Chinese Oil Country Simmers as Workers Protest Cost-CuttingChinese
Oil Country Simmers as Workers Protest Cost-Cutting
Thousands Laid Off, Benefits Reduced
By John Pomfret
building in the heart of
the restructuring of one of
The demonstrations at the Daqing Oil Management Bureau in this northern city
have ranged in size from several thousand people late Friday to 20,000 earlier
this week, witnesses said. Protesters have spilled into Iron Man park, an
adjacent square built to commemorate a working-class hero of the oil fields.
The peaceful protests in the center of Daqing illustrate the tensions that exist
throughout the country as millions of workers are laid off by inefficient
state-owned enterprises trying
to adjust to global competition following
entry into the World Trade Organization. On top of this already complex problem
are persistent allegations that the restructuring process has been fraught with
corruption. Furthermore it
highlights the problems
social safety net for laid-off workers. Despite claims by Premier Zhu Rongji on
Friday that the net is almost
complete, millions of
Thousands of similar protests
have erupted across
years. The one in Daqing is unusual because it has been so sustained and because
news of it leaked out before it was over.
The situation is complicated by the fact that PetroChina Co., which owns most of
oil assets, is listed on the
its actions, when dealing with the workers, could be subject to the scrutiny of
its foreign shareholders.
Workers complained today that
the city government and PetroChina, one of
biggest listed oil companies with operating income of $30 billion last year,
gave thousands of workers severance packages of less than $500 for every year
worked. They said the protest started this month when the government announced
it would stop paying heating bills and insurance premiums for people who had
received severance packages. The protesters' ranks swelled last week when
workers who still have jobs joined the demonstration to protest a tripling of
their pension-plan contributions.
"The managers are getting huge packages and we are getting nothing," said one
worker who identified himself only as Engineer Zhang. PetroChina officials
denied his allegation.
Zhang, a father of two, said he could not support his family with the $6,000
severance package he received. "What happens when the money runs out? What
happens if someone gets sick? What happens if my boys get into college?"
Zhang and others pointed to a scandal that roiled Daqing two years ago as
evidence that the restructuring was tainted by corruption. Thirty-nine
government officials were punished for rigging the listing of Daqing Lianyi
Petrochemical Co. on the
relatives and friends.
"Do you think anything has changed?" asked another worker who identified himself
only as Chen. "They changed the mayor but they didn't change anything else,
Participants and witnesses said plainclothes security forces had detained
several leaders of the ad hoc
workers' movement in Daqing.
independent labor unions, and the Communist Party-approved All-China Federation
of Trade Unions generally represents the interests of the security forces rather
"Now no one dares to speak in public because of the arrests," said a witness who
used to work for the oil bureau. She said she believed some of the workers had
been roughed up while in police custody. "When those workers were released from
the police station, some of them were in a daze."
in far northern
industry. When oil was discovered here in the 1960s, it was a state secret,
because China's leaders feared an attack by the Soviet Union, just 220 miles to
The town spawned a series of Communist legends about the superiority of China's
workers, most notably "Iron Man" Wang, who is said to have jumped into a pit of
cement to stir it with his body because of a lack of mechanical equipment.
During China's ultra-leftist Cultural Revolution, Daqing's reliance on heavy
industry, despite its costs, was held up as a model for all of China. But the
full-speed-ahead production techniques that once made Daqing the pride of
China's oil industry have now made it one of China's laggards.
Mayor Wang Zhibin recently told the official New China News Agency that the
outlook for his city was grim. He said that Daqing's aging wells would produce
1.5 million tons less crude oil this year than last. And, he said, Daqing's oil
still costs too much to produce; the cost of oil development in China averages
$1.50 a barrel, compared with $1.20 in most other parts of the world.
China began a large-scale restructuring of its oil industry in the 1980s,
merging companies to create a few large, integrated oil concerns. In November
1999, China National Petroleum Corp. formed a subsidiary called PetroChina and
gave it 480,000 of the parent company's 1.5 million workers and most of its best
assets. PetroChina took over much of Daqing's industry. Crude output from Daqing
reached 56.6 million tons.
By January 2001, 38,000 employees had been laid off. Many of them were from
Daqing, workers said today.
In November 2000, the oil bureau arranged for 50,000 workers to receive
severance packages of $375 to $500 for each year of service. All benefits
supplied by the company -- such as medical care and pensions -- were stopped.
Workers said the government had neither the funds nor the interest to step in
and replace the cradle-to-grave security once offered by Daqing's state-owned
The workers said their protest would continue until the government agreed to
reconsider the severance packages. But that could be difficult. While still
owned mostly by the state, PetroChina also has responsibilities to its
"This is a tricky situation," said a PetroChina executive. "If the government
orders us to back down, our shareholders will be angry. But if we don't modify
the plan, there could be more unrest."
© 2002 The Washington Post Company