The key to understanding the new amendments to the Trade Union Law lies in the reassertion of role of the ACFTU and the consolidation of its trade union monopoly. One of the main reasons why the ACFTU worked closely with the NPC’s Legislative Affairs Commission to amend the Trade Union Law was a growing concern among ACFTU officials that a rapidly declining state sector and expanding private sector threatened to undermine the authority of the ACFTU. Indeed, so long as it could not ensure the establishment of trade union organizations in the private sector, the relevance of the ACFTU was under serious threat. This situation was exacerbated by the end of the “shia-gan” (off duty) status of state-owned enterprise workers by the end of 2001, a move which meant that millions of workers could no longer be counted as trade union members.

From the point of view of the Government and Party officials this declining relevance meant that the ACFTU’s capacity to impose labour discipline was also in decline. This was evident in the massive increase in labour disputes, which surpassed 200,000 in 1999 and reached as high as 270,000 in the year 2000. Among these disputes spontaneous strikes and mass protests by laid-off state sector workers showed that the ACFTU was not able to effectively manage labour discipline and ensure a “harmonious relationship” between employers and employees. At the same time disputes in the private domestic and foreign-invested sectors were rapidly increasing.

This is precisely why the revision of the Trade Union Law was discussed in terms of the role of trade unions in maintaining social stability. For this reason the amendments expanded the power of the ACFTU and consolidated its trade union monopoly. The protection of the ACFTU’s right to form trade unions in the private sector enables it to establish its position in the employer-employee relationship in private enterprises, mediating this relationship in a way that ensures that workers’ demands are “reasonable” and disruption to production is minimized. At the same time, the ACFTU is further empowered to ensure that the ruling Party and state policies on economic reform are supported by workers in the private sector, as well as the state sector.

Another important dimension of the ACFTU’s relevance is its role in labour recruitment and labour management in the state sector – functions it is unable to pursue effectively in the private sector, especially in foreign-invested enterprises. The current attempt to regain both its relevance and greater control (and new sources of union finance) is commonly described by the ACFTU leadership as a strategy for “organizing” 30 million workers in the private sector.