China’s Lou Jiwei decries ‘996’ culture of overwork and says ambitious green targets risk economic ‘dangers’

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China’s “996” work culture – shifts from 9am to 9pm, six days a week – has hurt employment and employees in China, former finance minister Lou Jiwei warned while calling for stronger regulation of the corporate sector.

Lou’s criticism of 996 came just hours before China’s top court and the labour ministry issued a warning on Thursday about labour law violations, with the Supreme People’s Court ruling that common but controversial 996 schedules are illegal.

The ruling was the outcome of authorities investigating the overworking of employees in many Chinese companies, especially internet and tech giants, in the wake of public outrage and regulatory crackdowns on the tech sector.

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While many Chinese internet companies saw the 996 arrangement as a “gift” to employees, it clearly violated the country’s labour law and ruined work-life balance, Lou said during the online ESG Global Leader Summit organised by Sina Finance. ESG, which stands for “environmental, social and governance”, has become a buzzword in the Chinese business community, as emphasis is increasingly placed on fulfilling social responsibilities.

What is China’s 996 work culture that is polarising its Silicon Valleys?

“If there is no proper regulation, everyone will adopt 996, which will reduce jobs and be harmful to society,” he said.

In 2019, Alibaba founder Jack Ma was one of 996’s staunchest supporters, saying such a schedule helped Chinese tech giants like Alibaba and Tencent grow to become what they are today. Later, he said that companies looking to profit by forcing staff to work overtime were “foolish” and doomed to fail. Alibaba is the parent company of the South China Morning Post.

On Thursday, Lou also sounded the alarm on Beijing’s ambitious green targets, saying they could carry serious economic risks if advanced too quickly, and that the country also needs to be wary of future trade frictions brought on by the climate issue.

Additionally, he said the country should reject gender discrimination in the workplace.

Lou’s comments underscore Beijing’s latest efforts to put more focus on corporations’ social responsibility through “common prosperity”, a new national goal to tackle wealth inequality and boost domestic private consumption.

On the environment, Lou warned that China’s carbon-neutral goal would likely overwhelm the country’s supply chains and trigger structural inflation, though it will also bring investment opportunities.

In September, Chinese President Xi Jinping said at a United Nations summit that China would strive to reach carbon neutrality by 2060, after seeing emissions peak before 2030.

While the pledges have been hailed as significant steps toward curbing global warming, they have also sparked debate on how China will achieve them when no official timetable nor road map has been made available.

China has carbon neutral goals, but at local level old habits die hard

“The difficulty should not be underestimated,” Lou said. “Now the rhetoric is increasingly high, [but] we need to be aware of potential dangers.”

China recently kicked off a unified national carbon-emission-trading exchange last month, but the carbon price in the country is still only one-eighth of that in the European Union.

“If we leapfrog quickly on this issue, it will deal a serious blow to our country’s industry chain,” he said.

He warned that a sharp rise in carbon prices in a short period could also lead to a great surge in steel prices. “You can imagine how much structural inflation it will push,” he said while conceding that China would still need to fall in line with international standards at some point.

“We should be wary of developed countries taking advantage of the [climate change] issue and making use of carbon tariffs and carbon-quota pricing to achieve trade protection,” he said, likely alluding to the world’s first carbon border tax proposed by the EU.

Additionally, Lou called on Beijing to give official numeric guidelines about how much carbon the country emits each year, to formally state which year before 2030 the carbon peak will be reached, and to offer more clarity on the emissions cap, to help the price of carbon emissions “rise moderately”.

On steel and industrial production, China recently cancelled export tax rebates and raised export tariffs on steel, which Lou described as good moves.

“This can hedge against rising commodity prices … and helps prevent some countries from using carbon tariffs and carbon-quota pricing to crack down on our trade,” he said.

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