Argument for Engagement

By Doug Guthrie

Thank you to FPIF for holding this debate. It is very refreshing for me to be able to discuss these issues frankly within the progressive community. Let me say from the outset that I am not an advocate for big business, and I have no personal interest or stake in the success of business in China. My only interests for the 12 years I have been studying China's economy and society have been in understanding the reality of labor relations in this rapidly changing society, in understanding the forces driving these changes, and in finding a policy that is the best for the greatest number of Chinese citizens. That policy is engagement. This society still has a great distance to go in the realm of human rights, and I'm not an apologist for this regime. But there is no evidence that isolation will help the citizens of China, and there is a great deal of evidence that engagement has brought about change in the realm of human rights. For the United States to separate itself from the rest of the world on the treatment of China will be disastrous for the people of China.

The opponents of PNTR, who take the position that little has changed in China, that it is still the same despotic and corrupt place it was 20 years ago, fundamentally misunderstand the situation in China today. First, while change has been gradual in China, over the course of 2 decades of reform, we have seen radical changes that make China a fundamentally different society than what it was before the reforms began. Statutes like the National Compensation Law, which allows Chinese citizens to sue the government for past wrongs, and the Prison Reform Law, which according to most extensive research on the topic, has fundamentally altered the treatment of prisoners, have radically reshaped the reality of human rights in China. In the area of legal institutions and labor, the Labor Law and the Labor Arbitration Commissions are radical steps toward a rational, rights-based workplace and society. These changes amount to nothing less than radical social change in China. Reform in China has been a gradual process, and in our desire to see something dramatic like the fall of the Berlin Wall, we have imperiously ignored and arrogantly dismissed the radical changes that have evolved over the course of two decades of reform in China.

Second, it is on the factory floor where the emergence of a rights based workplace is the most apparent, and it is here that we can see the direct impact of foreign--in particular, Western--investment. Those who blithely state that Foreign Direct Investment has resulted in no increased protections for human rights in China simply have no idea of what is going on over there. And let me state as an aside here, virtually no one is working from systematic empirical research on the topic; my study of Chinese factories is one of the few that has actually tried to capture this effect. In my own research I have visited hundreds of factories, spent hundreds of hours interviewing hundreds of managers and workers, and systematically studied the impact of foreign investment on the transformation of labor relations in Chinese factories. I have watched these factories transform over the course of the 1990s. The emergence of rights-based labor practices is easily apparent to anyone who cares to look, but it is the Chinese firms that are engaged in relationships with Western investors who are leading the way in these changes. The findings of my research speak to the real issues before us--which few in this debate have any hard evidence about--the impact of foreign investment in the transformation of Chinese society.

Findings of My Research

My research on Chinese factories shows that those which have formal relationships with foreign (particularly Western) firms are significantly more likely to have institutionalized formal organizational rules, they are almost 20 times more likely to have formal grievance filing procedures, they are more likely to have worker representative committee meetings, and formal hiring procedures. They pay significantly higher wages (about 50% higher), they are more likely to adopt China's new Company Law, which binds them to the norms of the international community, and they are more likely to respect international legal institutions such as the Chinese International Economic Arbitration and Trade Commission. I have had many conversations with managers in which they openly acknowledge that the changes they have set in place have little to do with their own ideas of efficient business practices and much more to do with pressure brought on them by their foreign partners. I would also note here that Western firms bring different pressures to bear on their Chinese counterparts than Taiwanese or Korean firms. This is an important distinction, because it speaks to the U.S. role in the process of change there.

The Causal Argument

Foreign investment--and therefore engagement--influences this process of change in fundamental ways. While it is rarely the case that corporations are the leading advocates of civil liberties and labor reform, the Chinese case is different for a couple of reasons. Because many foreign investors in China are more interested in long-term investments (to capture market share) than they are in cheap labor, they generally seek Chinese partners that are predictable, stable, and knowledgeable about Western-style business practices and negotiations. Chinese factories, for their part, want desperately to land these partnerships, and they position themselves as suitable investment partners by adopting a number of the practices that Western partners will recognize as stable, reform-minded business practices. Among the basic reforms they adopt to show their fitness for "linking up" with the international community (a very popular concept among managers in China today) are labor reforms. Thus, the signaling of commitments to stable Western-style business practices through commitments to labor reform leads to fundamental changes in the labor relations in the Chinese workplace. Foreign investors and Chinese firms are not interested in human rights per se, but the negotiations in the marketplace lead to transformed workplaces, which affect millions of Chinese citizens on a daily basis.

Aside from South Africa, Have Sanctions Ever Worked?

I would like to note that there is so much evidence that the sanction and isolation position does not work that I find it difficult to believe that we still actually debate this question. What do the 38-year-old embargo of Cuba and the 10-year-old embargo of Iraq tell us about the usefulness of isolation in toppling despotic regimes? Has isolation done anything to transform North Korea? If anything is clear, it is that the citizens of these countries suffer while the resolve of their leaders is strengthened. The only case in which a successful international coalition has brought a country to its knees for social change is South Africa, and this case is so different from that of China that the comparison does not even merit discussion (there will quite simply never be an international coalition united to isolate China the way there was in South Africa).

Human Rights' Advocates Aligning Themselves with Despots

I would like to note that those who advocate isolation (in the name of human rights) should look closely at whom they are aligning themselves with in China: Li Peng and his cronies are the true despots of Chinese society--they are the ones who called in the tanks in 1989, they are the ones who would like to roll the clocks back on the economic, legal, and political reforms in China--and they would welcome the isolation position, because they know that the WTO and PNTR will further erode their dictatorial power in China. Think about that--the only people in the Chinese government who agree with the China bashers in Congress about U.S.-China policy are the despots themselves. Zhu Rongji, for his part, is completely focused on reform and the opening up of China, and he knows that the further integration of China into the international community will bring this about. If we want to align ourselves with the despots of this society, we can vote against PNTR; but if we want to align ourselves with the true social reformers of this country--those who actually care about labor rights, a rational legal system and transparency in procedures, and radical reform on the factory floor like Zhu Rongji--we will vote for permanent normal trade relations with China.

As a final note, I would like to directly address the argument that we should reject PNTR because it's the product of a U.S.-hegemony-based world system. Let me say here that I am very sympathetic to the critique of the U.S.'s 800-pound gorilla approach to international politics in general and from a concrete historical perspective. The U.S. has a long history of self-servingly supporting despotic, capitalist regimes, just like it has a long history of providing carte blanche for big business in its endeavors. And it has far too much of a history in exporting its own ideas of capitalism to the world. Indeed I'm sympathetic with the criticisms of the WTO, and on one level, I found the wave that pulsed through Seattle to be very exciting. I think it's a travesty that labor has been left out of the process to the extent it has; I think it's a disaster that the model economic system we hold up is a neo-liberal version of capitalism, rather than a social democratic alternative. As a liberal democrat myself, I find the entire trend depressing. However, the problem with the position of voting against China as a vote against the U.S. and WTO is this: those who would use the anti-China vote as a referendum against the WTO are doing nothing less than holding 1.3 billion of the world's poorest citizens hostage. If we make this decision, we should be very clear about what we are doing. We can use this vote as a referendum against WTO, but we cannot then turn around and hide behind a principled argument about individual civil liberties, labor reform, and human rights.

We can't have this argument both ways. Either we think individual civil liberties and human rights are the most pressing issues for 1.3 billion of the world's poorest citizens, and we support the best ways to gain progress in these realms--and this position is clearly engagement. Or we state up front that we don't care about the welfare and civil liberties of more than a billion Chinese and we take a position against PNTR and thus against the WTO. That's the choice we face.

For me, I have chosen to take the position that is best for the Chinese people, even at the risk of alienating my friends and colleagues on the Left--because my research about China shows that this is the right position. I will continue to fight for labor; I will continue to fight against the export of a neo-liberal ideology across the globe; and I will continue to believe that there is a principled social democratic position to take here. But that principled position does not involve voting against China and casting a vote for the true despots of Chinese society, the hard-liners led by Li Peng. Holding an entire country hostage to further our own interests in the struggles of the Left is simply not the way.

(Doug Guthrie <Guthrie@mail.soc.nyu.edu> is Associate Professor of Sociology at New York University, and acting director of the East Asia Program of the Social Science Research Council.)

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