Chinese migrant workers leave their factory construction site for a lunch break in Beijing on Mar. 16, 2012. As more jobs move inland, low income workers will be less pressed to travel for employment.
Credit: Mark Ralston

NEW YORK — For three decades, the blazing growth of China's coastal manufacturing regions has been fueled by a seemingly endless stream of workers migrating from China's poorer, rural interior.

Endless until now, that is. According to official Chinese statistics, this movement is reversing. The number of migrant workers finding employment in their home provinces is up 3.2 percent. With 252 million migrant workers, that equates to 7.6 million people staying in their home regions.

The march inland is driven by a complex set of factors. Coastal regions are the most expensive places to live in China, especially for migrant production workers whose average income was 4 percent less than that of all urban residents in 2011.

Migrants do not usually have the economic wherewithal or support network to easily establish long-term roots in coastal cities. This leads the majority of workers to head back home after an average of eight years in the city; this is reflected in the fact that only 18 percent of migrant workers employed outside of their home provinces are over the age of 40. Many migrants return home to raise a family; a full 90 percent of migrant workers employed in their home provinces are married.

This trend has been further exacerbated by the movement of major manufacturing into the Chinese interior. Companies are pulling production out of traditional coastal manufacturing hubs, due in part to increased costs associated with the rising wages of workers in those regions. Some foreign brands decide to leave China for cheaper labor elsewhere in Asia. But many are also moving operations to the Chinese interior, hoping to capitalize on the growing Chinese market.

For example, Foxconn, the Taiwanese electronics manufacturer who employs over 1.4 million Chinese workers, has in recent years set up large facilities in Chongqing, Taiyang, Jincheng and Zhengzhou, all located deep in the Chinese interior.

The upshot is: more and more workers are staying in China’s inland regions, and this trend portends challenges and opportunities for businesses, the Chinese government, and workers themselves.

In coastal regions, businesses will be facing a worker population that increasingly demands higher wages and shorter hours; they are currently made to work illegally long hours. As factories' profit margins continue to narrow and labor is squeezed, disputes will become inevitable. Research by Li Chaohai has indicated that developed Chinese cities are more likely to face labor unrest.

If companies decide to move to the interior, operating costs will be lower and there will be an abundance of experienced workers that have returned from coastal regions. More importantly, as wages continue to rise around China, businesses would be positioned to sell to a growing middle class in this country of 1.4 billion people.

On the other hand, inland workers will not necessarily make weaker demands than those of their coastal counterparts. Cornell University’s Chinese labor scholar, Eli Friedman, has suggested that inland workers — hoping to establish a stable family life with decent wages and benefits, job security and free time — may actually demand more than the young migrants in coastal areas.

Herein lies the intersection of challenges for business and the Chinese government. Bent on upholding social stability and foiling a large-scale labor movement, the government will confront labor unrest characterized by diffusion. While strikes are now primarily concentrated in traditional manufacturing regions, as labor and manufacturing moves inland, disputes will flare up in a greater number of localities around China.

Labor disputes in the interior will be particularly difficult for local governments inexperienced in this type of “social management.” Zhang Yonghong, a sociology professor at Sun Yat-Sen University, has shown that local government offices in less developed regions are unable to effectively handle labor disputes due to a dearth of resources.

Despite the perils of scattered strikes, there are also opportunities for the government. As business activity picks up in the traditionally poor Chinese interior, China’s heretofore-imbalanced economic growth should ebb. The government could reinforce this trajectory by providing incentives for businesses to open up shop in the interior and by strictly upholding labor law so that workers receive a fair share of the new economic growth.

Finally, there are implications for workers themselves. Inland wages will be lower, but so will living expenses. Moreover, migrants can live and work closer to family and friends, providing a support network.

Most labor NGOs are located in coastal regions. Despite this, inland workers will gain a rights defense advantage. Sharing the same local culture, dialect and community, workers in an inland factory will be more unified as they negotiate or struggle for better treatment.

Unlike migrant workers on the coast, inland workers possess the power of a cohesive local network. This may be the factor that places the future of Chinese labor back in the hands of workers.

Kevin Slaten is the program coordinator of China Labor Watch. He was previously a Junior Fellow at the Carnegie Endowment for International Peace and has carried out extensive field research of labor rights defense in China. Opinions expressed here are not necessarily those of China Labor Watch. Kevin can be followed on Twitter @KevinSlaten.

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