China: Manager beaten to death in steel privatisation battle

30,000 workers fighting for jobs and pensions in northeast China

A fight against privatisation and asset-stripping by 30,000 steel workers and retired steel workers in northeastern Jilin province resulted in a boss getting beaten to death on Friday 24 July. The incident has attracted global publicity, as a sign of the explosive social tensions in China as the global capitalist crisis continues. It also undermines government attempts to portray violence in Xinjiang province as exceptional, and the work of outside forces.

Around 10,000 workers and 20,000 retired workers have been protesting the sale of state-owned Tonghua Iron & Steel to the private Beijing-based Jianlong Steel Holding Company, which threatened drastic job cuts and loss of pension entitlements. Chen Guojun of Jianlong, the newly named ‘interim general manager’ of Tonghua was beaten to death by workers who had shut down the steel mill to prevent its take-over by Jianlong. Chen enraged a crowd of workers when he announced that staff numbers at Tonghua would be cut from 30,000 to 5,000. During the protest action on Friday 24 July, more than 3,000 workers kept riot police at bay for almost the whole day. The workers occupied the steel mill and also blocked a railway track, preventing supplies reaching the plant, and forcing the company to suspend production for 11 hours. About 100 people were injured in clashes with riot police, the Hong Kong-based Information Centre for Human Rights and Democracy wrote:

“Chen disillusioned workers and provoked them by saying most of them would be laid off in three days,” said a Tonghua police officer named Wang, quoted in the state-run China Daily. “Chen, saying that a total number of 30,000 employees would be cut to 5,000, infuriated the crowd.”

The English language Beijing News carried a report that the fighting started when workers demanded a meeting with Chen. The workers refused his order to return to work, battered him with boots and pushed him from a second-storey office, the newspaper said. A Reuters report, however, claimed Chen Guojun was thrown down some stairs to his death. Workers continued to block access to the factory, including for medical staff, because they feared their struggle would be lost if police and officials took control of the premises before their demands were met. Police were pelted with water bottles, although some reports claim bricks were thrown. The workers called off their action late in the evening, once it was announced that the Jianlong takeover had been shelved permanently.

Media comment

“Makes those French militants and their crazy boss-napping antics look positively small-time by comparison,” commented the business website “Surely there’s a lesson for recession-hit bosses everywhere in that?” it added. On domestic websites there was a flurry of comment. “Almost all were sympathetic to the plight of workers losing their jobs as part of China’s privatisation programme,” noted Sky News.

According to comments posted online, Chen infuriated workers with his “high-handed” attitude. Steel workers at Tonghua and throughout state-owned industry have suffered pay cuts as a result of the crisis. Meanwhile, Chen Guojun received an annual salary of 3 million RMB ($500,000) last year, according to media reports. This compares with Tonghua Steel’s retired workers who each receive only 200 RMB ($29) a month for living expenses.

“Workers may feel the state has sold them down the river, especially if there are layoffs or if the private investor moves in their own people,” commented Wang Erping of the Chinese Academy of Sciences Institute of Psychology. “Such protests pose a headache for the government – and any potential investors in privatised steel factories – since China lacks independent unions and limits legal options for workers to get their complaints heard.”

Steel sector ‘consolidation’

The Tonghua case is typical of China’s privatisation programme and how this is being stepped up in strategic industries like steel that face massive overcapacity. As Reuters correspondent Lucy Hornby points out, “That has meant opting for modern plants and laying off workers at state-owned firms while promoting well-paid executives trained in capitalist finance, a process that can get ugly, especially in economically depressed areas like northeast China.”

The central government wants to speed up ‘consolidation’ of the industry in the teeth of the current global crisis. Steel output in China is once again expanding rapidly, fuelled by a huge stimulus programme and flood of cheap credit. But at the same time, global demand for steel is falling sharply. China now has 160 million tonnes of excess capacity, according to industry officials, equivalent to the total steel output of the U.S. and Russia combined. Unless some steel plants are closed, the central government reasons, prices will continue to fall, along with profits, and any hope that steel plants will be able to repay the loans they use to finance their expansion will be dashed. For this reason the State Council (central government) has called for consolidation of the industry, with just five major producers occupying 45% of production by 2011. It is likely that pressure upon the Jilin provincial government to agree the merger with Jianlong came mainly from the central government, which regards private companies as a positive force for achieving savings and increased productivity.

Jianlong is a privately-owned conglomerate set up in 1999, which ranks 158 out of China’s 500-largest companies, with 40.79 billion yuan ($6 billion) in 2008 sales, according to its website. Tonghua ranks 244 out of the top 500 enterprises. The company posted a profit of 42.8 million yuan in June, reversing a loss from last year’s same period. This reversal in Tonghua’s recent fortunes explains the renewed interest from Jianlong, which acquired a minority stake in the company in 2005, but then pulled out as Tonghua lost money amid the global downturn. It was announced last week that Jianlong would buy in again, only this time taking a 65 percent stake. Workers and local people see the Jianlong bid as a blatant case of asset-stripping. The company, and the unfortunate Mr. Chen, made no secret of its plans to razor the workforce.

Quite probably the old management of Tonghua, wanting to block Jianlong’s takeover for their own reasons, had a hand in Friday’s events. It seems this is now the main track of the police investigation, although 20 Tonghua workers have been arrested so far. Information about Chen Guojun’s stratospheric seven-figure salary was widely leaked before his arrival at the Tonghua plant last week. It is possible that workers were egged on by former bosses in the attack on Chen.

Stop privatisation, defend jobs

Workers will welcome the news that the Jilin provincial government has decided to stop the merger plan with Jianlong. The Xinhua news agency said the government halted the plan “to prevent the situation [i.e. worker unrest] from expanding.” But this is not enough and does not yet represent a clear victory for the workers’ struggle. The Tonghua factory has been shut down now on the grounds of law and order and the police investigation. But this is also undoubtedly intended to make it harder for workers to congregate and discuss their next moves. The provincial government has conspicuously only ruled out a merger with Jianlong. It has not issued any statements that the threat of privatisation is removed or any guarantees for existing jobs and pension entitlements. Workers at Tonghua must continue their struggle and deserve the support of other workers in China and internationally.

In our (Chinese language) reports on the website we have put forward the following demands for this struggle to reach a successful conclusion:

  • Mobilise mass pressure to stop the privatisation of Tonghua Steel immediately; build factory committees, democratically elected worker representatives should take over control and management of the factory.
  • Tonghua workers should organise an independent trade union, for collective negotiation with the local government to achieve real workers’ democratic control of the workplace, and drive out any private company’s managers and bureaucrats.
  • Release all arrested workers and worker representatives, against any repression and harassment by the regime and police.
  • Elect an independent investigation committee with workers and other third party representation to look into these events, including the process of privatisation, repression by police and actions of the state bureaucracy.
  • All socialists and the left should unite in support of Tonghua steel workers’ struggle against privatisation, against capitalism and against bureaucratic dictatorship. Linking the Tonghua steel workers’ struggle with the Baoding garment workers’ struggle, to put the case for a socialist labour movement in China.

Finally, believes the only way to end the current crisis is to eliminate capitalism and bureaucratic dictatorship, through democratic organisation of the working class and masses from below to plan the economy under public ownership, and to achieve real democratic socialism.

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July 2009