Japan from the inside out

Arbeit macht frei

Posted by ampontan on Tuesday, August 31, 2010

THE ASSOCIATED PRESS offers a barely coherent report by Anita Chang on a meeting in Beijing last weekend between Chinese leaders and a Japanese delegation that included several Cabinet ministers. The Japanese side had several complaints. Here’s one of them:

Japanese Foreign Minister Katsuya Okada called for “transparent policies” governing workers in China, saying the labor disputes that halted work at dozens of factories were troubling to Japanese companies.

What labor disputes, what policies lack transparency, and why are they troubling to Japanese companies? Ms. Chang didn’t say.

Premier Wen Jiabao said it was all Japan’s fault:

“Labor disputes are occurring at some foreign companies, where there is a problem of relatively low wages. We would like (Japan) to address this issue,” Wen told Japanese officials, according to a news release by Japan’s foreign ministry.

In fact:

The Chinese delegation at the meeting said the strikes were to be expected because wages had been frozen for two years to help companies ride out the economic crisis, Japan Foreign Ministry spokesman Satoru Sato told reporters at a briefing late Saturday. The Japanese were “not so satisfied with this explanation, we still think this is very important to Japanese companies operating here,” he said.

Ms. Chang concluded:

The widespread strikes were rare for China but the government permitted them, apparently trying to put more money in workers’ pockets as part of efforts to boost consumer spending.

What this report doesn’t tell us, but the result of Googling too many articles to count did:

* Strikes are against the law in China.

* Despite their illegality, strikes and other labor disputes have been common in China for a while, Ms. Chang’s reporting to the contrary. In fact:

“Every month there are hundreds of strikes,” says Chang Kai, a labor-relations professor at Renmin University of China in Beijing, who advised the Honda workers. “What the government is concerned about is whether it can control these strikes or not.”

* The officially sanctioned outlet for labor complaints in China is an arbitration process that has broken down due to the sheer volume of cases.

* The situation has escalated to the point that some are now describing it as the open revolt of labor.

* The All-China Federation of Trade Unions is the only authorized labor union in the country. It is affiliated with the Communist Party.

* Chinese workers complain that the union usually sides with management instead of the workers and does not help them in negotiations. At a Honda plant, there was a brawl between the striking workers and the union leaders, after which the workers referred to the union as “the mafia”.

* The recent strikes have usually, but not always, occurred at foreign-owned plants rather than Chinese-owned enterprises.

* The Chinese government allowed the media to play up the strikes against the foreign companies, but clamped down on coverage when events threatened to spin out of control.

* At a Taiwanese-owned electronics plant earlier this summer, there were no strikes but a string of suicides over sweatshop working conditions (Seven days of work a week for more than 10 hours a day)

* The Japanese companies seem to have paid the minimum wage, but in the case of the auto workers, the minimum wage was not enough to allow the workers to buy an automobile.

* The Japanese and other foreign companies are following the lead of the Chinese authorities in its labor relations. That’s to be expected in a country with a heavy-handed government that determines whether foreign-owned companies can operate at all, and the conditions under which they operate.

* If dealing with the officially sanctioned union exacerbates problems with the workers rather than resolves them, who are the Japanese and other foreign companies supposed to deal with?

* The Japanese companies already started increasing worker wages as a result of the strikes, before Premier Wen’s “suggestion”.

* Chinese authorities informed the workers at one Japanese plant the salary of workers at the same company’s factory in Japan. The workers demanded the same salary. Had they thought about it, they should have realized they were demanding to become unemployed. If a Japanese company has to pay Japanese-level wages, there’s no reason to operate a plant in China.

* The primary reason for the unrest is a labor environment created by a Chinese government deathly afraid of giving its population too much freedom but desperate for the revenue the foreign companies generate.

* The Chinese government is now using the unrest as an excuse to have the overseas private sector operating in that country foot the bill for a consumer stimulus measure rather than reform its own labor laws.


How much longer will it be before the internal contradictions of the Chinese system cause its collapse?

As one of the above-linked articles notes, the Chinese are considering an experiment that would allow strikes in certain situations. When the Chinese people inevitably get a taste of what they want, won’t they also inevitably find their regime intolerable?

And if this is what the AP thinks is journalism, why do they even bother?


At the same conference, the Japanese also urged China to relax its recently imposed export controls on 17 rare earth metals used to produce components in computers, cell phones, and other high-tech products. Try this article in The Telegraph:

Beijing set off shockwaves in early July when it announced a 72pc reduction in rare earth exports over the second half of this year. The country has acquired a near monopoly, with 97pc of global output after under-cutting the rest of the world with Mongolian ores in the 1990s. The sudden cut-off since July has drastically restricted supplies to the rest of world.

Premier Wen’s reply defied logic in a single bound:

China would not stop exporting rare earth, but the tightened restrictions were necessary to address overdevelopment and the smuggling problem.

Ambrose Evans-Pritchard explains in the article that rare earth metals are not rare, but scattered and expensive to extract. The long-term solution to this problem is obvious: allow the free market system to operate with a minimum of interference. The private sector will develop the technology and the means to make it cheaper and easier to extract the metals in the same way that it allowed oil to be developed.

In 1977, U.S. President Jimmy Carter warned that “we could use up all of the proven reserves of oil in the entire world by the end of the next decade.”

Twenty-five years later, there was enough oil around to last for a century and a half.

The Club of Rome produced a study called The Limits to Growth in 1972 that declared the world would run out of gold by 1981, mercury by 1985, tin by 1987, zinc by 1990, petroleum by 1992, and copper, lead, and gas by 1993.

They should have consulted Julian Simon first.

Assuming that the obstacles created by the Luddites in control of the American government and influential throughout the developed world can be disposed of, the Chinese restrictions guarantee that rare earth metals will eventually become cheap and plentiful outside the country (or cheaper and plentiful substitutes will be found). The Chinese will have wound up killing the goose that lays their golden eggs.

But the disagreements at the recent conference highlight a more critical problem:

How is one to deal with a country that combines the worst aspects of 18th century imperialism, 19th century capitalism, and 20th century Marxism–particularly when it is the largest country in the world? Their system is unsustainable, but how much trouble will they cause the rest of us before it unravels?


* This is another indication that a tilt by the DPJ government toward China and away from the United States does not necessarily mean it will roll over for the Chinese.

* This also indicates it will be a long time before anyone can realistically consider the possibility of a functional East Asian entity, which might be beside the point by the time it is feasible.

Thanks to RD for The Telegraph link.

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6 Responses to “Arbeit macht frei

  1. Roual Deetlefs said


    If you have some spare cash invest in Rare Earth Exploration companies. There are some good ones in Australia if you do a search. But my suggestion is Namibia. Keep an eye on Namibia. But this only after, this crash cycle is over, which seems more and more like 2012/2013.

  2. Roual Deetlefs said


    … but then again China needs potash . This also :

  3. 21st Century Schizoid Man said

    Albeit Macht Frei is the phrase posted at Nazi concentration camp and used by an Italian superb jazz-rock-avantgarde band Area as the title of their first album. “Work makes freedom”? I am not sure about translation.
    2csm: Work will make you free. Work is liberating.

    Using it as a title here is just what passes for the Ampontan sense of humor at work.

    – A.

  4. Roual Deetlefs said


    An article on China buying Japanese bonds. Is this investment or something else ?

  5. 21st Century Schizoid Man said

    @Roual Deetlefs

    Investment purpose, I presume. But when necessary China may threaten Japan selling off all bonds so that price falls, though I do not know if it serves as real tactical one. Japan holds lots of USTB and some yell out to sell off them whenever they do not like US. Suffering substantial amount of loss would not justify it, in my understanding.

  6. Roual Deetlefs said

    @ 21CSM

    Thanks. In many ways bankkrieg is preferable to blitzkrieg.

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