This post is part of a symposium on China and the Political Economy of the International Legal Order.
From the 1990s until the Trump presidency, political and economic elites on both sides of the Pacific held a largely uncomplicated enthusiasm for the re-centering of global supply chains within the borders of the People’s Republic of China. This bilateral relationship developed into a cornerstone of the neoliberal global economy, and by the late 2010s, the U.S. had more than $500 billion in annual imports from China. Yet this shift in production, which sought to reap the gains of the exploitation of Chinese workers, always depended on the ability of foreign corporations to claim plausible deniability in the face of systematic non-implementation of China’s labor law and their own voluntary “codes of conduct.” Perhaps unsurprisingly, the political kneecapping of Chinese labor and endemic lawlessness in the workplace proved a shaky foundation for U.S.-China bonhomie—a foundation that has since been torn asunder by intensifying imperial rivalry. By examining this trajectory, we can see that recent legislative efforts by the U.S. to address labor exploitation will not succeed as long as they are narrowly focused on containing China. Rather, improving labor rights in China and globally will require transcending the narrow political vision engendered by the increasingly hostile U.S.-China rivalry.
American corporations’ interest in promoting free trade with China was simple enough: the country provided a vast, cheap, and politically repressed working class. Access to this enticing labor pool was initially limited by the fact that U.S.-China trade was subjected to ongoing Congressional oversight. However, after Bill Clinton prodded Congress to amend the law in 2000, China was granted Permanent Normalized Trade Relations status. This ended regular reviews of the PRC’s human and labor rights conditions and paved the way for China’s entry into the World Trade Organization. A torrent of foreign direct investment followed, with U.S. and other foreign companies free to relocate production to China with little fear of political intervention.
In the nominally socialist state, these foreign corporations found a capitalist’s utopia of a lightly regulated labor market and no risk of assertive unions. A series of labor laws, including the initial 1994 Labor Law and the landmark 2008 Labor Contract Law, established guidelines for working hours, health and safety, discrimination, workplace insurance, and all the other things necessary to formalize a national labor market (wage labor had functionally ended in the Mao era). Although the official standards established in Chinese labor law were, by the beginning of the 2010s, quite high, enforcement remains anemic and non-implementation remains the norm in many industries. The monopolistic All China Federation of Trade Unions is, for all intents and purposes, a government agency—it is formally subordinate to the Communist Party and is almost certain to side with the employer in the case of a labor dispute. As might be predicted, this has led to all manner of labor rights violations ranging from excessive overtime and wage theft to racial and gender discrimination, as well as forced labor. And this systemic non-enforcement of labor law undergirded vast accumulations of wealth for the world’s richest corporations, including Apple, Amazon, Tesla, and Walmart, to name only some of the most prominent examples.
In 2012, Apple was much lauded for its decision to join the Fair Labor Association (FLA), a step that would require it to meet a more stringent set of labor standards within its supply chain. Specifically, this decision would require Apple to reduce working hours in their “tier 1” suppliers (i.e., the final assemblers) to 60 hours or less a week. Yet setting aside whether Apple succeeded in meeting this goal (debatable), what went unsaid is that this would still be a gross violation of China’s labor law, which stipulates a 40-hour work week with a maximum of 36 hours of overtime per month. It is also notable that right up until the present, Apple’s most important suppliers continue to illegally hire un-free student “interns” while exceeding the legal limits on employment of temporary workers. If this is the situation in one of the most scrutinized sectors of the global supply chain, there is little question that illegality is worse elsewhere in the labor market.
Why would the Chinese government tolerate such lawlessness in its workplaces, particularly to the benefit of corporations hailing from the U.S.? Quite simply, local governments have had little incentive to rigorously enforce the laws. By contrast, they have had massive incentives to attract and retain foreign investment and to encourage the transfer of technology and know-how. And by those measures, the economic and political elites of China have experienced unimaginable success. China has continually vied with the U.S. for the position of top FDI recipient. Entire production ecosystems have sprung up, and the relationship with foreign corporations has allowed China to develop its own domestic companies that are now competing with their foreign rivals. For many elites, sacrificing the labor rights of the working class was a small price to pay for these bounties.
Toward Imperial Rivalry
Despite working fabulously well for many elites, this trans-Pacific neoliberal consensus began to crumble even before Trump took office. The cost of Chinese labor increased significantly in the 2000s, and therefore the most wage-sensitive industries (such as garments and toys) began to migrate to cheaper locales. After the 2008 crisis, China realized it needed to be less dependent on American and European consumers and made efforts—largely unsuccessful thus far—to increase domestic consumption. Equally significant was the development of huge and innovative capitalist firms in China that could compete with their U.S. counterparts. As Chinese corporations were no longer satisfied with their junior partner status within global supply chains, the U.S. became increasingly concerned about competition in the highly profitable capital- and knowledge-intensive sectors of the economy.
On the American side, the past five years have seen the emergence of a rare bi-partisan consensus in Washington that the U.S. must not let China attain economic dominance. The federal government has discarded the neoliberal playbook and is using a whole range of interventions to try to derail China’s ascendance. This includes massive subsidies to U.S. industries (notably via the CHIPS Act), export bans on semiconductors and other advanced technology, and, improbably, a newfound commitment to labor rights in China. The clearest example of this is the Uyghur Forced Labor Prevention Act, which presumes that commodities from Xinjiang are produced with forced labor and therefore subject to “withhold and release orders” from Customs and Border Protection unless it can be proven otherwise.
To be clear: the assimilationist and brutally repressive campaign against Uyghurs and other Muslim minorities in northwestern China is one of the most egregious social catastrophes in the world today. There is also ample evidence that forced labor is widespread in the region and that American and other foreign corporations have profited from these arrangements. It is reasonable for governments to take steps to prevent their companies from benefitting from forced labor, and we should support pressuring Beijing to end the human rights catastrophe in Xinjiang.
The problem is that this effort is narrowly focused and fundamentally driven by a desire to contain China. By targeting just one region, the implication is that the U.S. can accept forced labor or other egregious rights violations so long as they take place elsewhere. If corporations interpret recent efforts to address forced labor in Xinjiang as geopolitically motivated, they will feel emboldened to recreate lawless and exploitative labor regimes in an allied nation.
United States Trade Representative Katherine Tai has repeatedly argued that the Biden administration wants to promote a “worker-centered trade policy.” At a minimum, this is a rhetorical advance over Donald Trump’s unapologetic economic nationalism. It also serves as a counterpoint to China’s vision for reforming the global trade system, as the Beijing-backed Regional Comprehensive Economic Partnership contains no labor provisions whatsoever. Nonetheless, the recent focus on labor rights abuses in China must be broadened to include nations that are not imperial rivals. If U.S. corporations simply re-locate lawless and exploitative supply chains to India or countries in Southeast Asia, the underlying problem has clearly not been addressed. A trading system that advances the interests of workers cannot be subordinated to geopolitical convenience; it must be comprehensive in scope and valued intrinsically.