Day: September 4, 2021

China’s labor laws have long stated that a workday is eight hours long and overtime must be paid to any worker putting in more than 44 hours a week.

 

For many of China’s workers today that describes an idyllic daily grind given the common practice of companies demanding that employees follow a ‘996’ schedule — 9 a.m. to 9 p.m., six days a week — to keep their jobs as employers have devised ways around loosely enforced laws.

 

Entrepreneurs such as Jack Ma, who founded the online retail giant Alibaba, and Richard Liu, chief of e-commerce platform JD.com, praised 996 as their internationally lauded enterprises made them billionaires. They have since walked back their praise, however, as the Chinese government has cracked down its wealthiest citizens.

 

After the deaths of two workers earlier this year at the online agricultural marketplace app Pinduoduo, long-simmering dissatisfaction in tech and other globally competitive sectors boiled over into public outcry.

 

Following a ruling last week by China’s highest court, employers are on notice: 996 is illegal.

 

“The overtime issues at some industries and companies have come to the public’s attention,” the Supreme People’s Court said in its decision. “Legally, workers have the right to corresponding compensation and rest times or holidays. Obeying the national regime for working hours is the obligation of employers. Overtime can easily lead to labor disputes, impact the worker-employer relationship and social stability.”

 

Workers win

 

Last week’s ruling comes as the Xi administration moves to boost the birthrate, even as Chinese couples point to grueling demands of work, child and elder care, and many young Chinese, fed up with a culture of overwork, are “lying flat” to express their frustration.

 

China’s courts and ministries will now develop guidelines to resolve future labor disputes, according to the Aug. 26 ruling, which cited numerous cases focused on required overtime — most but not all of which involved tech companies.

 

In one case, a courier delivery company employee identified as Zhang was required to work a 996 schedule in 2020. He refused citing China’s labor laws.

 

The company fired him, saying he had failed to fulfill his duties.

 

Zhang filed a lawsuit against his former employer for wrongful termination.

 

The high court ruled in favor of Zhang, citing Chinese Labor Law Article 41, saying overtime is capped at 36 hours per month. “The firm’s required working hours violated the Labor Law, thus it is deemed illegal,” the high court said in its order to pay Zhang 8,000 RMB or about $1,230 dollars for illegal termination.

 

Another case involved the labor rights violation of a man identified only as “Li” who died of overwork in December 2018. That year, Li had less than three days off in August, September and November, during which he worked 319, 293 and 322.5 hours respectively. His survivors sued the company shortly after his death.

 

The Ministry of Human Resources and Social Security recognized the death as a work injury, according to the court, which ordered the company to pay 766,911 RMB or about $119,000 dollars to Li’s family in compensation, saying his “right to rest was severely violated.”

 

Important signal

 

In May 1995, China implemented a 40-hour, five-day workweek — standard in the U.S. and many other developed countries.

 

Since then, many big tech firms and private companies, driven to maximize profits, trim labor costs and compete in a global marketplace, have adopted the 996 model. In 2019, Ma famously said on China’s Twitter-like social media platform Weibo that “It’s a blessing to be able to do 996.”

 

“If you are not doing 996 when you are young, when can you do it? If we are doing things we love, 996 is not a problem at all,” he wrote. The post was soon deleted after vocal criticism from Chinese netizens.

 

Li Qiang, founder and executive director of the New York-based China Labor Watch, told VOA Mandarin that the 10 cases, all found in favor of the workers, are an important signal that the 996 practice may be coming to an end.

 

“China has many laws restricting overtime and forced work, but there were no legal precedents to follow,” he told VOA Mandarin in a phone interview. “These 10 cases send a signal that China’s existing laws could be implemented.”

 

Li also pointed out that the move might have certain political goals, as Chinese regulators have begun cracking down on the country’s tech companies in a bid to promote so-called social justice. But it’s possible, he added, that companies will develop certain “countermeasures.”

 

“We still need to wait and see if the 996 culture [will] actually disappear,” he said.

 

Overlapping interests

 

Teng Biao, a Chinese human rights lawyer who is a visiting professor at the Pozen Family Center for Human Rights at the University of Chicago, told VOA Mandarin that while the court’s warning is a step in the right direction, he worries about enforcement.

 

“In many places in China, businessmen and government officials have overlapping interests, so the protection of labor rights is very difficult,” he told VOA Mandarin by phone.

 

Liang Xiaojun, a lawyer at Beijing’s Daoheng Law Firm, said the warning also has something to do with China’s recent push for the three-child policy and its crackdown on private tutoring to reduce the costs of raising kids — all part of a bid to boost population growth.

 

“They aim at reducing working hours, so young people have time to fall in love, get married, and have kids,” he told VOA.

 

Li from China Labor Watch argued that the ultimate protection of workers’ rights lies in the formation of an independent union that will represent employee interests and rights.

 

The All-China Federation of Trade Unions, the only labor union in China, says in its charter that the union is “a mass organization of the working class led by the Chinese Communist Party.”

 

“Without independent labor unions, workers’ rights can’t be properly protected,” Li warned. “The Chinese Communist Party could potentially have a regulation to protect workers’ rights today, and another regulation to protect the companies’ interests tomorrow.

 

“In the end, no one is really protected.”

 

Source: Voice of America

In the latest sign that corporate debt levels in China pose a threat to the broader economy, Chinese regulators on Friday were forced to halt trading in bonds issued by Evergrande, the country’s second-largest property developer. Concerns that the company will be unable to continue making payments on its obligations prompted a huge sell-off by investors, overwhelming exchanges.

 

The rush to unload bonds issued by the company — some were selling for as little as 26% of their face value — came after a report from Bloomberg that said two major trust companies that have made large loans to Evergrande had demanded immediate repayment.

 

The crisis at Evergrande comes just days after another major Chinese firm, China Huarong Asset Management, released a long-delayed earnings report showing it had lost $15.9 billion last year and that its debt-to-equity ratio at one point totaled an eye-popping 1,333%.

 

State-owned financial firms engineered a bailout of Huarong late last month to avoid a collapse that could have been catastrophic for the economy. However, there has been no indication of a similar soft landing for Evergrande, which has been selling off assets in a rush to raise the cash needed to satisfy lenders.

 

The companies’ response

 

Huarong told investors last Sunday that it believes it will be able to continue paying its creditors, and that in the “near future” it will begin selling off non-core business units to raise additional cash and replenish its capital. The company had already sold off more than half of its non-financial subsidiaries.

 

Evergrande, earlier this week, was forced to warn investors in an earnings statement that the group “has risks of defaults on borrowings and cases of litigation outside of its normal course of business,” adding, “Shareholders and potential investors are advised to exercise caution when dealing in the securities of the group.”

 

Nevertheless, a company statement said, “The group will do its utmost to continue its operations and endeavor to deliver properties to customers as scheduled.”

 

Debt defaults rising

 

The problem of unsustainable debt is not limited to huge firms like Evergrande and Huarong. In both 2019 and 2020, Chinese firms defaulted on more than $20 billion in debt, and analysts believe that 2021 is on pace to set a new record.

 

“Debt, whether public or private, does seem to be an Achilles heel for China, and accounting practices and reporting are murky,” said Doug Barry, a spokesperson for the U.S.-China Business Council.

 

“The state-owned enterprises are huge, with some of them hugely inefficient. It’s a problem that has caught the attention of government regulators, an important first step in fixing it,” Barry said. “The private sector is important to China’s future growth and care must be taken to avoid clamping down too hard on it.”

Beijing cracking down

 

In one sense, the spate of defaults can be seen as good news, insofar as it signals that the Chinese government has recognized that past practices were unsustainable. For years, large money-losing Chinese companies have been kept afloat by waves of new loans, often issued with the government’s blessing.

 

For the past several years, regulators in China have been trying to crack down on these so-called “zombie” companies, which divert assets from profitable enterprises, creating a drag on the economy.

 

Beijing’s increasing willingness to let firms default and go out of business, while painful in the short term, could be laying the groundwork for a stronger economy in the future. However, weak transparency requirements for onshore debt issuance make the real depth of the debt problem hard to discern.

 

‘China has a serious zombie problem’

 

“The Chinese economy has been suffering from excessive non-financial corporate debt for a long time,” said Tianlei Huang, a research fellow at the Peterson Institute for International Economics. “As a result, China has a serious zombie problem. Across the country, there are probably tens of thousands zombie firms that are persistently making losses but kept alive only by continuous bank credit and government subsidies.”

 

According to the Bank for International Settlements, at the end of 2020, the total debt issued to non-financial corporations in China equaled 161% of the country’s GDP. That was significantly higher than the average for G-20 countries (102%) and even the average for emerging market economies (119%).

 

“Excessive non-financial corporate debt may pose a threat to the stability of the broader financial system,” said Huang, who corresponded with VOA by email.

 

Bankers getting nervous

 

Over the years, Chinese banks, sometimes with the encouragement of government officials, have issued hundreds of billions of dollars in loans to Chinese firms. As defaults increase, banks’ ability to absorb loan losses will deteriorate.

 

There are signs that bankers are getting nervous. In July, China Guangfa Bank moved to freeze some of Evergrande’s assets out of fear that the company would be unable to satisfy a loan set to come due next March.

 

Evergrande’s struggle is particularly worrisome to banks because of what it says about the real estate development sector more broadly. Loans to real estate ventures make up a large share of the loan portfolios of Chinese banks, so if Evergrande is unable to service its debts, that will call into question the quality of the other real estate-based assets on bank balance sheets.

 

Difficult balancing act

 

Until recently, there had been an implicit assumption among many lenders and investors that large distressed companies in China were considered “too big to fail” and would be bailed out by the government.

 

By allowing a number of these firms to default on their obligations over the past few years, said Huang, “Beijing was attempting to signal to all credit market participants that ‘too big to fail’ no longer holds and that it intends to allow more ill-managed state firms to default on their bonds.”

 

The bailout of Huarong this summer shows that, at least in some cases, Beijing will still feel the need to step in.

 

“The approach the Chinese regulators are taking is to expose risks in bond defaults gradually and at the same time to avoid anything that may explode abruptly, threatening financial stability,” said Huang. “This means there will be fewer government bailouts going forward, but for companies viewed as systemically or strategically important, bailouts will probably continue.”

 

Source: Voice of America

Pro-democracy demonstrations erupted in Bangkok after Premier Prayuth Chan-ocha’s parliamentary allies helped him survive a no-confidence vote called after rising public anger at his government and its handling of the latest coronavirus outbreak.

 

Thousands marched through Bangkok’s commercial center Saturday shortly after lawmakers voted 264 to 208 to knock down the motion brought by the opposition against Prayuth, a former army chief, who has clung to power since leading a 2014 coup.

 

Thailand has been trapped on a carousel of coups, mass protests and short-lived civilian governments for 15 years. As army chief, Prayuth toppled the elected government of Yingluck Shinawatra and has since transformed into a civilian leader, backstopped by a fully appointed senate, the military, business elite and all-important monarchy.

 

Protesters say he has presided over an increasingly authoritarian government, while inequality has soared during his seven-year tenure.

 

Anger is bubbling among the mainly young protesters who are back on the streets nightly in large numbers after 18 months of calls for political reform, including to the once untouchable monarchy.

 

On Saturday, demonstrators found their planned routes to embassies blocked by shipping containers topped with razor wire, while hundreds of riot police corralled them away from sensitive sites. As night fell, hardcore protesters hurled firecrackers toward police lines.

 

“Inside or outside parliament, they hold all the power,” Baifern Benjama, 19, told VOA.

 

“When they cling onto power like this all we can do is take to the streets.”

Three no confidence motions against Prayuth have been defeated since 2019 by a legislature dominated by allies of the military-establishment he represents.

 

Another young protester said desperation was building and warned that could tip the country toward violence, with Prayuth refusing to give any ground.

 

“Non-violence won’t work against this regime,” said Billie, 22, giving one name. “I can’t just stand and watch. I had to come out to protest and everyone else should, too.”

 

Prayuth’s government has come under intense pressure over its handling of the pandemic, which has killed 12,537 since April 1 in the deadliest outbreak so far.

Just 13 percent of the country has been fully inoculated against the coronavirus that causes COVID-19, raising questions about the sluggish rollout and a flip-flopping vaccine procurement strategy.

 

The government has defended its pandemic response, pointing to an uptick in the vaccination rate over recent weeks as a sign of its efforts in the face of a crisis without precedent.

 

Speaking after the failed bid to vote him out, the famously gruff Prayuth swatted away questions of his desire to carry on against mounting protests.

 

“My heart is like a fist, the fist of the prime minister,” Prayuth said from his car window, before punching his chest twice and driving off.

‘Going backwards’

 

Southeast Asia’s second biggest economy has taken its worst battering since 1997; household debt is soaring and tourists who accounted for 20%-25% of GDP pre-pandemic are not expected back in serious numbers for several months.

 

The months of anti-government protests have frayed the credibility of the conservative establishment, with a mix of anger and ridicule pouring across social media as the government struggles to get a grip on the pandemic and the ensuing economic pain it has heaped on Thais.

 

Experts say the momentum had been building toward an early general election before the scheduled 2024 poll. But Prayuth’s latest political escape act in parliament has potentially stalled that progress.

 

“But our politics is still so shaky and there’s still a chance for a dissolution of the parliament,” Pita Limjaroenrat, leader of the second biggest opposition party, Move Forward, said after the vote. “Political mathematics is one thing, but we will have to see if that plays out into the government’s legitimacy.”

 

Experts warn the ongoing political instability will further weaken an economy that was already one of Asia’s least equal before the pandemic wiped out millions of jobs.

 

But the prognosis if Prayuth clings to power for the long term is bleak, according to Khemthong Tonsakulrungruang, a legal scholar at Bangkok’s Chulalongkorn University.

 

“If Prayuth stays in power, we’re not just going nowhere, we’re going backwards,” he added.

 

Another major rally is expected Sunday, this time organized by the Red Shirt supporters of former prime minister Yingluck and her family dynasty, for a key Bangkok intersection.

 

Source: Voice of America

Taiwan’s Cabinet is proposing to increase the military budget next year to develop and buy modern hardware as Chinese ships and aircraft continue to encroach on the island’s waters and airspace, keeping alive fears of a strike.

 

Taiwan legislators have begun evaluating the Cabinet’s request to spend $17.07 billion next year for equipment such as fighter planes, guided missiles and drones. Of that total, $1.45 billion is for special purposes including fighter jets and $2.13 billion is for unspecified expenses.

 

The ruling party-dominated parliament, or Legislative Yuan, is expected to review and approve the budget by year’s end.

 

Military budget hikes are nothing new for Taiwan; this one would be a 5.6% increase over the 2021 allocation and come to the usual 2.3% of gross domestic product. The new budget is in response to a surge in Chinese activity in or near the Taiwanese air defense identification zone since mid-2020.

 

Chinese military planes passed through a corner of Taiwan’s zone Monday, Wednesday and Friday of the week beginning Aug. 29, for example, the National Defense Ministry said through a social media channel. Four flew on Friday and in the past as many as 28 planes have traveled the same path in a single day.

 

China and Taiwan have been separately ruled since the Chinese civil war of the 1940s, when Chiang Kai-shek’s Nationalist Party retreated to the island after losing the mainland to Mao Zedong’s communists. China still claims sovereignty over Taiwan and has not renounced the use of force to capture it.

 

About 80% of Taiwanese have told government opinion surveys since 2019 they oppose unifying with China and today’s Taiwan president, Tsai Ing-wen, takes a guarded view of any engagement with Beijing.

 

“The positive aspect is that there’s an increase in [the] budget of spending in defense,” said Sean Su, an independent political analyst in Taiwan.

 

“On the downside,” he said, “the question of whether it’s enough or not is one which no one can truly answer unless there’s an actual war.”

 

If Taiwan’s parliament, accepts the budget as submitted on Tuesday, the air force will spend some of the money through 2025 on four U.S.-designed Sea Guardian drones that can increase its day-night surveillance capability, and to equip its existing F-16s with precision missiles, Taiwan’s government-funded Central News Agency said.

 

The new hardware would fit into Taiwan’s development of asymmetric warfare, Su said. The term means fending off a more powerful enemy through unconventional tactics or weapons. China has the world’s third-strongest armed forces, according to the database GlobalFirePower.com. The database ranks Taiwan No. 22.

 

Some Chinese planes fly over Taiwan’s zone in a formation that would enable an attack from the front, rear and both sides. Its movements are raising fears among Taiwanese of an eventual strike.

Last September, China held a live-fire naval exercise in the strait that divides its mainland from Taiwan and its first aircraft carrier has passed through the same waterway.

 

Taiwan will need more U.S.-made F-16s, particularly advanced Viper models, and smart bombs, said Chen Yi-fan, assistant professor of diplomacy and international relations at Tamkang University in Taiwan. It must follow up the acquisitions with recruitment and training, he added.

 

“Without sufficient manpower and qualified training, these advanced weapons cannot operate by themselves,” Chen said.

 

Taiwan-based defense contractors are also developing new lines of military planes and a submarine.

 

Taiwan’s proposed defense budget is “vital to safeguarding national security,” the Central News Agency said, quoting National Defense Ministry spokesperson Shih Shun-wen. China’s ability to “paralyze Taiwan’s air defense, sea control, and counter-warfare systems poses a huge threat to the country’s military,” the news agency added, citing the ministry.

 

The ministry may privately worry that China is preparing to strike, said Alexander Huang, chairman of a military strategy research foundation in Taipei.

 

“We don’t know whether the increased budget is for inventory or is based on an assessment that the possible conflict is not too far away,” Huang said.

Source: Voice of America