Steelworkers in Henan province follow example of Jilin steelworkers and force local officials to suspend sell-off
For the second time in less than a month, militant action by Chinese workers has forced authorities to suspend privatisation of a steelworks. Several hundred workers – at times up to 3,000 – occupied the site of the state-owned Linzhou Steel Corporation in central Henan province for five days in opposition to a proposed takeover by privately-owned Fengbao Iron & Steel. During their protest workers took Dong Zhangyin, an official of the State Assets Supervision and Administration Commission (SASAC) in nearby Anyang city, as a hostage for four days. The workers’ occupation began on 11 August and ended on 15 August. At this point, having failed to break the occupation using armed police, Henan’s provincial government announced it was suspending the privatisation. The Linzhou workers’ action, part of a campaign that began over a year ago, was clearly inspired by the recent struggle involving 30,000 steelworkers at Tonghua Steel in faraway Jilin province (as reported on chinaworker.info, 30 July).
The Tonghua workers’ struggle in July captured global attention when, in the course of an angry exchange, some workers beat up a top executive of the notorious private steel company behind the privatisation grab, whose tough management methods and staff cutbacks had aroused massive opposition. The executive, Chen Guojun, died of his injuries. He had threatened to sack the entire Tongua Steel workforce if they did not immediately end their protest, which proved under the circumstances to be a poor tactic. To end the workers’ occupation of the plant, which enjoyed massive support in the city, including sympathy strike action and protests from other workers, the provincial government hurriedly revoked the sale of the plant to Chen’s company, Beijing-based Jianlong Heavy Machinery Group, which would be permanently excluded from the future restructuring of Tonghua Steel (meaning privatisation per se is not ruled out, on the contrary this is clearly still the provincial government’s intention, if they can get away with it).
News of Chen Guojun’s death served as something of a wake-up call for ‘communist’ officials and steel industry bosses alike, showing the fury that exists on the shop floor as the global capitalist crisis bites. The incident did not put an end to privatisations in steel or other industries in China, as the Linzhou example shows. However, workers at the Linzhou plant in Henan were not slow in recognising the significance of the Tonghua struggle – that it is possible to block private takeovers through militant action. This was shown by a banner unfurled during their five day occupation of the plant, which read: “Learn from the Tonghua Steel workers! Defend collective wealth!”
‘Copycat’ action
The victory of the Linzhou workers, even if the threat of privatisation has not been permanently laid to rest, is indicative of an important new trend emerging in labour struggles in China. This is recognised by pro-capitalist commentators such as the Wall Street Journal, which called the protests in both Jilin and Henan, “a sign of increasing labor activism”, and pointed to parallels with the much larger industrial battles in northeastern China at the start of this century, also against privatisation of state-owned companies.
“These events mark an important change in workers’ struggles, which in these two cases are very well-organised and determined, and show a higher than average consciousness,” commented Chen Lizhi of chinaworker.info. “The privatisation programme within heavy industry is in its final phase in China. In the case of Tonghua Steel, it is the last large-scale state-owned enterprise that has not yet been sold by Jilin’s provincial government. This is a process that began more than ten years ago, but now workers are more aware where privatisation leads: that jobs disappear, pension commitments are broken, and wages are cut. Private operators have been known to dismiss most of the non-skilled workforce and then replace them with migrants on short-term contracts, lower wages, and without medical or pension cover,” Chen explained.
In the Linzhou case, workers are incensed at the abysmally low compensation terms made under the takeover bid: laid-off workers would receive only 1,090 yuan ($160) for each year of service according to China Daily. “I’ve been with Linzhou Steel for more than two decades and all I got was 20,000 yuan and a letter asking me to leave,” one of the workers said on the Tianya.cn web portal. Workers also complain about the scandalously low price tag for the company. Linzhou Steel’s assets had a book value of 831 million yuan ($121m), but the commission in charge of privatisation valued the company at just 331 million yuan ($48.4m) and then gave Fengbao Iron & Steel a further 10 million yuan discount! Workers describe Fengbao as an empty “shell” that brings nothing to the deal other than a notorious reputation for not paying workers’ wages. “Most of the workers see the privatisation as a move to marginalise and ‘sell them out’ and to fill the pockets of the rich and the powerful,” noted the official China Daily.
Fengbao is owned by a well-known and, by the regime, much-decorated Henan billionaire, Li Guangyuan, whose business empire is now among China’s 500 largest companies. Li is also a village Communist Party secretary and delegate to the Provincial People’s Congress in Henan. He is also the brother of a top general in the People’s Liberation Army.
In this one case are highlighted the numerous and complex ties that bind China’s private capitalists to the party-state that emerged from the decay of Stalinism. This illustrates what a grey area the border between the ‘state’ and ‘private’ sectors is. The privatisation process, which has resulted in more than 60 million jobs lost since the late 1990s, has been accompanied by massive corruption, speculation, backdoor deals and outright theft – all at the expense of the working class. Linzhou Steel’s chairman, Liu Junshen, reportedly declared at a board meeting that the more the firm was in the red, the better it would be for securing a sale. According to a worker interviewed by China Daily, the state managers “deliberately screwed up” the factory in order to justify privatisation.
Fengbao’s boss Li has loudly denounced the provincial government’s climbdown. He points out his company has already paid for Linzhou Steel. But for the time being his interests have been pushed aside by the government’s overriding concern for ‘stability’ and the fear that unless nipped in the bud at an early stage, conflicts like this can mestatise into dozens of Linzhous and Tonghuas throughout the steel industry and other candidates for privatisation. This was shown by the comments of Henan’s Communist Party chief Xu Guangchun, who called on all levels of officials to “evaluate risks to social stability before giving the go-ahead for any corporate restructuring”.
Independent trade unions
Even as partial victories for the workers, the struggles at Tonghua and Linzhou raise an ominous spectre for the Chinese regime, as it prepares to celebrate the 60th anniversary of the founding of its rule. For an entire epoch, since the crushing of the Tiananmen protests in 1989, the regime has largely succeeded in keeping workers’ struggles separate and isolated, preventing cross-regional or national connections and organisation. But clearly steelworkers are learning from each others’ experiences as the Linzhou struggle demonstrates. A ‘copycat’ effect was manifested in the taxi drivers’ strikes that swept across a dozen cities in the closing months of last year. As we pointed out on chinaworker.info, these strikes were also an important new development. But for a similar process to take place within heavy industry, among steelworkers, is of even greater importance.
While trade union organisation is still outlawed, making it more difficult for workers to resist privatisation and other attacks, greater informal contacts and dissemination of information – often via the internet – are assisting workers to overcome such obstacles. A younger generation especially, often sons or daughters of workers involved in struggle, are assisting by blogging and running illicit online support campaigns. These trends must be built upon in the coming period as mass struggle and the need for genuine trade unions becomes even more important. Nowhere is this more pertinent that in the steel industry.
Faced with a glut of steel-making capacity, the central government recently ordered a three-year moratorium on the construction of any new steel mills or the expansion of existing mills. China’s steel exports slumped 15.4% in the first half of this year, while its stimulus-driven economy is still adding new steel capacity. The Chinese regime is also involved in a high profile conflict with corporate Australia over iron ore imports for steel production, exemplified by the arrest on industrial espionage charges of four executives of Rio Tinto. This is the background to Beijing’s frantic push to consolidate the steel industry and weed out the plethora of smaller producers who are now hampering its efforts to take a tough line with the global iron ore giants.
For this reason – with the law of profit ruling the roost – the threat of privatisation remains in Henan, Jilin, and nationwide. Militant workers’ action can, as is shown by the Linzhou and Tonghua struggles, force the capitalists and bureaucrats to step back. To eliminate the threat altogether and truly “defend collective wealth” however requires the building of a new socialist labour movement, based on independent and democratic trade unions, committed to ending capitalism and authoritarian rule.
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