China: Slaughter in China’s burgeoning coal industry

Official report reveals "Dereliction of duty and abuse of power" on a grand scale

The slaughter taking place in China’s coal industry is no secret. On a weekly basis there are heart-rending reports of new gas blasts or underground floods killing dozens of miners. Horror-stricken wives and relatives wait above ground for news of the rescue efforts. In the first three months of this year, 661 miners have been killed in China. This is a 15 percent drop on the figures for the same period last year due to upgrades in the state-owned coal sector and also intensive media coverage.

Does this mean central government measures are beginning to take effect? The answer is sadly no.

Independent research suggests the real level of fatalities is far higher – probably double the official figure. The State Administration for Coal Mine Safety Supervision reported a succession of ’cover-ups’ of fatal accidents in March. Under Chinese law, mine owners are only obliged to report accidents which involve three or more deaths. This leads to widespread ’body smuggling’ – corpses dumped in rivers or otherwise disposed of – preferably across provincial borders!

Even this somewhat reduced death toll is far worse than in the 1950s and ’60s, when the industry was completely state-run under Mao Zedong’s Stalinist regime. It was plagued by mismanagement, massive waste and arbitrary decision-making over which ordinary workers had no control – problems that are even worse on the basis of current ’market’ rules. But it was indisputably much safer compared with today’s wildly deregulated but hugely profitable industry. As for efficiency: the ’recovery rate’ for mining coal in China is only 30 percent. This is less than half the global average, according to the 2007 Blue Paper recently published by the Social Sciences Publishing House which points to "huge coal waste" in China today. (China Daily 3 May 2007).

Privatisation and deregulation

An estimated 3 million miners are employed in China’s coal industry. Many are migrant workers or laid-off former state sector employees working long shifts, for extremely low pay, often with little or no safety equipment or training. Around two-thirds of the total – roughly two million workers – are employed in private coalmines or those opened by local governments and this is where the majority of accidents occur.

Privatisation and deregulation of the industry has spawned around 17,000 small ’wildcat mines’ which account for a third of China’s total coal output. These mines are commonly subcontracted by local governments to private contractors. Supervision by government authorities is virtually nonexistent. To maximise profits, mine owners ratchet up production far above sanctioned levels, send down more miners than allowed by law and neglect safety equipment and procedures.

A central government drive to bring this process under control and order the closure of unsafe mines has foundered on the rocks of local government resistance. Even the state-controlled sector, which comprises the largest and most modern mines, is not integrated into any national plan, even on an industry-wide basis. State-run coal mines are under the supervision of their provincial governments. There is probably less coordination than between the coal industries of EU members, Poland and Germany.

In May alone there have been a number of fatal accidents. On 6 May, 30 miners were killed in a gas explosion at a colliery in Linfen, Shanxi province. Rescue work was slowed down by thick smoke inside the mineshaft. It soon transpired that the mine had been ordered to suspend production on safety grounds but this order had been ignored by the mine operators. At the Linfen mine, the 125 miners working on the day of the accident were employed by five different companies, reflecting the crazy deregulation and wild privatisation of the industry!

"The coalmine was in a mess and under poor management," noted Shanxi’s provincial work safety watchdog. Unfortunately they did not pass this verdict until after the loss of 30 lives.

Mega-profits and mega-fatalities

China, with vast reserves, accounts for around one-third of the world’s coal output, yet it accounts for four-fifths of coal industry deaths worldwide. The death rate is 50 times higher than in the United States, the world’s second largest producer, but also ten times higher per ton of coal than in India. Despite technological backwardness by comparison with its Western counterparts, India’s coal industry differs from China’s in one crucial respect – large parts of it are unionised. In China, only the official All China Federation of Trade Unions (ACFTU) is allowed to ’represent’ the workforce. This is a sick joke. The ACFTU is an arm of the state and consistantly sides with management against the workforce.

Chinaworker (CWI China web-site) has repeatedly called for the full nationalisation of the coal and energy industry under democratic workers’ control and management, including, as a prerequisite, the formation of genuine, independent and democratically-run trade unions in the industry and in the wider economy. Elected health and safety representatives, with the power to stop production and veto management decisions connected with the immediate safety and welfare of the workforce, are the only way to enforce China’s safety regulations. Today they are no more than a ’paper tiger’. This is a matter of life or death in hazardous industries like coal.

Coal production has nearly tripled in the past five years as China’s economy surges and the price of imported oil has rocketed. (China is now the world’s number two oil importer after the US). With the price of domestically produced coal, on the basis of market principles, shadowing oil prices upwards, this has meant rich pickings for a new class of ’coal barons’ in resource-rich provinces like Shanxi.

The coal price rose 6.2 percent in March this year. Wages, however, remain the same – around 1,000 yuan a month in the world’s most dangerous occupation. (More miners are killed in China every month than US and other foreign soldiers in Iraq). The Shanxi coal bosses are notorious for the ostentatious way they show their wealth. As Time magazine (2 March 2007) reported, "Chinese newspapers regularly tally the number of Hummers, Ferraris and Rolls-Royces in the otherwise impoverished province". In fact, the consumption of luxury items – from Rolex watches to Armani suits – by ’new rich’ coal proprietors in this province recently eclipsed the Beijing region, with its sizeable professional middle-class and army of government officials.

Officialdom on trial

Last week the Supreme People’s Prosecution service (SPP) announced its findings from an investigation into nine coalmine explosions in 2005 which claimed 270 lives. This top legal organ of the ’communist’ state found 46 local party-government officials guilty of ’malfeasance’ and corruption in connection with the accidents. The main cause was violation of safety rules – mine owners had ordered "excessive operations regardless of production limits", the SPP said, adding that local government officials had aided and abetted mine owners.

The SPP report found that, "Some officials had invested in the coal mines that they supervised or ensured certain mines were operated by their relatives or friends". This practice is an open secret in China. In Guangdong province, the report said, the former deputy director of the Provincial Administration for Work Safety had taken 530,000 yuan ($70,000) in bribes following the flooding of a mine that left 121 people dead in 2005. In the same year, at the Jiajiabao mine, also in Shanxi province, two senior ’communist’ party officials helped mine-owners hide the bodies of 17 miners after a gas blast.

The SPP report is a condemnation of workings of China’s ruling ’communist’ party. As China Daily (24 May, 2007) commented in an editorial: "The (SPP) explicitly states that there is a close connection between fatal workplace accidents and dereliction of duty and abuse of power by officials."

This newspaper noted that in 95 percent of the cases investigated, however, no criminal charges were brought against officials. While such reports, prompted by a growing public clamour for action, lift the lid on the extent of collusion between state officials repsonsible for ’monitoring’ the industry, and the mine profiteers, they fail to explain that privatisation, and the operation of market principles even in the state sector, are the root cause of these problems. Corruption and nepotism existed under the Stalinist state-run industries, but the state monopoly set definite limits on this process – limits which have now been removed!

Central government backs down

The issue of coalmine safety has become a touchstone of the central government’s ability to turn the tide on mounting social problems. On a range of issues – illegal land seizures, pollution and wage arrears, for example – central government policies are routinely thwarted by local non-compliance. The public outcry over coal industry safety has forced the central authorities to invest enormous prestige in the issue. In 2003, Premier Wen Jiabao celebrated the Chinese New Year by going 2,300 feet underground to eat lunch with miners. He visited coal miners’ homes and once tearfully implored party officials to learn "lessons drawn in blood".

The issue is especially embarrassing for Beijing because coal is one of a handful of ’strategic’ industries, earmarked for continued strong central supervision and control as the wider economy is steadily opened to greater foreign penetration or private Chinese capital. Other ’strategic’ sectors include the oil and gas industry, telecommunications, armaments, power generation, chemicals, aviation and shipping. If the central government cannot stamp out widespread corruption, illegality and local protectionism in the coal industry, how can it prevent such practices in other ’non-strategic’ sectors and industries?

But in reality, the central government is trapped in the logic of the market system. Coal accounts for 70 pecent of China’s electricty power generation. It is a motor of the wider economy. However much the top leaders may genuinely deplore the grisly death toll in the mines, they are dependent on continued high rates of coal production. A cut in production, brought about by the too zealous enforcement of existing safety laws, could unleash several undesirable consequences: sharp price hikes, distribution bottle-necks and, because of the far from integrated nature of China’s national economy, protectionism between provinces each fighting for ’their’ coal supplies.

Early last year a new, ’tougher’ approach was unveiled by Wen, ordering the closure of 4,000 unsafe mines across the country, compiled on a central government hit list. But then in October, Beijing announced it was delaying implementation of the plan until 2010. According to the official Xinhua news agency, the plan foundered because of opposition from local governments, which regard the mines as their "major capital sources," in the form of tax income, local employment, and – we might add – bribes from coal operators. This led "many local authorities to protect unsafe mines for financial gain," reported Xinhua.

A 2006 report from the Central Commission for Discipline Inspection of the Communist Party of China (CCP), found that 4,878 party-government officials nationwide admitted to owning stakes in coalmines amounting to a total registered capital of 737 million yuan (91 million US dollars). (China Daily, 14 February 2006).

This means an average investment of $18,600 in the local coal industry by the government officials mentioned in this report. It is no surprise, therefore, that provincial and local-level officials do everything in their power to shield the often illegal coal mining operations under their jurisdiction.

"Mining is the perfect case study of central-government relations with local government in China," says Arthur Kroeber, editor of the China Economic Quarterly. "The clash is between the central government’s desires and the local government’s pressing economic needs, and in 99 cases out of 100, local government wins out."

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May 2007