Reports from the Economic Front

by Martin Hart-Landsberg

Globalization, Capitalism, and China

with 2 comments

A January 22, 2012 New York Times story, The iEconomy: How U.S. Lost Out on iPhone Work, has been getting a lot of coverage.   The article makes clear that Apple and other major multinational corporations have moved production to China not only to take advantage of low wages but also to exploit a labor environment that gives them maximum flexibility. The following quote gives a flavor for what attracts Apple to China: 

One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

The article highlights these conditions to make the point that manufacturing is not coming back to the United States because these conditions cannot be replicated in the United States. 

One aspect not stressed in the article is that many of the labor policies described are actually against the law in China and contrary to Apple’s own claims about its labor standards.  See William K. Black’s analysis here.

If you are interested in a more detailed picture of just what goes into making Apple products so profitable you should listen to or read the transcript of a This American Life radio segment which aired in January.  The segment is based on a Mike Daisey performance in front of a small audience.  Mike is a self proclaimed technology geek who just adores Apple products.  At least that was before he visited the Foxconn (Taiwanese multinational corporation owned) factory located in China in which many Apple products are assembled.  The program discusses the labor conditions at Foxconn and other similar multinational corporations operating in China.

These multinational corporations have helped make China the world’s top exporter of manufacturers, both overall and of high technology goods more specifically.  China’s share of world exports of information and communication technology products (such as computers and office machines; and telecom, audio and video equipment) has grown from 3 percent in 1992 to 24 percent 2006, and its share of electrical goods (such as semiconductors) from 4 percent to 21 percent over the same period.  Of course, while these exports are officially recorded as Chinese exports, approximately 60 percent of all Chinese exports and 85 percent of all Chinese high technology exports are produced by foreign companies operating in China.

The issue here isn’t one of China stealing manufacturing jobs from the United States or other developed countries.  According to the U.S. Bureau of Labor Statistics, total manufacturing employment in China actually fell by over 9 million over the period 1994-2006, from 120.8 million to 111.61 million.  Total urban manufacturing employment, which would include most foreign operations, declined sharply from 54.92 million to 33.52 million. 

In fact, China’s growth has generated few decent employment opportunities for urban workers, regardless of their employment sector.  The International Labor Organization did an extensive study of urban employment over the period 1990 to 2002.  Although total urban employment increased slightly, almost all the growth was in irregular employment, meaning casual-wage or self-employment—typically in construction, cleaning and maintenance of premises, retail trade, street vending, repair services, or domestic services.  More specifically, while total urban employment over this thirteen-year period grew by 81.7 million, 80 million of that growth was in irregular employment.  As a result, irregular workers in China now comprise the largest single urban employment category. 

The issue here isn’t even one of China versus the United States.  It also isn’t one of dictatorship versus democracy.  Rather it is one of capitalism’s logic.  Said simply, large multinational corporations and their allies in both the United States and China have successfully created a global system of production and consumption that gives them maximum freedom of operation.  It is this logic that keeps pushing more free trade agreements, attempts to create more flexible labor markets, and more attractive conditions for business investment, both here and in China.   And it is this logic that needs to be challenged on both sides of the Pacific. 

2 Responses to 'Globalization, Capitalism, and China'

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  1. I think that the issue of irregular/outsources labour in Asia is central and should be given more publicity in the western world.

    In Australia they have used the excuse of “efficiency” to send jobs overseas and many reactionary commentators are claiming that if only we follow industrial relations policies of Asian nations everything would be fine.

    We have to let people know that in Asian countries outsourcing is also a problem. This would show that no matter how low they push workers, it is the logic of capitalism to push for more.

    Clive Tillman

    5 Feb 12 at 7:20 pm

  2. I posted a few days ago but I guess the censor’s on holiday, so here’s another try.

    Thanks for the article, esp. the counter-intuitive point for the uninformed that urban Chinese mfg. jobs have fallen significantly since GDP ‘lift-off’ began in the early 1990s.

    My attempted post had some calculations on the figures used in the BLS paper, & as it would be too tedious to do them all again I’ll just refer readers to p.32 where they can see (1) the huge drop that occurred in 1998 (by 25%, 13m people), & (2) employment going into a hollow 2000-6, bottoming 2002-3, rising back to the 2000 level in 2006.

    But I’d like to ask 2 Qs about the export figures given 4 paras. from the end: (1) what’s the source, & (2) is the 60% actually “all Chinese exports” or mfg. exports?

    Lastly, how has urban mfg. employment fared since 2006?

    Hope the censor passes this comment on, & that you can make time to answer the 3 Qs. And thanks again.

    (P.S. I appreciate the Marxist value analysis you do on South Korea.)

    Calum

    12 Mar 12 at 7:41 pm

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