I. Background on China

China is the world's most populous nation and has had single-party, communist rule since the mid-twentieth century. Since the end of the 1970s, it has engaged in a wide range of economic reforms that are moving the country away from a centrally planned economy towards one that is market driven. Although the basic political structure of the country remains that of a one-party state, the political situation in China is characterized by an effort by the ruling Communist Party of China to redefine its role in a situation of rapid economic and social change.

With a US$1.2 trillion gross domestic product (GDP) in 2002¹ and remarkably rapid economic growth over the last 20 years, China is the 6th largest economy in the world. Its potential for continued growth is great, given the size of its population and its leadership's push towards progress. Its total labor force is estimated to be more than 750 million workers. That said, China exhibits many of the characteristics of a developing country. Close to 50 percent of the country's population subsists on less than two dollars a day, and according to the 2003 United Nations Development Program's Human Development Report, China ranked 104th on the human development scale.²

Nonetheless, China's past development and potential for continued growth is nothing less than extraordinary. The country has attracted large amounts of foreign direct investment (FDI) and formally joined the WTO in December 2001, both of which accelerated structural transformation. By 2002, the government had approved more than 200,000 foreign-funded businesses, with about half of all FDI focused on the export sector. Foreign-funded businesses reportedly delivered more than 50 percent of China's exports and more than 25 percent of China's industrial output in 2002, and indicators show that their market share continues to increase.³

China's global trade totaled US$616 billion in 2002, with a trade surplus of approximately US$30 billion. The country's primary trading partners are the United States, Hong Kong, Japan, Korea, the European Union, and Singapore. While China dominates the international market for apparel (see sidebar), footwear, and toy production, recent export growth has been attributed to China's move into the technology sector where it produces a wide range of mechanical and electronic products. Such exports range from computers to televisions and DVDs to microwave ovens.

	In Focus: the Chinese textile and apparel sector China is the world's largest producer and exporter of textiles and apparel. While no aggregate data on European and US importers' future plans relating to China is currently available, it is expected to be among the "winner countries" following the elimination of textile import quotas in 2005, when the Multi-Fibre Arrangements (MFA) end. This is due in large part to the country's ability to produce almost any type of textile and apparel article at almost any quality level -- and deliver them at extremely competitive prices. Official Chinese statistics for 2001 show that the sector comprised about 21,000 enterprises with total output of US$116 billion. Thirteen million people are employed in this industry. Most textile and apparel production is concentrated in the coastal areas of the country; Guangdong province is China's major producer of apparel for export, accounting for one-third of the country's apparel exports in recent years. According to China's National Textile Industry Council, in 2001, China's export of textile and apparel totaled over US$53 billion, which amounted to 20 percent of the nation's commodity exports. To learn more about China's growing strength in this sector, see USITC's Textiles and Apparel: Assessment of the Competitiveness of Certain Foreign Suppliers to the U.S. Market (Investigation No. 332-448, sent to USTR in June 2003) Publication 3671 January 2004, available at: http:// hotdocs.usitc.gov/pub3671/main.html.

II. Freedom of Association and Chinese Labor Law

A. Trade-Union Monopoly

Under Chinese law, the All China Federation of Trade Unions (ACFTU) is the only trade union recognized in China. It exercises a legal and heavily protected monopoly over all subsidiary union organizations and trade union activities. It remains under the control of the Communist Party, which appoints its officials. This means that by law there is no possibility of truly independent unions forming in China, which compromises workers' freedom of association.

In October 2001, the National People's Congress passed amendments to the Trade Union Law, the leading law regulating freedom of association.⁴ The amendments give union organizing activities in the private sector the legal protection that they previously lacked -- including the provision of specific legal remedies against employers' attempts to interfere with organizing activities and punishment of union officials for failure to carry out official duties -- thus aligning some of China's labor law more closely with ILO labor standards. The amendments, though, did not include any change in the legal monopoly of the ACFTU.

Therefore, in its current form, the Trade Union Act imposes a trade-union monopoly, preventing the establishment of trade union organizations that are independent from the public authorities and the ruling party. Moreover, the Act requires that grassroots organizations be controlled by higher-level trade unions and that grassroots organizations' constitutions be established by the National Congress of Trade Unions, which is the governing body of the ACFTU. As discussed above, such limitations on independent unions contradict the principles of freedom association established in ILO conventions.

B. International Labor Standards and China's Labor Law

Although China has endorsed important international human rights conventions and United Nations (UN) resolutions, respect for human rights in China continues to be of major concern to the international community.⁵ With regard to workers' rights, China has ratified three of the eight fundamental conventions of the International Labor Organization (ILO):⁶ the Equal Remuneration Convention (No. 100), Minimum Age Convention (No. 138), and the Worst forms of Child Labor Convention (No. 182). China has not, however, ratified either of the two fundamental ILO conventions concerning freedom of association, the Freedom of Association and Protection of the Right to Organize Convention (No. 87) and the Right to Organize Convention (No. 98). Nevertheless, its membership in the ILO requires it to respect, promote, and realize the right to freedom of association and the right to collective bargaining, which are included among the fundamental rights enumerated in the ILO's 1998 Declaration on Fundamental Principles and Rights at Work.

When China ratified the International Covenant on Economic, Social and Cultural Rights (ICESCR) in 2001, it entered a reservation on Section 1.a of Article 8, which guarantees the right of every individual to form a trade union and to join the trade union of his/her choice. The reservation states that the article would be applied within the parameters of "relevant provisions of the Constitution of the People's Republic of China, Trade Union Law of the People's Republic of China, and Labor Law of the People's Republic of China."⁷ For the most part, however, these laws do not coincide with the spirit of the ICESCR article.

Indeed, the Chinese Constitution and Chinese legislation provide that freedom of association can be exercised by workers at the levels of the enterprise, the sector/industry, or the nation. These provisions apply to export processing zones (EPZs) or enterprises/industries with EPZ status. Under Chinese law, workers in state-owned and foreign-owned enterprises have the right to form and join organizations of their own choosing.

The effect of these legal guarantees is limited, however, by China's clear policy that such freedoms are subject to the interests of the State and the Communist Party. Most notably, China's Trade Union Act imposes general restrictions on trade unions' and members' political activities. The Act reiterates that trade unions shall assist the government in its work, and mandates that in the event of a clash of interests between workers and the government or the party, the trade union shall protect the overall interests of the entire Chinese people. In considering complaints against China, the ILO's Committee on Freedom of Association has concluded that many provisions of the Trade Union Act are contrary to the fundamental principles of freedom of association. The Committee found that they constituted major constraints on the right of unions to establish their own constitutions, organize their activities, and formulate programs. It noted that the mission of trade unions should be to defend and promote the interests of their constituents and not to reinforce the country's political and economic system.⁸

	Current Chinese Law Dealing with Freedom of Association Trade Union Law of the People's Republic of China, adopted on April 3, 1992, and amended at the 24th Meeting of the Standing Committee of the Ninth National People's Congress of the People's Republic of China on October 27, 2001 Decree 22 of the Ministry of Labor and Social Security of the People's Republic of China, Regulations on Collective Contracts, adopted by the Ministry of Labor and Social Security at its 7th Plenary Meeting on December 30, 2003.

III. Right to Bargain Collectively

Chinese legislation permits collective bargaining for workers in all types of enterprises. Under the law, collective contracts are to be developed through collaboration between the labor union and management. The law provides that workers may elect representatives to negotiate collective contracts with management in the absence of a union. The law states that collective contracts should specify working conditions, wages, and hours of work.

According to data provided by the Department of Labor Relations and Wages, in China's Ministry of Labor and Social Security, the number of collective contracts signed and registered with the Ministry exceeded 240,000 by the end of 2000 and covered more than 60 million workers. Most of these agreements, however, were products of an administrative process between the ACFTU and management rather than collective bargaining.

IV. Right to Strike

Neither the Chinese Constitution nor Chinese law provides for the right to strike. In fact, the right to strike was removed from the Constitution in 1982 on the grounds that the political system had "eradicated problems between the proletariat and enterprise owners." Nevertheless, more than 100,000 strikes and work stoppages reportedly take place each year.

The ILO´s Committee on Freedom of Association urged the Chinese government to take the necessary steps to amend its labor law to ensure that workers and their organizations are not punished for exercising the right to strike in defense of their social and economic interests.⁹ The government maintains that the National People's Congress has always tried to promote, establish, and explore labor relations that encourage the 'gradual' improvement of working conditions and working life.

	Democratically-Elected Trade Unions in China? The Trade Union Act requires that members of trade union committees at various levels be democratically elected by trade union members. Furthermore, the Act provides that no close relatives of the chief members of an enterprise may become members of enterprise trade union committees. Observers in China claim that these rules are often ignored, however. They report that union representatives are often appointed by local government authorities, factory management, or higher-level ACFTU officials. In some cases, factory management staff members occupy elected union positions, effectively fusing the positions of union chairman and senior manager into one. Nonetheless, there are signs of progress in various enterprises in China. While various projects plant seeds for future union elections by educating workers about the Trade Union Act's requirements for democratically-elected representatives, other enterprises have already seen the free election of representative union officers. For example, in 2001, one of the first free elections by secret ballot was held at a foreign-owned factory in Guangdong that has an ACFTU-affiliated union. In October of the same year, a second free election was held at a foreign-owned factory in Fujian Province. There are other ongoing initiatives that aim to bolster the Trade Union Act's requirement of democratically-elected unions. The FLA and its Participating Companies and Licensees are working to support these efforts.

Although the amended Trade Union Law does not provide for the right to strike, it acknowledges that work stoppages and work slowdowns may occur. In such an event, the Trade Union law stipulates that in the event of any work stoppages, the primary goal of the union is to "assist the enterprise or institution in making proper preparations for resuming work and restoring work order as soon as possible" -- regardless of whether or not the workers' demands have been met.

1. The dispute shall be resolved by both parties through workplace conciliation.
2. If conciliation fails, the case can then be referred to the labor dispute arbitration committee for arbitration.
3. If one of the parties does not accept the awards of arbitration, it can file a lawsuit with the people's courts, which is a court system that starts at the local level and extends to the provincial and national levels.
4. The local people's government can also call the concerned parties together to coordinate and settle the dispute.

For More Information about Freedom Association in China:

See a) Observations submitted to the ILO by the International Confederation of Free Trade Unions (ICFTU), and b) Information submitted by the Chinese Government to the ILO, which are both published in the Review of Annual Reports under the follow-up to the ILO Declaration on Fundamental Principles and Rights at Work, 2002. http://www.ilo.org/dyn/declaris/DECLARATIONWEB.INDEXPAGE

See also Country Reports on Human Rights Practices, 2003; released by the US State Department, Bureau of Democracy, Human Rights, and Labor, February 2004. http://www.state.gov/g/drl/hr/c1470.htm

Click here to read case studies about FLA Third Party Complaints that deal with freedom of association

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