectively, Intertek drew a different picture
of the whole story. This selective use of information for this
company's own interest is consistent with its issuing biased and even
blatantly false audit reports.
iii. the responsibility of multinational corporations to take action
Currently in China, there is no independent labor union to monitor
labor conditions and implementation of labor laws. We hope that the
Chinese government will change its policies in favor of advancing labor
rights, including encouraging legal construction and the reform of the
one, official labor union. However, we know it is very difficult to
influence China's government directly. Therefore, to be effective, and
reflecting the shared responsibility of the corporations operating in
China, the best approach to advancing labor rights would be to focus on
the multinational corporations themselves.
The multinational corporations obtain extra profits through the use
of low-wage labor in China; they also often squeeze the profits of
their suppliers, which in turn leads them to squeeze the wages of
workers. These factors help explain why those corporations may choose
factories in China over those in other countries, where workers' rights
are more respected, labor standards are stronger, and where there may
be the freedom to organize independent labor unions. In other words,
the large profits of multinational corporations reflect their
exploitation of Chinese workers.
At the same time, the investment from multinational corporations in
China is a form of support to China's current political system; that
is, the economy can grow even though China refrains from undertaking
essential reforms in its political economy. Because Chinese workers do
not have the rights to organize independent labor unions and have no
channels to fight for their interests, China's government acquiesces in
transferring workers' rewards to the extra profits of the multinational
corporations, with the aim of attracting foreign investment.
In addition, there is no law in the United States to restrain the
purchasing systems of the multinational corporations, especially their
overseas components, from violating human labor rights. The absence of
involvement by both of the governments leads to the severe working
conditions of the Chinese workers.
Corporations have the responsibility to change and improve workers'
rights; this solution should be accepted by both China's factories and
the government. Further, if multinational corporations demand and
advance improvements in their supplier factories in China, this may
influence the policy-making in China's government.
In our opinion, truly improving the working conditions in Chinese
factories could be achieved by multinational corporations simply
raising the prices they pay to their suppliers and demanding needed
improvements in labor conditions in return. Multinational corporations
have both the power and the resources to take these steps.
Take the example of Apple, the world's leading company, which is in
possession of enormous resources. In the first quarter of its 2012
fiscal year, Apple had $46.3 billion in revenue and made a net profit
of $13.1 billion, its largest profit ever and one of the largest
quarterly profits of any American company in history. And Tim Cook,
current CEO of Apple, personally received stock awards worth $380
million just before the start of the quarter. Let's do some simple
math. The $13.1 billion net profit Apple made in one single quarter is
equal to the combined salary of 300,000 workers at Foxconn's assembly
line over the course of eleven years. And the value of Cook's options
alone could pay for those 300,000 workers' salaries for that extremely
profitable quarter. Experts from the Economic Policy Institute have
made similar calculations and arrived at similar results.\3\
So part of the broad answer is that companies like Apple have ample
resources to ensure that workers at their supplier factories in China
receive better treatment. There are also creative, simple steps
multinational corporations can take to improve labor conditions. For
instance, as the labor unions in China can function only in a severely
limited way, we suggest opening worker hotlines in the supplier
factories of multinational corporations. The hotlines could go from the
workers to the multinational corporations and perhaps to neutral
monitors. Such hotlines may not be able to change labor rights
fundamentally, but if hotlines could be installed that were safe for
the workers to use without retribution from the supplier factories,
they could increase the transparency of the factories and potentially
relieve some of the harsh situations. The hotlines could attend to
every worker's complaints as the receptors on the other end could try
to solve the workers' practical problems with some dispatch. In return,
the establishment of the hotlines benefits the factories in terms of
staff turnover rate. If the hotlines satisfy the workers' expectations,
there will be smaller number of employees leaving the factory. I think
this is a solution that both the corporation and factories could accept
and put into practice.
In addition, the redundant audits performed on many factories
should be reduced, as they are not effective in monitoring the
conditions in the factories. Other ways such as the hotlines, or
allowing for truly independent and corruption-free audits, may be more
reliable and more effective.
In closing, I express my gratitude to the Committee for holding
this important hearing. The deplorable working conditions faced by
workers in China continue. A key `response' that is currently being
used by the multinational corporations--the audit system is failing.
All of us need to think more creatively, and multinational corporations
must take much more responsibility, to ensure that labor conditions in
China rise to reasonable levels.
Prepared Statement of Harry Wu
july 31, 2012
Laogai Prisoners, the Slaves of the Communist Regime
i. introductory remark
Thank you for inviting me to speak today before the Commission.
Over these years, I have testified for many times before the congress
about China's Laogai and its derivative abuses. But today it is the
first time, I'm testifying at a hearing about China's worker rights.
With the Laogai system deeply rooted into the state's economic
structure, China's working class is different from that of the modern
democratic countries. It includes not only ``workers'' at the ordinary
sense, but also ``workers'' of the prison enterprises. So when we talk
about worker rights in China, it will be definitely incomplete if we
ignore the millions of workers in Laogai camps. I am very glad that the
Commission clearly realized this difference and invited me to testify
about the slave labor of China's prison enterprises. For this, I'd like
express my special appreciation to the Commission's ongoing concern and
insights on human rights in China.
ii. prisoners in laogai, more like state slaves than enterprise workers
Prisoners in Laogai provide the state with an endless source of
cheap or payless labor force, so the Laogai enterprises develop
basically at the same pace with the economy. During the Mao's era when
economy was sluggish and food and basic material were in urgent need,
Laogai prisoners were forced to do works of farming, mining and
When Deng led the country into frenzy economic pursuits,
authorities began to establish more and more industrial and commercial
enterprises where Laogai prisoners are forced to labor solely for the
sake of profit. Partly as an effort to remedy increasing enterprise
deficit from the mid-1990s, and partly as a response to international
criticism, the central government attempted to implement the policy of
separation of prisons and enterprises since 2003. Till 2010, it is said
the ``separation'' had basically been completed. However, according to
our findings, the separation is more nominal than real. Prisoners all
across the country are still toiling in the prison enterprises under
sever working conditions with insufficient health protections or safety
Below I give a description of the conditions of the Laogai
prisoners in terms of basic worker rights:
1. Health, safety and work environment
China's communist regime first installed the Laogai system out of
three considerations: (a) for the reform of the prisoners, (b) for the
settlement of the problems of the prisons, and (c) for the prohibition
of counterrevolutionaries living in leisure without doing anything.
This is clearly stated in the decision of the Third National Public
Security Conference in 1951. Although 60 years have passed, this
doctrine remains strong in the mind of the communist authorities.
Therefore the prisoners are essentially considered as state slaves
whose labor force can be exploited while his health, safety and work
environment can be completely ignored.
I personally worked as a miner for many years in a Laogai coalmine
in Shanxi. During these years I witness many accidents, injuries and
deaths. And in a couple of occasions I almost lost my own life due to
the poor work protection.
During the 1990s I visited China for several times to gather
information about the conditions in the Laogai enterprises. I found
although the country was becoming richer, the work conditions of the
prisoners almost remain the same. I saw workers standing nakedly in
harmful chemical solutions; I saw miners digging in the mine without
adequate facilities to prevent caving in and I saw juvenile prisoners
working in magnetite dust without mask.
I had been prohibited to go back to China over the past 15 years
after I was deported in 1995 and the information regarding China's
labor camps has become increasingly sensitive. However we can still
learn something of this sort between lines of other reports. In 2005,
an article about an illness of prisoners in Tibet was published in a
medical journal,\1\ which indicates that hypokalemic flaccid paralysis
is a very common illness among prisoners. In the study group, 16 of the
patients are found to be rock miners, so the illness and high labor
intensity are positively correlated. This case shows that right till
this day, the Laogai prisoners' basic work rights are still denied by
the authorities and they are treated nothing more than cattle.
\1\ Xi Luo, ``Exploration of the causes of prisoners' hypokalemic
flaccid paralysis'', Science and Technology in Tibet, 2005 (11).
2. Work time
Though China's Law of Prison as well as regulations issued by the
Department of Justice both specified the working hours, rest breaks and
holiday entitlements for prisoners, the authorities routinely place
priority on work quota. When there are more orders for their products,
the authorities will make the prisoners work around the clock, and even
force them to work seven days a week. It is learned recently that Liu
Xianbin, a pro-democracy activist who was put into prison for the third
time, has been forced to work 13 hours per day in Chuanzhong Prison.
Regulations also specified the portion of time to be used for
But when enterprise profit is taken as the most important, the
authorities even change the time for study into time for labor.
The Laogai prisoners work long hours in severe work conditions, but
they basically have no payment. In very rare cases they may be given
some ``payment'', but in terms of policy this is called ``symbolic
payment'' or simply ``compensation'' or ``stipend''. Since it is
``symbolic'', the payment may not match the value of labor that the
prisoners have given. With the completion of enterprise-prison
separation, it is said Laogai prisoners will get a better payment from
the ``separated'' enterprise, but the fact will be very discouraging.
For one thing, even if the enterprise is taken apart from the
prison, as long as the prisoners' basic rights are not respected, no
one will pay more for their labor while they could pay less.
As a special kind of workers, laogai prisoners never need to worry
about unemployment. As long as they are able to work, their labor force
will be exploited. In fact, just decades ago, the communist regime
practiced the measure of ``Forced Job Placement''--when prisoners
fulfilled their sentence and are ready to get rid of the labor camp and
endless exploitation, authorities would find some job vacancies in the
laogai camps and arbitrarily order them to work there instead of going
back to their old home or old job. This is not because the authorities
concern about the inmates' employment, but because they want to keep
these prisoners as their working cattle all their lives. Personally, I
know many people who committed suicide after they were put into
``Forced Job Placement'', because they were completely desperate of
their fate and future.
On the other hand, after the prisoners are released and return to
society, most of them, especially the political prisoners, will face
the problem of job hunting. Because of political discrimination and
possible police harassment, many of the employers would not or dare not
accept the application of former prisoners. The fact is recently
demonstrated by Tibetan political prisoners at the international
conference entitled ``Laogai in Tibet.''
Above, I talked about prisoner-workers' situations in terms of
worker rights. However, prisoner-workers are not exactly workers; they
have some more characteristics:
1. Paying for their own imprisonment
In modern democratic countries, prions are run and funded by the
government. But in China, ever since the CCP took power in 1949, it has
never spent enough money on the operation of prisons. As a result, the
prisons have to do production or business to earn money to sustain
themselves, and the prisoners, consequently, have to toil for their own
From 1949 to 1989 the government's yearly spending on prison system
has never exceeded 2 billion RMB, while the laogai enterprise earnings
gradually rose up from zero to 10 billion RMB.2 At present the yearly
budget for both laogai and laojiao is about 15 billion RMB, but the
government can only allocate 30% to 60% of the total. The rest can only
be earned by the Laogai enterprise, or most exactly eked out from the
flesh of the prisoners.
2. Torture and other types of punishment
For ordinary workers, salary is leverage over the quality or
quantity of work. But for the laogai prisoners, torture and other types
of punishment are routine ways to control product quality and quantity
as well as obedience to production regulations.
There are various ways to punish prisoner-workers who dare to
violate the production regulations or who failed to meet the production
These include but not limited to (1) deprivation of sleep, (2)
deduction or deprivation of food, (3) stress position, (4) beating up
and so on.
Liu Xianbin who is now imprisoned in Chuanzhong Prison is forced to
work 13 hours to do ornament processing. Since he is near-sighted and
can't work well, he is always deprived of sleep and food.
The condition in Laojiao camps is as bad, if not worse. LRF learned
that in Shayang Laojiao Camp, Hubei Province, various measures are
taken to punish those who failed to fulfill the quota. So every night
the Laojiao inmates would bring their work to the public restroom to go
on, because they are not allowed to stay in the workshop during the
night but they are not allowed to fail the quota.
iii. china floods the world market with inhuman and unethical labor
Laogai enterprise is an indispensable part of China's economy. The
official-recognized number of such enterprises varies from time to
time, for example, 4671 in 1953 and 1280 in 2005, but its importance in
China's economy remains unchanged. Today's laogai enterprises engage in
many types of production and processing, from mining, farming, to the
making of products as big as fire engines and as small as ladies'
Under Section 307 of the Smoot Hawley Tariff Act of 1930 (19 U.S.C.
Sec. 1307) goods ``mined, produced, or manufactured wholly or in part .
. . by convict labor or/and forced labor . . . shall not be entitled
entry at any of the ports of the United States, and the importation
thereof is . . . prohibited.'' Furthermore, Section 1761 of Title 18 of
U.S. Code makes it a criminal offense to knowingly import goods made
with prison labor. Additionally, in 1992 the U.S. and China signed a
Memorandum of Understanding which stated that China will ``investigate
companies, enterprises or units suspected of violating relevant
regulations'' and report back its findings and furnish available
evidence to the U.S. regarding the suspected violations. Most
importantly, the Memorandum states that China will ``arrange and
facilitate visits'' by U.S. officials to ``respective enterprises or
units,'' within 60 days of a request. Such agreement coincides with
Chinese law which prohibits the export of Laogai products. But despite
these laws and regulations, China's prison enterprises never cease
attempting to enter U.S. market.
Our findings indicate that the situation of laogai products in U.S
is still serious.
1. China's various tricks to erase the marks of Laogai
To escape from international condemnation and legal punishment,
China's laogai enterprises tried many types of tricks to erase the
marks of Laogai of their products. The common ones include but not
limited to (1) using different names for the same Laogai camp(s), for
example, Nanchang Fire Engine Factory and Nanchang Auto Factor are
commercial names for Jiangxi Prison Enterprise Group, and the later
combines several smaller prison enterprises; (2) reorganizing prison
enterprises, for example, Shandong Lineng Group Co. Ltd is a
combination of several well-known laogai enterprises in Shandong
Province, and this kind of one name for multiple prisons enterprises
has the function to cover the nature of Laogai for each individual
enterprise; (3) engaging mainly in ``processing'' rather than
``manufacturing'', for example, in recent years many laogai enterprises
shift their business from production to processing. There may be other
reasons for this change, but the most evident reason is to get rid of
the hints of Laogai for a certain type of products. The Laogai
enterprises only do a part of the whole processing, so their names will
not be listed as processors or manufacturers.
2. Findings in D&B databases
In 2008, LRF researchers explored the two databases of Dun &
Bradstreet (``D&B''): Duns Worldbase (Lexis-Nexis) and Duns Records
Plus (Westlaw),\3\ and found China's Laogai products have found many
ways to enter U.S. market.
\3\ LRF, Laogai forced labor camps listed in Dun and Bradstreet
databases, June 19, 2008.
We found in the databases that a total of 314 separate entries were
Laogai related, which represent 256 different laogai camps, almost 25%
of the total known camps as of 2006. The 314 entries cover laogai
enterprises in 28 of 31 provincial level divisions (including
provinces, municipalities, and autonomous regions).
The findings indicate that U.S. business and business services do
not have the adequate awareness of the threat of China's Laogai
It's true that many Laogai camps have different business names but
in the B&D databases, 65 of the 314 entries directly contain the word
``Prison'', such as ``Sichuan Qiaowo Prison Machinery Factory'', or
more directly ``Shandong Prison'' and ``Sichuan Deyang Prison''.
Therefore D&B have ample reason not to list these enterprises in their
iv. conclusion and suggestions
1. China's prisoner-workers in the laogai enterprise are a special
kind of workers who are vulnerable to worker rights abuses. Therefore
special attention should be paid to this group of people when we talk
about China's worker rights and more so when we talk about China's
Laogai or judicial system;
2. Although U.S. Congress had passed a resolution to condemn
China's laogai system, there are still more to be done to give enough
pressure to China's authorities to consider abolishing the Laogai
3. Although there are U.S. laws and regulations, as well as
memorandum signed between U.S. and China to ban the Laogai products,
the products never ceases its infiltration into U.S. markets. Therefore
more solid measures, including drafting of new regulations and
strengthening of the law enforcement, should be taken to keep the
Laogai products away from our market.
4. To promote the public awareness of China's Laogai and Laogai
products, so that they would have the right choice to buy products
which are made in an ethical manner rather than products which are low
Prepared Statement of Thea M. Lee
july 31, 2012
Mr. Chairman, Mr. Co-Chairman, distinguished members of the
Commission, thank you for the opportunity to speak to you today on
behalf of the twelve million working men and women of the AFL-CIO on
this very important topic.
The U.S. trade relationship with China is enormously imbalanced and
problematic. In 2011, the United States ran a goods trade deficit with
China of $295 billion--up from $273 billion the previous year. This is
the largest bilateral trade deficit between any two countries in the
history of the world, and it is long past time for the U.S. government
to rebalance this trade relationship, including by addressing several
key sources of unfair and illegal competitive advantage.
As this commission has documented thoroughly, the Chinese
government has violated its international obligations with respect to
currency manipulation, export subsidies, and intellectual property
rights, among other things, contributing to the loss of millions of
American jobs, mainly in the manufacturing sector.
However, there is an additional issue that does not receive
adequate attention, from our own government or from the media, and that
is the subject of today's hearing: the ongoing and systematic
repression of internationally recognized workers' rights in China. This
involves both labor laws that deny Chinese workers fundamental
freedoms, including most notably freedom of association, and the
Chinese government's egregious failure to enforce its own laws in a
number of crucial areas--including maximum hours, minimum wage, child
labor, forced labor, and occupational safety and health. For the
American labor movement (and for unions globally), addressing the
Chinese government's massive violations of human rights and workers'
rights is a top priority.
This is both a moral and an economic issue, impacting the daily
lives and well-being of Chinese workers, the quality and composition of
American jobs and the health of the U.S. economy, as well as trade and
investment flows for many developing countries.
We would like to see our own government, both the Administration
and the Congress, put protecting workers' rights at the center of the
U.S. and Chinese governments' dialogue--not as an afterthought behind
other trade and foreign policy concerns. Protecting workers' rights is
an essential cornerstone of any democracy, and without democratic
freedoms, it is impossible to imagine Chinese workers and citizens
building a healthy, robust, sustainable, responsible future.
Independent and democratic unions in China, together with more
consistent and aggressive enforcement of Chinese labor laws, would
rebalance the economy in a way that most economists agree is long
overdue--towards building a strong middle class and strengthening
domestic consumption and away from over-reliance on export-led growth
and a weak, disenfranchised and politically unstable work force.
violations of workers' rights
The Chinese government's systematic and sometimes brutal repression
of fundamental workers' rights is a key contributor to the unfair
advantage Chinese exports enjoy in the U.S. market and in third-country
markets. Chinese workers' most basic rights are routinely repressed,
and they do not enjoy the political freedom to criticize, let alone
change, their government.
Chinese workers do not enjoy freedom of association or the right to
organize. According to the State Department's 2011 Human Rights Report,
``workers are not free to organize or join unions of their own
choosing. Independent unions are illegal, and the right to strike is
not protected in law.'' The single labor organization in China, the
All-China Federation of Trade Unions (ACFTU), is legally subordinate to
the government and the Chinese Communist Party (CCP), not accountable
to its members. It is chaired by a member of the Politburo.
While Chinese labor law now allows for election of some trade union
officers, the 2011 State Department Human Rights Report says that:
Most factory-level officers were appointed by ACFTU-affiliated
unions, often in coordination with employers, and were drawn
largely from the ranks of management. Direct election by
workers of union leaders continued to be rare, occurred only at
the enterprise level, and was subject to supervision by higher
levels of the union or CCP. In enterprises where direct
election of union officers took place, regional ACFTU offices
and local CCP authorities retained control over the selection
and approval of candidates.
The Chinese government also fails to enforce its own laws with
respect to minimum wages, maximum hours, child labor, forced labor and
health and safety rules, as recent high-profile media accounts have
amply demonstrated--much to the chagrin of some marquee U.S. brand
Migrant workers face particularly harsh and precarious conditions,
often facing deportation if they complain to authorities about abuses
by employers. Child labor is becoming more common, as labor shortages
increase turnover in some regions. Forced labor remains a significant,
if difficult to measure, problem.
Chinese government policies amount to a deliberate and artificial
suppression of wages below what a freely bargained wage would be, and
even below what would be efficient in the Chinese context. This
exploitation artificially lowers the price of Chinese exports in the
U.S. market--harming American workers and American businesses competing
with Chinese exports domestically or in third markets. It also harms
workers and businesses around the world, in both industrialized and
These abuses allow producers in China, including many multinational
and U.S. corporations, to operate in an environment free of independent
unions, to pay illegally low wages, and to profit from the widespread
violation of workers' basic human rights.
The Chinese government's poor enforcement record is not simply a
result of a lack of resources, but rather reflects a conscious economic
strategy chosen by the Chinese government, silently supported by
multinational corporations, and ignored by the U.S. government.
Voluntary corporate codes of conduct are structurally incapable of
remedying this problem and wildly inadequate to the scale of the
As we have seen, in the wake of the FoxConn scandal that revealed
worker suicides, unacceptably long hours, unsafe working conditions,
and low pay--even with top corporate attention to the problem, remedies
are slow and incomplete. One company, no matter how well-intentioned
and high-profile, simply cannot fix a problem that is systemic to the
The Chinese government has made an implicit bargain with
multinational corporations: they bring much-needed jobs to China, and
agree to export the bulk of their output and to transfer technology
where possible. In exchange they enjoy access to a large and relatively
inexpensive workforce with no independent union representation and
little effective protection under the law. Consumer and environmental
protections are also enforced erratically, contributing to artificially
low prices and long-term human costs, both in China and elsewhere.
On the face of it, the current situation in China may appear to be
extremely favorable to the corporations operating there, as well as to
the leadership of the Chinese Communist Party, which has successfully
achieved extraordinarily rapid aggregate economic growth over several
decades without significant challenges to its political dominance. Many
argue as well that workers in China have benefited from the rapid
economic growth, job creation, and market access achieved by the
current economic and political model.
However, in many ways, China's economic model is showing signs of
stress--even for those often considered its chief beneficiaries--and I
believe it is very much in the interest of the U.S. government to press
for improvement in China's worker rights sooner rather than later.
For the Chinese government, widespread worker unrest and regional
labor shortages are signs that as the country grows and develops,
workers will naturally demand more voice, better wages and working
conditions, and more freedom. These demands will not be satisfied for
long by cosmetic changes or rhetorical sops. And in the international
arena, including at the G-20 meetings, the Chinese government will come
under increasing pressure to reduce ``external imbalances,'' that is to
say, to reduce its current account surplus. Allowing workers more
economic and political power is the surest way to boost domestic
consumption in a sustainable way.
For multinational corporations, producing in China is not a bargain
if their international reputation is tarnished by bad publicity around
abuse of workers. Many companies reflexively resist union organizing or
labor law changes that would facilitate the formation of unions. The
irony, however, is that allowing workers the freedom to form their own
unions, without interference from the government or management, might
actually be the only way for companies to produce in China without the
constant and justified fear that unsavory production conditions are
occurring and could be revealed. Thousands of corporate monitors who
jet in and out of a factory cannot possibly replace a union on the
ground, made up of workers, with democratically elected leadership.
And Chinese workers deserve to have their internationally
recognized human rights respected. They deserve the right to form their
own organizations at their workplaces--free of interference from their
government or employer, free to set their own priorities at the
bargaining table, free to demand consistent enforcement of labor laws
from their government.
American workers are not ambivalent on this matter. We want to see
the rights and dignity of our Chinese brothers and sisters respected.
We want to see American corporations held accountable for their actions
in China, as well as in the United States. We want our own government
to fight hard to protect our jobs and our rights--including by
insisting that one of our largest trade partners live up to its
international obligations with respect to worker rights, among others.
And we want to see China fulfill its promise as a great nation, but one
that achieves its success through hard work and ingenuity, not by
repressing the voice, the rights, and the democratic aspirations of its
time to act
The AFL-CIO calls on the Obama administration to raise the profile
of workers' rights in its bilateral dialogues with the Chinese
government; to insist on achieving concrete progress on the full range
of workers' rights issues, including freedom of association; and to
keep open the option of using every tool available, including a self-
initiated Section 301 workers' rights case, to pressure the Chinese
government to act in a timely way. Congress can provide welcome and
needed pressure to move forward, including by supporting a 301
petition, as has been done in the past.
We simply cannot afford more years of inaction and empty promises.
We cannot afford another year of watching working conditions in China
worsen, as good jobs continue to leave the United States.
The AFL-CIO remains committed to fighting for America's working
families and America's manufacturing industries.
Thank you for having me here today and thank you for the important
work you do. I look forward to your questions.
Prepared Statement of Christopher Smith, a U.S. Representative From New
Jersey; Chairman, Congressional-Executive Commission on China
july 31, 2012
Welcome to our distinguished witnesses to this hearing on the
important topic of the appalling state of working conditions and worker
rights in China--a significant human rights abuse that requires greater
examination, analysis and bolder action. Worker rights are
systematically violated and are among the many human rights abuses
committed by Chinese government officials at all levels. Today, the
Commission hopes to continue to draw attention to these critical issues
in order to push the Chinese government to reform and respond to the
legitimate concerns of its' own citizens all of whom are entitled to
well-established, universally recognized labor rights.
As a member of the World Trade Organization, China has experienced
tremendous economic growth and integration into the global economy, but
as this Commission's most recent Annual Report documents, China
continues to violate the basic human rights of its own people and
seriously undermines the rule of law. Workers in China are still not
guaranteed, either by law or in practice, fundamental worker rights in
accordance with international standards. Despite legislative
developments that purport to ensure some labor protections in China in
recent years, abuse and exploitation of Chinese workers remain
widespread. Conditions in Chinese factories continue to be incredibly
harsh. Workers are routinely exposed to a variety of dangerous working
conditions that threaten their health and safety. Low wages, long hours
and excessive overtime remain the norm.
Chinese workers have few if any options to seek redress and voice
grievances under these harsh conditions. If workers step out of line
they may be fired without payment of back wages. Workers have no
collective bargaining power to negotiate for higher wages and a better
working environment. The Chinese government continues to prevent
workers from exercising their right to freedom of association and
strictly forbids the formation of independent unions. Attempts to
organize are met with dismissal, harassment, torture, punishment, and
incarceration. Workers are ``represented'' by a government-controlled
union, the All-China Federation of Trade Unions--a phony, fake and
fraudulent ``workers organization.'' The recent crackdown on authentic
labor non-governmental organizations in Shenzhen in 2012 and the
mysterious death of labor activist and 1989 Tiananmen Square
demonstrator Li Wangyang in June are but a few examples of Chinese
authorities continued attempts to crush labor activism.
While touting itself as an economic superpower, China continues to
violate worker rights with impunity. With no institutions capable of
protecting their interests, Chinese workers are nevertheless taking
matters into their own hands. In the past few years, there has been a
dramatic rise in the number of labor-related protests in China--an
estimated 30,000 labor related protests in 2009 alone and there are no
signs that this positive trend has abated. The increase in labor-
related demonstrations not only represents a glaring lack of
institutional capacity for fair labor negotiation, but also reflects
the rise of a new generation of workers in China who are better-
educated, tech savvy, rights-conscious, and more willing to protest and
endure the consequences.
The deplorable state of workers' rights in the PRC not only means
that Chinese women, men and children in the work force are exploited
and put at risk, but also means that U.S. workers are severely hurt, as
well, by profoundly unfair advantages that go to those corporations who
benefit from China's heinous labor practices. As good corporate
citizens, multinational corporations, such as Apple and Microsoft, must
ensure that international labor standards are being implemented in
their factories and supply chains in China. In the glaring absence of
Chinese government efforts to bring its' labor laws and enforcement up
to International Labour Organization (ILO) standard--multinational
companies can and must play a unique role in advancing labor rights and
industry standards through their operations in China.