Striking a Balance: How Did China Manage Its Guestworker Program?

Most people would not consider China a typical migrant destination country even though over the past decades it has seen the growth of diverse communities of foreign populations, including African traders in Guangzhou and Yiwu (Wan 2023), intellectual migrants in its universities (Li et al. 2021), and European professionals in the major cities (Camenisch and Suter 2019). This perception could be because these individuals are highly skilled and/or entrepreneurs and therefore do not fit the common image of a ‘migrant’. To further complicate matters, China’s economic and demographic transformations have caused increasing labour shortages, particularly in the manufacturing sector, with many factories struggling to recruit workers relocating to inland regions or even abroad. A widely adopted solution to labour shortages in advanced industrial countries has been to bring in ‘guestworkers’—that is, temporary labour migrants who are prevented from settlement (Martin and Miller 1980). This leads to the question: could China resort to the same means and become a destination for large-scale international labour migration?

In this essay, I discuss a guestworker program recently implemented in Pingxiang, a city in China’s Guangxi Province on the border with Vietnam. During its two-and-a-half years of operation (2017–19), until it was paused due to the Covid-19 pandemic, this program—officially referred to as ‘cross-border employment cooperation’ (跨境劳务合作)—granted more than 378,000 work permits to Vietnamese workers, allowing them to work temporarily in a designated region near the border. Based on interview data collected in the winter of 2021, I discuss how the local government in charge of the program struggled to balance economic development goals with border security concerns during implementation. This struggle had important implications for how the initiative was managed on the ground, leading to the extensive involvement of labour dispatch agencies and the selective enforcement of regulations (Huang 2023).

A Brief History of the Guestworker Program

Located on the Sino–Vietnamese border, Pingxiang is a small city with a population of almost 130,000 people. For many residents, the presence of Vietnamese traders and workers is a normal part of life. Vietnamese border residents are allowed to stay in the city for 24 hours without a visa. However, many of them stay longer and become undocumented workers, driven by the wage differences on the two sides of the border. Importantly, the inflow of undocumented Vietnamese migrants fills the structural and persistent labour shortages in Pingxiang and nearby regions caused by the loss of workers to coastal China, where wages are higher. The agricultural sector, for example, has become dependent on seasonal Vietnamese labour.

Recognising the economic benefits of cheap migrant labour, the local government loosely enforced migration controls. However, the massive cross-border movements caused security concerns related to criminal activities such as drug smuggling. Moreover, many Vietnamese migrants travelled beyond the border regions to coastal provinces where they did not have the formal right to stay, which raised further public security concerns. This is borne out by the fact that of the 3,400 court rulings on the illegal entrance of Vietnamese citizens published by the China Judgment Online database, about one-third of cases occurred outside of the border provinces—most in Guangdong Province. It was in this context of local labour shortages and increasing public security concerns that Pingxiang implemented its guestworker program.

The program was implemented following a series of policies released over two years in the mid-2010s. In December 2015, the State Council published the ‘Opinions of the State Council on Several Policies and Measures to Support the Development and Opening Up of Key Border Areas’, which provided guidelines for further opening several border regions to neighbouring countries for commercial transactions, tourism, and labour exchange (State Council 2016). Pingxiang was listed as one of 28 designated border cities and 17 border economic cooperation zones across China. In June 2016, a pilot program was carried out in Dongxing, another border city in Guangxi. Satisfied with the policy outcomes of the pilot program, in January 2017, the Guangxi provincial authorities approved a cross-border employment cooperation program to be implemented in Dongxing and Pingxiang. Two months later, the government of Chongzuo, a prefecture-level city under whose jurisdiction Pingxiang falls, followed up the provincial government’s decision with its own policy guidelines (People’s Government of Chongzuo City 2017). Within the next three months, the Pingxiang authorities and the county governments of surrounding regions all passed related policy documents, which added more detailed instructions.

The guestworker program was officially launched in Pingxiang in August 2017, gradually gained momentum in the summer of 2018, and was brought to a sudden halt by the Covid-19 pandemic in January 2020. Vietnamese guestworkers were allowed to work anywhere within the boundaries of Chongzuo, except for Tiandeng County, resulting in 378,000 work permits granted for the duration of the initiative. At the program’s peak, more than 3,000 guestworkers entered Pingxiang daily—a significant number considering the short window of operation and the small size of the population of Pingxiang.

What process did Vietnamese migrants need to go through to become guestworkers in Pingxiang? The first step was to obtain an Exit and Entry Permit—a document that the Vietnamese Government issues only to border residents. The permit allows workers to enter Pingxiang through the Friendship Pass, which is a border checkpoint 16 kilometres from the city. They could then apply to become guestworkers by obtaining three other essential documents: a Health Certificate, Foreign Worker Registration Card, and Foreign Residence Permit. Applications were processed in a new office building established specifically for handling guestworker paperwork. Besides application forms and associated fees, workers were required to submit a digital colour photo of themselves, a work contract, and proof of accident and work–related injury insurance. In practice, the application process was delegated to local labour dispatch agencies and the Vietnamese workers simply followed the instructions of the agency staff. Once workers obtained the four essential documents, they were dispatched to different employers in Pingxiang or other regions within Chongzuo.

The cross-border employment cooperation program resembled other guestworker schemes in its emphasis on the temporary nature of the migrant labour. To begin with, workers were required to physically return to Vietnam when their documents expired and reapply to renew their guestworker status. They were required to renew every 30 days—a much shorter timespan compared to the guestworker programs implemented in other countries. Furthermore, these migrants had few rights and were excluded from the provision of social services such as health care and housing. This proved very attractive to local businesses, with many of my employer interviewees speaking of the benefit of not having to make social security contributions for Vietnamese workers. Lastly, Vietnamese workers were discouraged from having social interactions with locals by policies that required employers to provide them with accommodation.

The Chinese guestworker program was distinctive in two other respects. First, guestworkers were only allowed to work in a designated region that included Pingxiang and five surrounding counties. The practice of conducting policy experiments within geographic boundaries is not uncommon in China—a famous example being the special economic zones that piloted China’s market reforms. Guestworker programs in foreign settings sometimes restrict workers’ occupations, but they rarely place a geographic boundary on where they can work. Second, in China, guestworker governance was decentralised, with the local authorities of Pingxiang spearheading the program’s design and execution. While the national government retained authority over important decisions such as the frequency of permit renewal, the local government had substantial autonomy over how the program should be regulated on the ground. As a policy experiment, the guestworker program was under evaluation by the central authorities, which placed considerable political constraints on the local government’s governing strategies.

Balancing Economic Development and Border Security

Officials in Pingxiang faced the challenge of balancing the conflicting goals of economic development and border security (for a more detailed discussion, see Speelman 2022). While the local authorities valued the developmental benefits of the regularised supply of migrant workers, the national government prioritised maintaining border security and enforcing migration controls.

The guestworker program contributed significantly to the local economy through the supply of migrant workers and the spillover effects on businesses. Rather than migration policy, local officials emphasised the developmental nature of the guestworker program. As one of them told me: ‘The centre provided the policies. Our job is to use them well to develop the economy.’ While the local government worked hard to pressure existing employers to switch from undocumented migrants to legal guestworkers, it spent even more effort attracting external investments, mainly manufacturing firms from coastal cities. Besides offering these firms struggling with labour shortages and rising wages preferential industrial policies and tax incentives, it promised them a steady supply of cheap guestworkers. This strategy seems to have been quite successful, if we consider that among the employers registered to hire guestworkers in Pingxiang, about 80 per cent were officially established after 2017, when the guestworker program was implemented.

At the same time, the local government received substantial political pressure from the centre to maintain social stability and border security. This is reflected in the design of the guestworker program, especially in the fact that guestworkers were geographically confined to the designated region. As we have seen, undocumented Vietnamese workers made their way to several coastal provinces, undermining the local government’s claim of being able to maintain border security. In the words of a local official from Ningming County: ‘Having workers running away means that we can’t maintain control.’ Another example of how security concerns have shaped the program is the 30-day time limit for the work permits, which was clearly too short and inconvenient for both employers and workers. Since 2017, local officials have persistently petitioned the higher levels for a longer work permit term; however, these efforts have been stonewalled due to the security concerns of the central government.

The conflicting goals of development and security are constantly negotiated on the ground. In the early months of the program, incidents of guestworkers ‘running away’ or overstaying raised concerns from the central authorities, forcing the local government to adjust its strategies. Yet, strictly enforcing regulations would hinder the development benefits of the program. Thus, the need to balance development and security became an ongoing challenge for local officials.

Outsourcing

How did the local government manage the guestworker program on the ground? One notable aspect is the extensive involvement of labour dispatch agencies in regulation. Before getting into the specifics of what these agencies do, it is useful to discuss who they are.

By the end of 2019, there were about 130 labour agencies in Pingxiang. With some exceptions, most were small companies founded after 2017. Scattered around the city centre, these agencies blended in with the surrounding shops. Establishing a labour agency requires registered capital of RMB2 million (roughly US$280,000)—a manageable threshold for many locals with resources. Typically, one or two owners run the labour agencies with a few Chinese employees. Based on my observations, most owners had very little experience in labour dispatch or migration brokering. Instead, they came from a variety of backgrounds, including civil servants, businesspeople, or ordinary employees of local firms. For instance, during the Covid-19 pandemic, Boss Peng returned to his previous IT job while waiting for the guestworker program to resume. On the other hand, these owners shared the common characteristic of being well-connected with Vietnamese border residents and/or local officials. In the words of Boss Li, who claimed to be one of the few labour agency owners with no connections, the other owners ‘either know people from Vietnam or know someone in the government’.

During the implementation of the guestworker program, labour agencies experienced a drastic change in their roles from simple labour brokers to regulators of guestworkers. The initial policy guideline published in 2017 stated that ‘the employers hold the main responsibility for managing foreign workers’ (People’s Government of Chongzuo City 2017). While the document supported the development of labour agencies, it did not mention any regulatory tasks to be assigned to them. Throughout 2018, the guestworker program grew substantially, bringing in tens of thousands of migrant workers. Yet, the local authorities also encountered trouble regulating the flow, as many guestworkers overstayed their permits, ran away to other regions of China, or disappeared altogether. As mentioned, these incidents led to considerable pressure from the central authorities, who demanded that the local government control the situation and maintain border security (Speelman 2022). Local officials quickly discovered that employers were ineffective in managing their guestworkers, partly because they had the capacity to resist local state control and ignore its demands. As the local government struggled to fill the regulatory gap in the guestworker program, the labour agencies emerged as suitable alternatives.

Labour agencies were gradually tasked with guestworker governance and became accountable for any rule-breaking activities by workers they dispatched. These changes were formalised in a policy document released in early 2019 (People’s Government of Pingxiang City 2019), which included an evaluation system that ranked agencies based on their performance in ensuring that their workers followed the rules. Lower-ranked agencies were restricted in their business activities. The policy document also contained a list of activities forbidden to labour agencies. Interestingly, agencies were to be disciplined both for rules they violated directly and for rule violations committed by their guestworkers, such as street fights. The result was that agencies were compelled to proactively control their workers to avoid being sanctioned. Compared with employers, who held strong bargaining power, agencies were more easily regulated as their operations depended heavily on the local government.

Labour agencies deployed two strategies to manage guestworkers. First, they ‘appeased’ workers by pre-emptively addressing issues that could cause problems—for example, some agencies organised entertainment events such as movie nights and happy hours in the factory compounds to keep guestworkers from entering the city centre in their leisure time. They also made efforts to match workers with suitable employers to prevent workers running away from their jobs. The second approach was close monitoring, which involved constant surveillance of guestworkers in and outside the workplace. While large labour agencies hired professional agents to carry out surveillance, others relied on third-party actors who worked with several agencies simultaneously. Occasionally, Vietnamese guestworkers themselves were recruited to monitor and report unusual behaviours by their peers. Thus, it was common to see delegates of labour agencies wandering in the workplaces and accommodation to check on guestworkers. When the permits of some workers were about to expire, labour agencies sent buses to transport them to the border checkpoints. The primary goal of these surveillance activities was to ensure that guestworkers did not cause trouble and abided by the regulations imposed by the local government.

Selective Implementation

Facing political pressure from the central government to maintain border security, local authorities established a stringent set of regulations. However, faithfully enforcing these rules would likely undermine the guestworker program’s developmental impacts. So, in practice, the local authorities selectively enforced the regulations most directly related to border security, while largely acquiescing to rule violations that were seen as less threatening to security.

In my conversations with agency owners, they occasionally mentioned activities that were clearly forbidden under the policy guidelines. When I pointed that out, one of them explained: ‘In principle, yes, it is against the rules. But it’s not a big deal, since we are not doing anything illegal.’ Some violations were perceived as ‘breaking the law’ (犯法), while others were described merely as ‘not following the rules’ (不按规定来). This distinction was reflected in the attitudes of local officials towards different violations. For example, Deputy Director Zhang of the local Bureau of Human Resources considered violations such as dispatching undocumented workers illegal activities that would result in severe punishment. However, he held a more ambiguous attitude towards other violations, such as dispatching documented guestworkers to employers who did not meet the requirements: ‘We investigate as much as we can. The specific punishment will depend on the circumstances and the severity [of the violation].’

For instance, sugarcane farming contributes significantly to the local economy and employs many Vietnamese migrant workers. However, individual farmers were not considered employers and thus could not hire guestworkers. Labour agencies worked around this rule by registering guestworkers under qualified employers and then dispatching them to the farmers. This was a clear violation of the regulations but was tolerated by the local authorities given its beneficial effect on local development and its limited impact on border security. The selective enforcement of regulations and labour agencies’ strategic rule violations helped the local government balance the conflicting goals of economic development and border security.

Concluding Thoughts

This essay has illustrated how the divergent policy priorities of the central government and local authorities shaped the ways the guestworker program was regulated on the ground. An important question that remains unexplored is what this means for the guestworkers. Since most of my interview participants were Chinese actors due to the border closure during the Covid-19 pandemic, there is very little I can say on this subject. However, one observation is worth mentioning. The extensive involvement of labour agencies in guestworker governance generated substantial costs that were eventually shouldered by the guestworkers. Labour agencies charged employers RMB300 to RMB400 (roughly US$42 to US$56) on top of the RMB140 (US$20) application fee every month, which is a significant amount given that a typical guestworker earned about RMB3,000 (US$420) per month. Some agencies even demanded additional brokerage fees from guestworkers. It was only fierce competition between them that temporarily prevented labour agencies from raising their fees. However, by the end of 2019, major agencies began the process of forming an association to avoid undercutting each other. While this effort was halted by the pandemic, there was a clear tendency towards market consolidation by labour agencies, which would only make migration more costly.

At the time of writing in December 2023, one year after the Covid-19 lockdowns were lifted and the border reopened, the guestworker program was yet to resume. Local officials told me they were waiting for approval from higher levels of government. As it is likely that the guestworker program will re-emerge in Pingxiang soon, now is a good time for us to start contemplating the possibility of China becoming a destination country for labour migration. When that happens, what will employment relations, immigrant–native integration, and immigration policies look like? Some scholars have already begun exploring these questions (You and Romero 2022; Speelman 2020), but many more questions remain unanswered.

Featured Image: Pingxiang, Chongzuo, Guangxi, China PC: Wikimedia Commons.

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