Modern Chinese Legal Reform: New Perspectives

5. Labor Law Reforms: China’s Response to Challenges of Globalization

5 Labor Law Reforms China’s Response to Challenges of Globalization Yunqiu Zhang During the post-Mao reform years, China carried out vigorous labor law reforms, as witnessed by the promulgation of numerous laws and regulations on labor issues. What were the dynamics behind these labor law reforms? This chapter is an attempt to answer this question by focusing on the influence of globalization, which is understood in two senses— economic and legal. It argues that in economic globalization, China was increasingly integrated into the world economic system, which compelled China to reform its traditional labor system and follow, or adjust to, internationally accepted rules or conventions in conducting economic activities , including labor management. In other words, economic globalization created the need for labor law reforms in China. Globalization also had a legal dimension: legal ideas or practices of different nations were disseminated globally and interacted with or were influenced by one another. In this legal globalization, China was apparently the recipient or borrower of foreign (Western and other Asian nations’) legal ideas, including those about labor legislation. These foreign practices were introduced into China through various channels and exerted a significant influence on Chinese authorities and legal professions, inspiring them to build a new labordirected legal system. This paper is divided into three parts. The first part reviews the challenges globalization posed for China’s traditional labor system. The second examines how the Chinese responded to these challenges by focusing on 132   Yunqiu zhang China’s labor law reform practices. The last deals with the limitations and prospects of China’s labor law reform. Challenges of Globalization for China’s Labor System Since the early 1980s, when China formally adopted the open policy as a component part of its economic reform, China has been increasingly integrated into the world economic system and has become an important player in economic globalization. The presence of large numbers of foreign businesses in China and the country’s steady involvement in international trade is proof of this fact.1 Economic globalization posed significant challenges for many of China’s orthodox or socialist institutions or practices , including the socialist labor system, and compelled China to change them in accordance with internationally recognized principles. Economic globalization challenged China’s labor system in three ways. First, foreign businesses introduced China to a new and typical capitalist labor relationship , which needed to be handled with new mechanisms or rules. Furthermore , China’s trading partners, especially the Western nations, increasingly linked international trade and labor standards, and they pressured China to raise its labor standards. In addition, international organizations such as the International Labor Organization (ILO) kept close watch over China’s (and other countries’) labor conditions and persistently urged it to follow the labor standards set by the ILO. Foreign Investments and the Emergence of New Labor Relations The post-Mao reform era witnessed China becoming one of the most attractive destinations for foreign investments. As of the end of 1997, the total registered foreign-related enterprises in China amounted to 304,821. And 145,000 of these enterprises were in full operation.2 Foreign enterprises introduced China to a typical wage-labor relationship unknown to Chinese workers under the socialist system of the Mao years and absent from Chinese state-owned enterprises in most of the post-Mao reform era. Compared with those in its socialist counterparts, the relationship in foreign -related enterprises had two salient characteristics. The first was the sharp division between labor and management (or employer) as two distinct entities, both attempting to maximize their own interests—wages and Labor Law Reforms  133 profits, respectively. (In socialist labor relations, the division between labor and management was blurred by the intrusion of the state.) Second, the formation of labor relations in foreign-related enterprises was based on the working of market mechanisms or the principle of supply and demand; employers enjoyed the right to hire or dismiss workers, and workers possessed the right to choose their employers. (Under socialism the allocation of labor was realized by the state through administrative means.) The labor relationship in foreign-related enterprises in post-Mao China can be understood as a contract between workers and employers and bears a strong resemblance to its counterpart in modern Western (capitalist) countries. On the other hand, the labor relationship in foreign-related enterprises in China differed significantly from those in modern Western countries. In the Chinese context, the labor...