Labour Strikes In China - A Regional Perspective

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by: Joseph Shupac

Summary

Labour strikes have been becoming a lot more common since the beginning of 2014.

In the province of Guangdong, in particular, which borders Hong Kong, they have been occurring regularly.

If you look at the statistics showing labour strikes that involved more than 1000 participants and adjust it to reflect provincial GDP sizes, a number of notable patterns emerge.

The China Labour Bulletin website provides maps displaying incidents of labour strikes that have occurred in recent years. While, of course, these should be viewed with a fistful of salt, they may be worth scrutinizing all the same.

This image below shows the number of strikes in general that have occurred since 2011. As you can see, they have been getting a lot more common since the beginning of 2014.

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Yet, this may be somewhat misleading - nearly half of the strikes indicated in the map above are thought to have had fewer than 100 people participate in them. It may be better to look just at the number of larger strikes that have occurred, as the following two maps do:

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(4 out of the 7 labour strikes involving 10,000+ people since 2011 occurred in Guangdong province, according to the China Labour Bulletin.)

These maps above show that the larger strikes, with 1000-10,000 people and 10,000+ people, respectively, occurred most often in 2014, unlike the smaller but more numerous strikes that occurred most frequently in 2015 and so far in 2016. Since 2015, there have not been any strikes involving more than 10,000 people, in fact, according to the China Labour Bulletin.

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Now, let's take a closer look at the differences between China's many provinces. Below, I have tried to graph out the number of strikes that have occurred in each province, first since 2011 and then since 2015:

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Guangdong, China's most populous province, finished at the top of both graphs, while Tibet, Qinghai, Hainan, Tianjin, Ningxia, Gansu, and Xinjiang finished at the bottom of both graphs. All of the provinces of China are more or less in the same position in both graphs, in fact. And there are no major regional patterns that can be gleaned clearly from either list.

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(Labour strikes since January 1, 2015 involving at least 1000 people. Guangdong had 27, followed by Jiangsu with 9, Shandong with 8, and Sichuan with 5.)

What if we adjust the figures to take into account the population size and GDP of each province? Then, we get the following graphs:

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Here, Guangdong and Tibet again finished at the top and bottom of both graphs, respectively, but Ningxia, which had finished fifth from the bottom before adjusting for population and GDP, has now moved up to second from the top. Ningxia is China's third-least populous province (the two Tibetan provinces, Tibet and Qinghai, are the least populous), is one of China's five "autonomous regions" (the others being Tibet, Xinjiang, Inner Mongolia, and Guangxi), and apart from Xinjiang, has by far the highest concentration of (Hui, not Turkic Uyghur) Muslim inhabitants of any province in the country.

In the adjusted-for-population graph, China's relatively small and wealthy "direct-controlled municipalities", namely Shanghai, Beijing, Tianjin, and Chongqing, all were much higher up than they were on the adjusted-for-GDP graph, with the exception of Chongqing. (Chongqing is quite a bit less urbanized than the three others are.) Shanghai and Beijing were third and fifth, respectively, while Tianjin, which was at the very bottom of the adjusted-for-GDP graph, was close to the middle of the pack when adjusted for population.

Another big change was Hainan, China's southernmost province and only island province (not counting Hong Kong, Macau, or Taiwan), which was third from the bottom before adjusting for population size or GDP, but fourth from the top when adjusting for GDP and eighth when adjusting for population size. Shanxi and Shaanxi, meanwhile, two neighbouring provinces located in and around the mountains of north-central China, moved from around the middle of the pack to near the top once adjusted for GDP and population.

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Shanxi, in particular, is China's major coal-producing region, and the coal industry has come under a lot of pressure in recent years, which may help explain Shanxi's high position on both of these graphs. (Shaanxi too is a top coal producer. Inner Mongolia, though, China's second-biggest coal producer, is admittedly near the bottom of the GDP-adjusted labour strikes graph.) Shanxi has also been arguably the main provincial target by far of Xi Jinping's intense "anti-corruption" campaign.

Still, these graphs again do not prioritize large strikes over smaller ones. Below, then, are the strikes with between 1000 and 10,000 participants that have occurred since 2011. Since there have been very few strikes with more than 10,000 participants, the 1000-10,000 category accounts for an overwhelming share of the large labour strikes that have taken place:

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The graph showing labour strikes with 1000-10,000 people since 2011, adjusted for GDP size, is the most important one, I suspect. The population-adjusted graphs tend to somewhat misleadingly overemphasize the wealthiest provinces, like Shanghai, Tianjin, or Guangdong, since they have lots of per capita economic activity and therefore also lots of per capita labour strikes. The non-adjusted graphs skew in favour of populous provinces, meanwhile. The GDP-adjusted graphs, though, are perhaps more indicative of provinces in which there may be growing social challenges to China's political or economic establishment.

Notably, this GDP-adjusted graph is also the only one in which clear regional divisions can be seen. Western provinces like Tibet, Qinghai, Xinjiang, Yunnan, Ningxia, and Gansu are at the bottom. The south-central/south-western region of Hunan, Hubei, Chongqing, and Sichuan is also near the bottom. Beijing and the provinces around it, like Liaoning, Inner Mongolia, Hebei, Henan, Tianjin, Shanxi, and Shandong are near the bottom or the middle. Shanghai and the three provinces that surround it, namely Jiangsu, Anhui, and Zhejiang, are also near the top (or in Zhejiang's case, the middle).

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Guangdong, which is the heartland of Cantonese (rather than Mandarin) and is the only province in China to border Hong Kong and Macau, remains far ahead at the top of the list. Three of Guangdong's four neighbouring provinces, namely Jiangxi, Guangxi, and Fujian, are also near the top, as is nearby Guizhou. Remarkably, Guangdong's GDP-adjusted figure for large labour strikes is roughly twice as high as any other province and five times the nationwide average. Guangdong has also been home to four of the seven labour strikes in China involving more than 10,000 people since 2011, according to the China Labour Bulletin. Given Guangdong's enormous size, its ties to Hong Kong, and its revolutionary history, this may be worth taking note of.

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The other biggest outlier is the northeastern province of Heilongjiang, which, apart from Guangdong, had by far the most large strikes adjusted for GDP size. Heilongjiang has been a major oil and coal producing province, which may partially help to explain this. Strikes in the province have been putting its governor Lu Hao, the youngest provincial governor in the country, under a lot of political pressure of late.

Heilongjiang's position also highlights an interesting trend: China's most peripheral provinces, like Tibet, Guangdong, Heilongjiang, Xinjiang, Guangxi, Yunnan, Qinghai, Inner Mongolia, Hainan, and Jiangxi, are either at the very top of the list or at the very bottom. Heilongjiang itself has the longest international border in China outside of the three "autonomous regions" of Tibet, Xinjiang, and Inner Mongolia. Its border with Russia is only slightly shorter than the entire US-Mexican border. Hopefully, Donald Trump will move there once he loses the election this year and trouble America no more.

The China Labour Bulletin maps also zoom in to show which cities the strikes took place in and gives basic information about them. For example:

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It also breaks down the strikes by the response they are thought to have received, into five categories: "police", "arrest(s)", "government mediation", "negotiation", or "other". According to the site, "Guangdong also led the country in the number of police interventions in labour disputes, accounting for about 19 percent of the total 831 incidents in which police were deployed and 24 percent of the incidents in which arrests were made".

"Worker protests accounted for 38 percent of all mass protests by Chinese citizens last year, according to statistics published on the well-respected Wickedonna blog".

To close, here are the numbers of strikes of all sizes since the beginning of 2015, adjusted for provincial population size and provincial GDP size. Guangdong is finally not at the top of either:

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But if you look only at large strikes since 2015, then Guangdong is back on top:

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(Labour strikes since January 1, 2015 involving at least 1000 people. Guangdong had 27, followed by Jiangsu with 9, Shandong with 8, and Sichuan with 5. There have been no strikes with 10,000+ people since the beginning of 2015, according to the China Labour Bulletin.)

Takeaway For Investors

By itself, none of these facts really provide any insight into how one should or should not invest in China. However, the question of how much regionalism exists in modern-day China is a crucial one for investors. The country has historically been been prone to strong regionalism at times, and in general, regionalism tends to make central governments less likely to risk economic or political liberalization. Those who understood that China was a lot less of a monolithic country that it was often portrayed to be were less likely to have been suckered by the China and BRICs investment bubbles of a few years ago.

Guangdong, China's most populous province and largest provincial economy, is particularly noteworthy in this regard, as it has played a leading role in Chinese revolutions in the not-too-distant past. Thus, investors in mainland China or Hong Kong should be interested to find that even after adjusting for GDP size, Guangdong has had by far the most labour strikes with more than 1000 participants since 2011 (according to the China Labour Bulletin), twice as many as any other province, and about five times the nationwide average. And that Guangdong has had four out of the seven labour strikes involving more than 10,000 people.

Similarly, they should note the various regional patterns in China's labour strike figures, which are only apparent once you ignore small labour strikes and once you adjust for provincial GDP sizes.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.