Tongfei Kou's Blog

A man throws a rock at a non-strike truck - REUTERS/Carlos Barria

Carworkers in southern Guangdong province warned the world last year it could not take cheap Chinese labour for granted any more by successfully agitating for higher wages in a series of industrial actions. Shanghai truckers reinforced that message with a strike of their own last week.

The Chinese government is always wary of workers who possess the wherewithal to organise independent industrial action outside the auspices of the country’s only sanctioned union, the All China Federation of Trade Unions. But Shanghai’s truckers undoubtedly frighten Beijing more.

The adage in western democracies that “all politics is local” has a parallel in authoritarian China, where almost all social unrest is local too. Dozens if not hundreds of small-scale protests, typically labour or land-related, flare every day.

For all the attention they commanded, the Guangdong strikes were in keeping with this pattern. Each concerned pay and conditions on the factory floor and they were resolved on the factory floor. The ire was directed at management, most notably at factories run by Honda and other Japanese carmakers.

Shanghai’s truckers latched on to something larger that, from the Chinese government’s perspective, made their strike potentially more dangerous. They were more explicit about their impatience with inflation in the form of the rising port fees and fuel costs that are eroding their ability to make a living. As one trucker told the FT: “This truck is all I have to support my wife and kid.”

Police is on duty during a truck driver strike at a seaport in Shanghai

Port fees can be blamed on port operators, even if they are state-owned, and at the weekend the Shanghai Transport and Port Authority announced a reduction or cancellation of various charges. In doing so the authority did not mention the strikes, saying only that the fee cuts were aimed at “easing rising inflation and cost pressures on transport companies”. It also lowered the monthly fee taxi drivers must pay for their vehicle, in a canny effort to prevent the port protests on the city’s outskirts from spreading into Shanghai proper.

If only Beijing could fix inflation as readily as it fixes fees. Interest rate increases and other measures aimed at reining in price rises have thus far failed to have their intended effect, with inflation hitting a 32-month high of 5.4 per cent last month. As Wen Jiabao, China’s premier, put it recently, the government is discovering that inflation is a tiger that “once set free is very difficult to put back in its cage”.

The government will have gotten off lightly should this weekend’s fee reductions prove enough to send Shanghai’s truckers home, especially if they disperse before drivers in other cities cotton on to their example. As with last year’s Honda strikes, censors have imposed a strict media blackout to prevent exactly that.

Shanghai has the largest container terminal on the world

While the authorities can do little to prevent vertical explosions of local discontent – think of thousands of little volcanoes erupting all over the country – they are ruthless when it comes to eradicating any horizontal linkages that might give rise to larger co-ordinated movements. Hence the brutality they unleashed on the highly networked Falungong cult a decade ago, and more recently their over-reaction to the anonymous internet pleas for “jasmine” protests inspired by this year’s Arab spring.

As for the truckers’ concern about the rising price of diesel, increasing China’s already generous fuel subsidy would be too costly and humiliating a concession for such a localised disturbance. Beijing sets fuel prices and has raised them twice already this year.

Yet Chinese truckers still pay just $1.05 per litre of diesel fuel – 35.1 per cent below the international market price – and the government fears the financial consequences of this year’s oil price surge. Minggao Shen, a China equity analyst at Citibank, has estimated that $150 a barrel oil would cost the government $66bn annually in subsidies.

But even if Shanghai’s truckers fade away quietly this time, they have already proved that one of the government’s worst fears was not misplaced – inflation can and will continue to inspire protests and social unrest. Another long, hot summer is just beginning on the Chinese mainland.