China’s New Draft Labor Contract Law—Help or Hindrance?

The State Council of the People’s Republic of China has issued for comment a draft of its new Labor Contract Law. That draft was recently released to the public and will likely go through at least one more iteration before a version of it is enacted. The seven-chapter draft is the country’s first law governing the establishment, revision, and termination of labor contracts in the People’s Republic of China. These new laws were designed to offset the abuses and poor working conditions particularly common to Chinese laborers, as well as to minimize labor-management disputes, and stabilize the job market. With China’s entry into the World Trade Organization (WTO) in 2001, China recognizes the need to improve the outdated labor law. However, the current draft of the new law may go too far in favoring workers’ rights and may create problematic employment situations for foreign-invested companies.