UPDATE 1-Third day of Shanghai strike threatens China exports

Fri Apr 22, 2011 4:36am EDT

Related Topics

* Two arrested; foreign reporters briefly detained

* Strike sparked by rising costs, fees

* Some exports delayed at world's busiest container port

* Minimal disruptions to refined copper flows (Adds comment, detail)

By Melanie Lee and Royston Chan

SHANGHAI, April 22 (Reuters) - Striking truck drivers protested for a third day on Friday in Shanghai's main harbour district amid heavy police presence and signs the action has already started to curb exports from the world's busiest container port.

The strike is a very public demonstration of anger over rising consumer prices and fuel price increases in China.

It comes as the government struggles to contain higher inflation, which hit 5.4 percent in March, fearful that rising prices could fuel protests like those that have rocked the Middle East. [ID:nL3E7FF0AC]

A crowd of up to 600 people milled about outside an office of a logistics company near the Baoshan Port, one of the city's ports. Some threw rocks at trucks whose drivers had not joined in the strikes, breaking the windows of at least one truck.

The strikers, many of them independent contractors who carry goods to and from the port, stopped work on Wednesday demanding the government do something about high fuel costs and what some called high fees charged by logistics firms, said the drivers, who clashed with police on Thursday.

China is especially wary about threats to social stability following online calls for Middle East-inspired "Jasmine Revolution" protests and has detained dozens of dissidents, including renowned artist Ai Weiwei.

As many as 50 police officers were at the area on Friday, and at least two people were arrested after throwing rocks at trucks. Plainclothes officers also briefly detained some foreign reporters and manhandled a Reuters photographer.

The crowd thinned out after a policeman said authorities planned to meet representatives of the truck drivers on Monday for talks aimed at ending the strike.

"Please disperse and go back," he said through a megaphone to truckers who had gathered near a road junction. "We are already talking to your representatives. There will be an answer for you on Monday."

But two truck drivers told Reuters that they would continue their campaign for the government to offset the rising cost of fuel.

"We are continuing our strike," said a 38-year-old truck driver surnamed Liu. "There has been no response from the government or anybody else. There's nothing we can do."

Workers organised the strike using word of mouth, said a driver.

China's tightly controlled state media has made no mention of the unrest, and the city's government, which is working hard to turn glamorous Shanghai into a global financial hub to compete with Hong Kong and London, has denied knowledge of the strike.

"We're currently not aware of the situation," a spokesman with the Shanghai city government said. He declined to be identified.

EXPORTS SLOW

Duncan Innes-Ker, China analyst at the Economist Intelligence Unit, said the strikes could inspire protests by workers in other transport sectors, given rising fuel prices.

"There are strikes in the taxi driver industry on a regular basis in numerous cities across China," he said. "These are happening and they will continue to happen, and if the oil price continues to rise they will get worse."

China said in early April it would lift retail gasoline and diesel prices by 5-5.5 percent to record highs. [ID:nSGE736009].

An official reached by telephone at Shanghai International Port (Group) Co, which runs the Shanghai port, told Reuters the strike "has not affected operations", though would not comment further.

But one executive said the action was already starting to affect the port's operations, at least for exports.

"The strike has delayed exports and many ships cannot take on a full load before leaving," said Wei Yujun, assistant to the general manager at China Star Distribution Center (Shanghai) Co.

"For example, if one ship carries 5,000 containers en route to Hong Kong and the U.S., now they can only carry 1,000 or 2,000 containers," Wei said, adding that such containers typically carry goods such as textiles and machinery.

Traders said that the strike had caused only minimal disruptions to refined copper flows. Waigaoqiao, together with two other bonded areas in Shanghai, hold about 80 percent of China's bonded copper stocks. [ID:nL3E7FM07W]

"There is more than enough stocks in the bonded warehouses to offset any short-term impact on supplies," said Bonnie Liu, a Macquarie analyst based in Shanghai.

Shanghai's most active copper futures contract SCFcv1 closed flat at 71,440 yuan at midday.

FEW OPTIONS FOR WORKERS

Chinese workers have few means of pressing for better wages.

The government prohibits unions independent of the All-China Federation of Trade Unions, an umbrella organisation run by the Communist Party. Historically, the ACFTU tries to prevent strikes.

"The most basic issue isn't simply that fuel prices are rising. It is that when fuel prices rise, the truck drivers don't have an independent channel to express their interests," said Li Qiang, executive director of China Labor Watch, told Reuters from New York.  

The unrest is occurring near at least one of the port's five major working zones -- Waigaoqiao, a massive free-trade zone and bonded storage warehouse.

Shanghai overtook Singapore in 2010 to become the world's busiest container port. The Shanghai port handled 29.05 million 20-foot equivalent units, or TEUs, in 2010 -- 500,000 TEUs more than Singapore [ID: nTOE70700A].     Shanghai's cargo throughput rose to about 650 million tonnes in 2010, remaining the world's largest, up from 590 million tonnes in 2009.

Situated in the middle of the 18,000 km-long Chinese coastline, the Shanghai port is managed by the publicly listed Shanghai International Port (Group) Co Ltd , which is 44.23 percent owned by the Shanghai Municipal Government.

Last May, a burst of labour disputes disrupted production for many foreign automakers including Toyota and Honda, which laid bare the rising demands of China's 150 million migrant workers and raised questions about the region's future as a low-cost manufacturing base. (Additional reporting by Jason Subler, Jane Lee, Carlos Barria in Shanghai, Ben Blanchard, Sui-Lee Wee, Michael Martina, Niu Shuping in Beijing and Tan Ee Lyn in Hong Kong,; Writing by Ben Blanchard and Sui-Lee Wee; Editing by Don Durfee and Robert Birsel)

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