Is Shanghai a Global City?

By Wai Kit Choi and David A. Smith, Sociology, UC-Irvine

This research will examine how modern capitalist development shapes the growth and decline
of different modes of labor control in Shanghai and Hong Kong from the early 1900s to the
contemporary period. A mode of labor control, as Immanuel Wallerstein defines its, is the mode “in
which labor is recruited and recompensed in the labor market” (Wallerstein 1979, 17). Examples of
modes of labor control include slavery, sharecropping, tenancy, wage-labor, self-employment, etc.
The modes of labor control from Shanghai and Hong Kong to be examined in this research are:
(1) the contract labor system in Shanghai from the early 1900s to 1942, (2) colonial Hong Kong’s
system of state-coerced wage labor from 1902 to 1932, (3) the system of migrant labor and (4)
informal wage labor in both cities following China’s market reform in the early 1980s and Hong
Kong’s subsequent transformation into a global city from the same period.
Different modes of labor control in the two different cities wax and wane during a century of
modern capitalist development, though in Shanghai’s case it was interspersed with a period of
socialist planning. How then do we explain the prevalence of one mode of labor control and its
subsequent decline? The central issue in this research is how the trajectories of capitalist
development in these two cities reciprocally affect the growth and decline of each other’s modes of
labor control.
In the first section of this proposal I will specify the research question and introduce theories
relevant to answering my research question. In the last two summers I took two research trips to
Shanghai and Hong Kong. While parts of the findings from those trips are for two other projects
(Choi 2004; 2005), in the second section of this proposal I will discuss the data collection from those
trips relevant to this current project and the methodology to be adopted for future research trips. In
the third section I will discuss the general significance of this research.

I. Theories Explaining the Growth and Decline of Modes of Labor Control

How do we explain the relationship the growth and decline of different modes of labor control
under capitalist development? Orthodox Marxist theory explains that the birth of capitalism is
inextricably tied to the emergence of free wage labor as the dominant mode of labor control. In
orthodox Marxist theory, wage laborers are conceptualized as free wage laborers in two senses: (1)
They are free from owning means of production, that is, they are deprived of alternative means of
subsistence, and they primarily live on the wages they earn. (2) They are also free in that, unlike
slaves or serfs, they are not coerced into working for an employer due to the threat of violence but
only because of economic necessity. As capitalism develops, free wage labor will increasingly
replace other modes of labor control. Since under capitalism there is only one dominant mode of
labor control, from an orthodox Marxist standpoint, there is no need to explain the growth and
decline of different modes of labor control.

1
Multiple Modes of Labor Control Under Capitalism
Many sociologists challenged this simplistic account of the relationship between capitalist
development and modes of labor control (Koo, 1990, 2001; Sen and Koo, 1992; Tilly, 1981, 1983,
1984; Wright, 1997; Wright and Singlemann, 1982; Wright and Martin, 1987). For example,
Alejandro Portes and Saskia Sassen claim that capitalist development does not lead to the elimination
of alternative modes of labor control by wage labor. In many developing countries and global cities
of the developed world today, we see the persistence and even the expansion in the number of
informal wage laborers who undertake low-paying part-time jobs or homework while supplementing
their incomes with self-employed activities such as windshield cleaning, wristwatch battery
replacement, or recycled-paper collection (Portes 1985; Portes and Benton, 1984; Portes, Castells
and Benton, 1989; Portes and Sassen-Kobb, 1987; Sassen 2000, 2001). In contrast to the orthodox
Marxist theory, Portes and Sassen show that many people, rather than being archetypal free wage
laborers, become informal wage laborers since they cannot rely exclusively on their wages but must
resort to alternative means of subsistence in order to survive.
The idea that there are multiple modes of labor control under capitalist development and that
free wage labor does not necessarily dominate can be supported by cases from Shanghai and Hong
Kong. Many scholars of Chinese labor history (Chesneaux 1968; Honig 1986; Hershatter 1986; Perry
1993) note the prevalence of the contract labor system in different industries in China during early
twentieth century. Owners of cotton factories in Shanghai at the time did not directly recruit workers.
Rather, this was conducted through middlemen who were often members of a secret society, the
Green Gang. The middlemen would go to the villages where they had ties, pay a lump sum to a
young woman’s parents for a period from one to three years, then bring her to the city. Wages were
not directly paid to the female workers but to the middlemen who kept a portion for themselves then
redistributed the rest.
In colonial Hong Kong, a new law, the Employers and Servants Ordinance. No. 45, was
introduced in 1902 to strengthen the old Master and Servant Act. The new law not only covered
contracts between employers and domestic servants but applied to all employment contracts. Under
the new law, a breach of contract on the part of the workers could lead to criminal prosecution;
workers could be fined, or even face imprisonment. Until 1932, the year this law was abolished,
wage labor in Hong Kong was not free wage labor since state coercion was used to discipline wage
laborers. I refer to this as the system of state coerced wage labor.
In the contemporary period, we also witness in Hong Kong and Shanghai the rise of informal
wage labor and the system of migrant labor. Since the early 1980s, Hong Kong became
deindustrialized because of massive relocation of factories to mainland China. Hong Kong then
transformed into a specialized and financial service-based global city with a polarized occupational
structure. The top tier is composed of high paying management or consultant positions at
multinational investment banks, law and accountant firms. The bottom tier consists of low paying
temporary or even part-time clerical and janitorial positions. Many full-time factory wage laborers
then became casual or informal wage laborers in the service sectors following the closure or
relocation of their factories (Lui and Chiu 2001; Chiu and Lui 2004; Forest, Grange and Yip 2004).

2
On the other hand, in many mainland Chinese cities today, Shanghai for instance, we see the duo
dynamics of informalization of state sectors’ workers and the proletarianization of migrant laborers in
foreign-invested enterprises (Lee 1998, 2002). However, the mode of labor control that the Chinese
migrant laborers are subordinated to is not the typical free wage labor system. As Dorothy Solinger
observes, many migrant laborers from the rural areas do not have an urban hukou—an official
household registration that allows them to live legally in the cities. These migrant laborers are then
excluded from mainstream labor markets and have less job freedom than official urban residents
(Solinger 1999: 198). Furthermore, corporeal punishment and physical assaults are used in many
foreign-managed factories to discipline migrant laborers (Chan 2001: 46). The migrant labor system
is then different from the system of free wage labor where coercion is absent. The different modes of
labor control in Shanghai and Hong Kong are listed in the following table.
Table 1: The Four Modes of Labor Control from Shanghai and Hong Kong
Mode of Labor Control Contract Labor State-Coerced Wage Labor Informal Wage Labor Migrant Labor
Central Feature Indirect hiring Employment contracts based Flexible terms of Exclusion from
on legal coercion employment rights
Place Shanghai Hong Kong Shanghai/Hong Kong Shanghai/Hong Kong
Period 1900-1942 1902-1932 Contemporary Contemporary
This research will then explain the growth and decline of these four modes of labor control that have
existed in Shanghai and Hong Kong during the two cities’ last hundred years of modern capitalist
development.
Explaining the Growth and Decline of Different Modes of Labor Control
Given that there are multiple modes of labor control under capitalist development in Shanghai
and Hong Kong, over time some modes grow while some others decline. There are three approaches
that help explain the mechanisms of their growth and decline—the production function account, the
“embeddedness” account and the incorporating comparison approach.
Production Function Wallerstein agrees that a variety of modes of labor control exists under
capitalism. In explaining the co-existence of different modes of labor control--why there are many,
rather than just one mode of labor control--he points out that each particular type of mode of labor
control is “best suited for particular types of economic production” (Wallerstein, 1974: 87).
Wallerstein’s answer helps explain the growth and decline of different modes of labor control. When
the type of production with which a mode of labor control is associated is flourishing, this particular
mode of labor control continues to expand. But when that mode of labor control can no longer fulfill
its productive function or when that production is shrinking, that mode of labor control begins to
wane.
Embeddedness Two sociologists, Giovanni Arrighi and Gary Hamilton (Arrighi et al 2004; Hamilton
et al 2004), recently intervened in the debate about the “sprouts of capitalism” in imperial China.
Allying themselves with Kenneth Pomeranz and R. Bin Wong’s position (Pomeranz 2000, Wong
1997), they challenge traditional Western historiography and argue that that there were sprouts of
Chinese capitalist development even before Western capitalist penetration in the mid nineteenth

3
century. Hamilton argues that there was even capitalist industrialization in late Imperial China. As
“an alternative to the Fordist systems of production that emerged in the nineteenth and early
twentieth century” in the West (Hamilton 2004: 203), Chinese industrialization in the textile industry
was characterized by a putting-out system structured by buyer-driven commodity chains.
Drawing on the notion of embeddedness from Mark Granovetter, Hamilton explains that
household mobility and a fluid class structure in late Imperial China at the time help account for the
particular type of industrialization that existed. Hamilton’s point then is that we can explain the
specificity of a particular type of capitalist development by examining how production is embedded
in a holistic social organization structure. Hamilton does not address labor issue in his work, but we
can extend his insight to explaining the growth and decline of different modes of labor control in
China. Perhaps the growth and decline of a particular mode of labor control in Shanghai and Hong
Kong is also determined by its degree of “embeddedness” in the overall local social structure.
The third approach to explain the growth and decline of different modes of labor control in
Shanghai and Hong Kong is by examining the economic ties between the two cities and their niches
in the global economic order. The method of comparison adopted in this research, incorporating
comparison, aims precisely at capturing such interconnection.

II Methodology: Incorporating Comparison, Interviews and Archival Research

The method I will use to compare Shanghai and Hong Kong is neither one of individual
comparison nor universalizing comparison. The former aims at capturing particularities while the
latter aims at “universal laws” (Tilly 1984b: 87-115). Rather, I will use a method that Philip
McMichael refers to as “incorporating comparison” (McMichael 1990), the purpose of which is to
identify interactions between the different local units and show how they form a sub-system of its
own. What type of economic interaction exists between Shanghai and Hong Kong? Recently there
has been discussion of the “competition” between Shanghai and Hong Kong. There may be
competition between them but what is equally important is the capital and labor flow between the
two cities that mutually re-configure their paths of capitalist development and modes of labor control.
For example, Wong Siu-Lun shows how industrial capital and talents from Shanghai after the
Chinese communist liberation of the mainland fueled Hong Kong’s export-led industrialization
throughout the 1950s (Wong 1988) while currently Hong Kong is Shanghai’s largest source of direct
foreign investment. The economic flow between the two cities during different periods of global
capitalist expansion can also explain their changing modes of labor control.
I speak Cantonese and Mandarin fluently and I also read and write Chinese. My mastery of
Chinese helped me enormously while I was conducting preliminary research in Hong Kong and
Shanghai in the past two summers. While there I collected both quantitative and qualitative data. In
Hong Kong, I collected data from the census, records from the Legislative Council meetings,
economic and judiciary statistics from the Hong Kong Public Records Office and university libraries.
While in Shanghai, I went to the Shanghai Municipal Archive and Shanghai Library.
In addition, through the help of different senior centers in Hong Kong, I was also able to
conduct oral history interview with 9 Hong Kong men and women in their 80s to 90s on job searches

4
and labor conditions in Hong Kong from the 1920s to late 1940s.
The next stage of this research will involve more interviews and statistical analysis of
quantitative data on the two cities’ economic and labor development. I will also conduct similar oral
history interviews with Shanghai workers in their 80s and 90s and compare their experiences to those
of the older Hong Kong workers I already interviewed. Equally important are recent informal wage
laborers and migrant laborers in the two cities. A difference between the migrant laborers in the two
cities is that in Hong Kong has a high number of Filipina and South Asian migrant laborers in the
city and I will also interview them.

III Why is it important to study modes of labor control?

The Noble Laureate in economics Joseph Stiglitz and Saskia Sassen each wrote a book titled
Globalization and its Discontents (Sassen 1998; Stiglitz 2003). They argue that globalization leads to
downward social mobility for many people and that it exacerbates poverty and income inequality in
different parts of the world. In Stiglitz’s account, the opening up of markets in the developing world
to goods from the developed world lead to the bankruptcies of many self-employed direct producers
in these developing countries. For example, due to their inability to compete with imported U.S.
agricultural products, many self-employed Mexican farmers, similar to the Chinese farmers, have to
leave their lands and become migrant laborers in the sweatshops in maquiladora. In Sassen’s account,
increased economic ties among different regions of the world transform many metropolises into
global cities—cities where multinational corporations establish their regional headquarters to
coordinate their transnational business activities. As it is illustrated by Hong Kong’s experience,
many former full-time factory wage laborers then became casual or informal wage laborers in the
low paying service sectors—restaurants, sub-contract cleaning companies, retail, etc. following the
closure or relocation of their factories.
“Self-employed direct producers,” “wage-laborers,” “informal wage-laborers, ”etc., are
modes of labor control. The movement of people from one category to another indicates the decline
of certain modes of labor control and the growth of some other—one mode of recruiting and
compensating labor becomes obsolete while another mode becomes prevalent. Different modes of
labor control have different impacts on the income of laborers because they compensate laborers in
different ways, transformation in modes of labor control could entail downward social mobility for
those involved.
This research examines how the global expansion of capitalism during different historical
periods affects the growth and decline of different modes of labor control in Shanghai and Hong
Kong. This is an important issue. The globalization-induced downward social mobility increases
poverty and income inequality, which will in turn generate resistance to globalization. If we are to
gauge the consequences and future direction of globalization, it is then crucial to understand how
global free market expansion, through the mediation of local capitalist developments, transforms
modes of labor control.

5
 REFERENCE

Arrighi, Giovanni, Po-keung Hui, Ho-fung Hung and Marken Selden. 2004. “Historical Capitalism,
East and West.) In G. Arrighi, T. Hamashita and M. Selden eds., The Resurgence of East Asia: 500,
150 and 50 year perspectives. London, New York: Rouledge.
Chan, Anita. 2001. China’s Workers Under Assault: The Exploitation of Labor in a Globalizing
Economy. Armonk: M.E. Sharpe.
Chesneaux, Jean. 1968. The Chinese Labor Movement, 1919-1927. Translated and edited by H.K.
Wright. Standford: Standford University Press.
Chiu, Stephen W. K. and Tai-lok Lui. 2004. “Testing the Global City-Social Polarisation Thesis:
Hong Kong since the 1990s.” Urban Studies 41 (10): 1863-1888.
Choi, Wai Kit. 2004. “Empire, Strategies of Resistance, and the Shanghai Labor Movement,
1925-1927.” In G.G. Gonzalez, R.A. Fernandez, V. Price, D. Smith and L.T. Vo eds., Labor Versus
Empire: Race, Gender, and Migration, pp. 165-181. London; New York: Routledge.
____________. 2005 (Forthcoming) “The Transformation of Hong Kong Masculinity in Hollywood
in the Era of Post-Fordism.” In L. Pang and D. Wong eds., Masculinities and Hong Kong Cinema.
Hong Kong: Hong Kong University Press.
Forrest, Ray, Adrienne La Grange and Ngai-Ming Yip. 2004. Hong Kong as a Global City? Social
Distance and Spatial Differentiation. Urban Studies 41 (1) 207-227.
Hamilton, Gary G. and Wei-An Chang. 2004. The Importance of Commerce in the Organization of
China’s Late Imperial Economy. In G. Arrighi, T. Hamashita and M. Selden eds., The
Resurgence of East Asia: 500, 150 and 50 year perspectives. London, New York: Rouledge.
Hershatter, Gail. 1986. The workers of Tianjin, 1900-1949. Standford: Standford University Press.
Honig, Emily. 1986. Sisters and Strangers: Women in the Shanghai Cotton Mills, 1919-1949.
Standford: Standford University Press.
Koo, Hagan. 1990. “From Farm to Factory: Proletarianization in Korea.” American Sociological
Review 55: 669-681.
__________. 2001. Korean Workers: The Culture and Politics of Class Formation. Ithaca: Cornell
University Press.
Lee, Ching Kwan. 1998. Gender and the South China Miracle: Two Worlds of Factory Women.
Berkeley: University of California Press.
______________. 2002. “From the Specter of Mao to the Spirit of the Law: Labor Insurgency in
China.” Theory and Society 31: 189-228.
Lui, Tai-lok and Stephen W. K. Chiu. 2001. “Flexibility under Organized Industrialism? The
Experience of Industrial Restructuring in Hong Kong.” In F.C. Deyo, R.F. Doner and E. Hershberg
eds., Economic Governance and the Challenge of Flexibility in East Asia, pp. 55-78. Lanham:
Rowman & Littlefield Publishers.
McMichael, Philip. 1990. “Incorporating Comparison within a World-Historical Perspectives: An
Alternative Comparative Method.” American Sociological Review 55: 385-397.
Perry, Elizabeth. Shanghai on Strike: The Politics of Shanghai Labor. Standford: Standford

6
 University Press, 1993.
Pomeranz, Kenneth. 2000. The Great Divergence: Europe, China, and the Making of the Modern
World Economy. Princeton: Princeton University Press.
Portes, Alejandro. 1985. “Latin American Class Structures: Their Composition and Change During
the Last Decades.” Latin American Research Review 20 (3): 7-39.
Portes, Alejandro and John Walton. 1981. Labor, Class and The International System. New York:
Academic Press.
Portes, Alejandro and Laura Benton. 1984. “Industrial Development and Labor Absorption: A
Reinterpretation.” Population and Development Review 10 (4): 589-611.
Portes, Alejandro and Saskia Sassen-Koob. 1987. “Making it Underground: Comparative Material on
the Informal Sector in Western Market Economies.” American Journa of Sociology 93 (1): 30-61.
Portes, Alejandro, Manuel Castells and Lauren A. Benton, eds. 1989. The Informal Economy :
Studies in Advanced and Less Developed Countries. Baltimore, MD: Johns Hopkins University
Press.
Sassen, Saskia. 1998. Globalization and Its Discontents: Essays on the New Mobility of People and
Money. New York: The New Press.
____________. 2000. Cities in a World Economy, 2nd edition, Thousand Oakes: Pine Forge/Sage
Press.
____________. 2001. The Global Citiy: New York, London, Tokyo, 2nd edition, Princeton: Princeton
University Press
Sen, Yow-Suen and Hagen Koo. 1992. “Industrial Transformation and Proletarianization in Taiwan.”
Critical Sociology 19 (1): 45-67.
Solinger, Dorothy. 1999. Contesting Citizenship in Urban China: Peasant Migrants, the State, and
the Logic of the Market. Berkeley: University of California Press.
Stiglitz, Joseph E. 2003. Globalization and Its Discontents. New York, London: W.W. Norton &
Company.
Tilly, Charles. 1981. As Sociology Meets History. New York: Academic Press.
___________. 1983. “Flows of Capital and Forms of Industrial in Europe, 1500-1900.” Theory and
Society 12: 123-143.
___________. 1984a. “Demographic Origins of The European Proletariat.” Pp. 1-85 in
Proletarianization and Family Life, edited by David Levine. Orlando, Flor: Academic Press.
___________. 1984b Big Structures, Large Processes, Huge Comparisons. New York: Russell Sage
Foundation.
Wallerstein, Immanuel. 1974. The Modern World-System: Capitalist Agriculture and the Origins of
the World-Economy in the Sixteenth Century. New York: Academic Press.
__________________. 1979. The Capitalist World-Economy. Cambridge: Cambridge University
Press.
Wong, R. Bin. 1997. China Transformed: Historical Change and the Limits of European Experience.
Ithaca: Cornell University Press.
Wong, Siu-lin. 1988. Emigrant entrepreneurs : Shanghai industrialists in Hong Kong. Hong Kong,

7
 New York: Oxford University Press.
Wright, Erik Olin and Joachim Singelmann. 1982. “Proletarianization in the Changing American
Class Structure.” Pp. S176-S209 in Marxist Inquiries, edited by Michael Burawoy and Theda
Skocpol. Supplement to the American Journal of Sociology 88.
Wright, Erik Olin and Bill Martin. 1987. “The Transformation of the American Class Structure,
1960-1980.” American Journal of Sociology 93 (1): 1-29.
Wright, Erik Olin. 1997. Class Counts: Comparative Studies in Class Analysis. Cambridge:

Cambridge University Press.