The Many Realms of Chinese Labour Law. Theory and Implementation of PRC Labour Law Reform

by Orlan Lee*

(2003) Oxford U Comparative L Forum 2 at | How to cite this article this article

Table of contents


“Law, in particular its actual functioning in any given society, is above all a part of the culture of that society,”1 Jianfu Chen retorts. He articulates far better than many other Chinese students, scholars, and members of the literate public, their recurring alienation at the seemingly invidious comparison of the divergence between letter and practice in Chinese law with the supposed continuity in Western legal culture. “[T]o understand Chinese law, its nature and developments,” he says, “we need to examine the Chinese legal traditions, the prevailing political and economic situations, Party policies on economic reform and tolerance towards political liberalisation, and scholarly discussions and debate.”
There was a time 30 years ago when the Western legal practitioner or scholar observer had to attempt to assemble a legal anthropologist’s picture of normative values having the force of law in order to describe Chinese legal institutions at all. Thus, in his groundbreaking work on Chinese international trade law, Weggel hesitated:

The concept of a practice arising out of norms cuts two ways and needs some justification. It could be, for example, that in a particular area there were legal norms that were only unknown to the Western observer. In this case, the particular forms that had arisen in practice would not be sources of law, but rather simply the consequences of legal norms, which fell under [the rubric of character of Chinese law in general]. A variety of symptoms lead to the supposition that in many cases real “gaps in the law” are revealed, which can be filled in only through the “trial and error” of daily practice. In domestic law, for example, one is struck by the kaleidoscope of multiple forms and legal observances of local organisations.2

That bewilderment was justified in a society then just emerging from the throes of communist revolution, that had abrogated the laws of the republican period, and had lived in virtual isolation from the rest of the world for 25 years. But now, 25 years later, there have been widespread efforts at codification3 and the experience of many years’ practice. Why then the enduring reproach?
“In my Father’s house there are many mansions,” are words they attribute to Jesus of Nazareth, for creating an all-encompassing institution that means many things to many different people. The linguists prefer to say “abodes” to “mansions” today. But perhaps it is “realms” that they really mean. The house of Chinese law is also like a church where believers of many different leanings pray. You are obliged to deal with each one of them in their own “realms”.
Their perspectives may range from the bare patriarchal communitarian, to the socialist doctrinal, from black-letter regulatory administrators to those whose notion of a labour contract is anything you can get a labourer, who must be on contract terms, to put his name to,4 or to those who strive to make the system on paper work for the individual labourer. All of these perspectives and practices, law graduates of this century realize, may have some validity as a form of “living law” for different purposes — but each one leaves a great deal to be desired if taken alone to be the whole picture of law in China today.
Take a particular field such as labour law, the concern of this essay, and attempt to ascertain the current status of the institutions laid down in the PRC Labour Law Reform of 1994, for example. Despite all that has occurred since the law came into force, the haunting questions remain, “To what extent does the law on the books have relevance outside the panoply of administrative regulatory and licensing offices?”, and, “To what extent does it afford meaningful opportunity for the common labourer to go to law?”

I. Meaning in Terms of Complying with International Expectations

When reading the Peoples’ Republic of China’s (the PRC’s) Labour Law of 1994, one is struck with the extent to which the statute displays values shared with those in the forefront of the labour movement in developed countries. The new law admirably follows models of International Labour Organisation (ILO) Conventions — both those which have been ratified by China,5 and at least one which has not been.6 The reform law was codified from earlier attempts, and new provisions were enacted by the National People’s Congress (NPC) in July, 1994,7 and came into effect on January 1, 1995.8
However, to read that China has enacted laws in keeping with the highest ideals of the labour movement is not to say that China has, thereby, implemented all of those values, or is even able to do so very easily. One must remember as well that what is progressive for labour in a capitalist society, may also be reactionary in a society committed to Marxist socialism.9
The new Code (which for practical economic reasons — “applies to all enterprises and individual economic organizations” [Sec. 2]) proudly proclaims, for example, the labourer’s “right to … choose occupations” (Sec. 3).10 This is naturally a significant departure from the practice of assigned employment in the previous planned economy. However, the new rhetoric should not be confused with the concept of a “right to work” in the understanding so long cherished in the socialist heritage.
The “right to work”, the expectation that everyone fit to work, or desiring to work, should be able to claim a suitable job was historically a basic premise of socialism. In the PRC after 1949, it meant that the “work unit” (the danwei) would detail a person to his or her work assignment. There was not much choice involved in those days. Depending on the size and means of the enterprise, a worker also expected to be provided with housing, schools or day care for his or her children, medical care, and pension or welfare benefits — at least at the level the state owned enterprise (SOE) was able to provide.
The so-called “right to choose occupations” would free the worker from assigned employment by the “work unit”, though that may not necessarily be the result in all cases — until the “labour contract” employment has completely replaced the prior system. Yet, practically speaking, this signifies a gradual end to the system whereby SOEs provide social benefits. There is no guaranty that one may be hired by an employer one chooses. But that was never promised in the socialist dream.
The new law emphasizes that “a labour contract shall be concluded where a labour relationship is to be established” (Sec. 16). The same section defines that relationship: “A labour contract is the agreement reached between a labourer and an employing unit for the establishment of the labour relationship and the definition of the rights, interests and obligations of each party.” This may sound progressive in an unbridled capitalist society where employment is solely “at the pleasure” of the employer. Yet, if one expects specific job entitlements in this new employment relationship, they are generally not going to exceed those foreseen in the statutory guaranties of the labour law itself.
Left unspoken is that the labourer’s benefits in the socialist planned economy were not bargained for. Socialist doctrine has always emphasized that individual labourers could never attain sufficient bargaining power to obtain these on their own. Practically speaking, that means that not only must the labourer now provide for his or her own social benefits, but also that he or she will be employed only for as long as the contract runs or is in force.
However, the statute also provides that:

The staff and workers of an enterprise as one party may conclude a collective contract with the enterprise on matters relating to labour remuneration, working hours, rest and vacations, occupational safety and health, and insurance and welfare. The draft collective contract shall be submitted to the congress of the staff and workers or to all the staff and workers for discussion and adoption.

A collective contract shall be concluded by the trade union on behalf of the staff and workers with the enterprise; in enterprise[s] where the trade union has not yet been set up such contract shall be also concluded by the representatives elected by the staff and workers with the enterprise. (Sec. 33)

Collective bargaining” may operate, as herein foreseen, among the older SOEs, where any new proposed work contract could conceivably be put before an already organised in-house trade union, or staff and workers representatives. However, this is not likely in the situation where a new private or “foreign-invested” enterprise (an FIE) is just being set up.
In the latter case, the employer can be assumed to be looking for staff and labourers of choice. Furthermore, prospective employees will be offered a take-it-or-leave-it employment contract. On the assumption that multinationals or FIEs are offering higher wages — and that jobs are not easy to get — one can hardly expect that the individual staff member or labourer will do much negotiation on his or her own. Where manual labourers have come great distances in order to take advantage of any employment opportunity at all, with a small FIE, say in one of the special economic zones, they may not even be given the opportunity to read the contract before signing11 — if they are able to read and/or understand it themselves at all.
An employment contract also has the negative meaning that one is bound to an employer during the full course of the contract but has no assurance that a contract will be renewed if one remains for the whole term. That is, the worker cannot leave to accept a better offer, and may find that he or she has no work at the end of the contract. Notification of termination or non-renewal may not be given until the last day, but must be given at that time (Sec. 23).12 In that sense, “employment at will” — with statutory protection against termination without notice — puts the employee in a better position. In Hong Kong, where we also enjoy the sometimes illusory socially progressive protection of an employment contract, typically, professional people now expect that they may have to buy their way out of a contract if they do not give due contractual notice in resigning, as, for example, to accept better terms that will not wait.
The new Labour Law of the PRC expresses precisely that employer friendly expectation:

Labourers who revoke labour contracts in violation of the conditions specified in this Law … and thus have caused economic losses to the employing unit shall be liable for compensation … (Sec. 102);

and similarly:

The employing unit that recruits labourers whose labour contracts have not yet been revoked shall, according to law, assume joint responsibility for compensation if economic losses have been caused to the original employing unit of the labourer. (Sec. 99)

Surprisingly, the legal literature of this theoretically Marxist-Leninist state omits mention that the “economic loss” of the employee who is unable to take advantage of an occasionally more favourable job opportunity can be far more damaging than the potential inconvenience of loss of an employee to the work unit. Surprise may, of course, be diminished if one acknowledges that both arch conservative and Marxist social theory promote collectivist interests (whether of the state or the employer) over individual benefit.
Therefore, if one wonders whose values this new law protects first, one is bound to be confronted with the preferred status of the employer. Contrary to Marx, who saw labour as the source of economic value, this legislator sees the employment unit, public or private, as the vehicle of collective economic development.13 Those who drafted the law surely knew what course they were taking. The policy makers surely knew what obstacles they would encounter as workers were told that:

  • Yes, they would have “choice of occupation”; but,
  • No, they would not have the continued guaranty of their welfare benefits.

Obviously the “reform” was made in an effort to assist uneconomical industries to reorganize — but also to enable them to shed the vast expense of social welfare benefits. That may allow some enterprises to become more profitable. But, it also means that many labourers and their families will have to provide for themselves for the first time, with no assurance that they will be able to manage.
Theoretically, the PRC Labour Law reform of 1994 represents, aside from the sensitive area of labour union organisation, and the abandonment of the social welfare society, a major step in the direction of conforming with the aspirations of “progressive” international labour law. Hilary Josephs has written:

The 1994 Labor Law represented significant advances in protections for the rights of Chinese workers while maintaining previous anti-democratic attitudes to independent labor organizing …14

Social reality is, however, more what Malcolm Warner describes: “ongoing reforms of the management of human resources” and “ongoing moves towards greater use of labour markets” dating from the 1980s. But, as he says, “there is frequently a gap between intent and practice.”15
To summarize the statutory provisions briefly the “rights” and protections afforded the labourer under the 1994 Labour Law, include, the rights:

  • to be paid;
  • to have rest days and holidays;
  • to protective measures in the workplace;
  • to training to improve skills;
  • to guaranties against discrimination on the basis of race, national group, sex, or religion;
  • to a minimum wage set by the local government;
  • to a contract setting out work and pay conditions;
  • to a work week limited to 44 hours and six days;
  • to an eight-hour work day; and
  • to overtime that is limited and compensated for at a set rate.

There are also special provisions:

  • to prohibit child labour below the age of 16;
  • for the protection of women, including pregnancy leave and 90 days leave after childbirth;
  • for dispute committees to be set up in the workplace to include both employers and workers; and
  • to cover social security, health insurance, workers’ compensation, and pensions.

Shortcomings of the law should not be ignored simply out of regard for its advances, however. The basic Marxist features of the existing socialist system remain:

  • no express right to strike;
  • no right to organise independent trade unions;
  • no freedom of political persuasion; and, now,
  • limited employment security; and
  • no automatic provision of welfare benefits by the employer. 16

Nevertheless, the enactment of the Labour Law demonstrates that the government has not simply been sitting idly by in the face of deteriorating labour conditions in uneconomical industrial organisations. But the official view of what is accomplished here is sometimes a little rosier than practical experience warrants. In a review of the new situation in the Beijing Review, we are told, for example:

According to an official in the Labor Relations Bureau of the Labor Ministry, the Chinese labor force is now split into two groups because of the job selection priorities—those who value higher pay go into foreign or private businesses, whereas those who place importance on welfare (including housing, health care, and pension) stay in the public sector. He said “This is sometimes a dilemma since most wish they could have the best of both.”17

In reality, of course, most workers have no such choice. True, there are now private and “foreign-invested” enterprises in the economy. But the former are often the last resort small vendor stands run by labourers who have lost everything else, who are retired, or who are better classified as simply “unemployed”.18

II. Consequences for Foreign Multinationals

Large foreign multinational corporations are big targets.19 Naturally, they have to treat seriously any new piece of legislation that purports to affect how they do business. They must make every effort to conform with the law of the land — even if the human resources policies that they are required to adopt may apply practically only in their own “realm”.
There is a sizable professional literature, written from the point of view of the legal and management consulting professional, to guide them in this effort. This includes the highly instructive legal practitioners’ and business managers’ handbooks edited by Dr. Andreas Lauffs, labour law partner in the largest international law firm in the China practice.20 Practically speaking, however, the multinationals must employ these Western firms to organize their personnel policy, and then hire an additional local firm to “sponsor” their efforts before the official licensing agencies.
Enforcement in this “realm” consists of compliance by the multinational with respect to its organisation, terms of employment, etc., and/or any effort by the applicable state authority to bring the documentation of the multinational into compliance. Since employment in this “realm” is likely to be the most sought after, the need for or occurrence of labourer claims is not high.
That is the point, however. Unless the labourer brings a complaint the administrative, regulatory agency has no way of knowing of non-compliance — because the multinational will have gone to great lengths to register its compliance. In China today — as in ancient times — documentation tends to speak for itself. In the language of the statute:

A labour contract once concluded in accordance with the law shall possess legal binding force. The parties involved must fulfil the obligations stipulated in the labour contract. (Sec. 17)

The danger here is that, in a part of the world where “law” and “contract” tend to be given very rigid literal reading by administrative agency personnel, agents of the official labour union, and the human resources office of the employer, the potential career advantage of an employee, or wage advantage of a worker plays no role. And there is no doctrine of “involuntary personal servitude”.
Similarly, if the same administrative agency or administrative personnel are unsympathetic in their reading of a contract, or perceive a provision to be invalid, again, the statute appears to speak for itself:

An invalid labour contract shall have no legal binding force from the very beginning of its conclusion. (Sec. 18)

The danger here is that the agency which administers the statute, and is probably not out of line in claiming to know best the policy of interpretation, tends to leave no room for discussion. There appears to them to be no need for independent review, where the statutory prohibition already appears to contain the apparent self-executing judgment as well.21
This is a cultural phenomenon wherever “law” tends to be understood as a very literal reading of statute, only — or of agency favourable provisions, only. In Hong Kong, for example, we do have the theoretical opportunity of going to judicial review of an agency determination. But, in the face of agency tenacity, at public cost, and a loser pays rule, in a jurisdiction with a tremendously high cost of litigation, the insitutional difference with the PRC can appear to be totally illusory. For the average citizen in Hong Kong, litigation with any better funded party is tantamount to playing Russian roulette with bankruptcy.22 On the other hand, there have been notable successes for those on legal aid, who had nothing to lose23, or those with unlimited resources who could afford to gamble out of sheer stubbornness.24
In the case of “invalid provisions”, cited above, however, sections of the contract which are valid and those which are invalid are separable, and “invalidity” “shall be confirmed by a labour dispute arbitration committee or a people’s court”. But the agency that set the whole process of compliance in motion has nothing to do with enforcing it. The employee must litigate at risk of losing his employment or at best spoiling the relationship with the employer. The agency is above the fray.
Whether or not the labourer — or better said, “the employee” — brings a complaint, depends, generally, more on how high his or her wages are, whether or not the job is replaceable, and whether he or she is willing to risk being known as a troublemaker, than on the degree of violation of the statute and of the rights of the employee. This is not just idle speculation. But more will be said about this problem at Section V below.

III. Consequences for SOEs

For the state owned enterprises (SOEs), the new statutory contract-based labour system, where in force, effectively does away with 50 years of the institutional social compact of the socialist state. The labourer may have had very little to say about assignment to a job in the previously existing system. Yet, for 50 years, housing, schools, medical facilities, and pensions were all organised around the state owned workplace.
It is this entire social welfare institutional structure that non profitable SOEs aspire to cast off in order to convert uneconomical enterprises into economically viable ones.25 It is also at this point that takeover or merger proposals with other local enterprises, or foreign investors, who believe they can breathe new life into what may be inherently viable underlying enterprises, falter. As one such M&A venture capital consultant put it: “We were interested in the underlying steel business. But we did not want to take over 150,000 employees”, which would have included the nursery and school teachers, medical personnel, housing authority, estates maintenance, etc. A business enterprise, even in a social market economy, is not a social welfare institution.
The term “downsizing” was not invented for the vocabulary of the socialist state. Nevertheless, the attractions of this process have not been lost on Chinese management. In the long run, such added “flexibility” in the employment market, and entry into the World Trade Organization may ultimately, though not at present, turn the economy around.
However, as figures begin to come in, we see just how bad the employment situation in China can be. The BBC has reported variously: “About 11 million workers were laid off in 1997 and nine million lost their jobs in 1998.”26 In the year 2000, the BBC reported that “in eastern China …, large and medium state firms cut their losses by nearly 25%, but in the west they managed a reduction of only just over 3%.” However, “many state firms are struggling to keep afloat, and at least seven million redundancies are predicted this year.”27 In May, 2000, they quoted Reuters: “unemployment in the worst-hit city of Liaoning was running as high as 90%.”28 In June, 2000, they reported, “more than six million workers had been laid off in the first five months of the year” with the possibility that the figure could reach 12 million by the end of the year.29 In March, 2002, the BBC quoted Prime Minister Zhu Rongzhi, to the effect that urban unemployment is one of the country’s most pressing problems and that:

Increased foreign competition brought by China’s entry into the World Trade Organisation could lead to a doubling of the official urban unemployment rate over the next few years from 3.5% to 7% or about 30 million people.30

On the other hand, if recourse to the Labour Reform’s system of labour arbitration and labour tribunals works anywhere in the Chinese economy, the somewhat unsystematic case reporting manuals seem to indicate that they enjoy more vitality in the SOE “realm”. For it is practically only in the SOEs that labourers retain sufficient personal economic independence, and/or social cohesiveness, to confront their employers, either individually, or as groups, over the employer’s non-adhesion to the new protections offered to labour.
An individual labourer, or organised groups of labourers, who have a home and a social support system, can take a stand that would be potentially suicidal to contract labour totally dependent on the employer enterprise — as in many a “foreign-invested” small enterprise (the FIEs), for example.
But even a labour arbitration and labour tribunal system that functions fairly well in good times, cannot sustain itself in an economy so damaged that it cannot enforce its decisions — or where officials are so complacent or pre-occupied that they do not realise that the entire judicial and social system may be at risk. Thus the BBC reports:

…the contradictory system of struggling state firms being responsible for paying unemployment benefits to the same workers they have just laid-off is clearly breaking down in some parts of the country.

Such problems have provoked a series of protests – this month [March, 2002] up to 50,000 laid-off workers have demonstrated in Daqing in north-eastern China, demanding unpaid benefits and pensions.

And 30,000 workers in another north-eastern town, Liaoyang, have staged two weeks of protest against non-payment of wages and official corruption.31

During the demonstrations at Shenyang in May of 2000, it was reported that a thousand workers surrounded the mayor’s office, calling on him to listen to their demands for back pay and for release of three detained workers:

One official confirmed that around 2,000 staff had not been paid for up to 16 months, while a similar number of retired and laid-off workers had received no benefits for up to six months.32

In March 2002, the BBC reported:

About 200 retired workers [of the Beijing Automobile Works] have staged a protest in the Chinese capital Beijing to demand unpaid pension benefits.

An official at the company told the BBC the firm had not paid the workers their health care fees since 1998, and their retirement pensions since 1999. She said the factory, which has stopped production, simply did not have enough money.

She said the company’s manager had been away at a meeting, but the workers were planning to return on Thursday in the hope of seeing him.33

In other words, the problem of non-enforcement in the SOEs is similar to the problem in the multinationals. Law and power tend to reside under one roof in China. And power, even when it is close by, is far away in its concerns. Even the manager of a bankrupt company is “away at a meeting”. Armed police and “para-military” troops34 were deployed in Liaoyang and Daqing although no violence was reported. Peaceful assembly for redress of grievances has never been counted among “Asian values”, but is certainly not tolerated in the PRC. From experience of the Russian Revolution, it would not have mattered if demonstrators were singing “God save the Czar” — if no one is listening.
Unfortunately, there are not many below the rank of Prime Minister Zhu Rongzhi willing or able to take on the plight. A year ago, there were reports of a design for a new social security and unemployment insurance scheme expected, eventually, to cover 200 million people. To cover employees, or “labourers”, that is. 800 million people in agriculture would not be covered. The Minister of Labour and Social Security, Zhang Zuoji, is reported to have said: “In rural areas … the main form of insurance is still provided by families, which completely conforms to the national condition and ethics of China.”35 In other words, in China, families look out for themselves.

IV. Consequences for Capitalist Small Enterprise

Many of the “foreign-invested” companies (FIEs), now fill the important roles of out-sourcing suppliers and distributors for multinational consumer goods and heavy equipment manufacturers. The FIEs are where they are because these foreign investors have recognised a niche in the market. Therefore, if they are in business, they tend to be doing well.
Investors in this branch have to know the local areas where they operate. Therefore, this “realm” tends to attract overseas Chinese. However, especially in the case of the Taiwan, Hong Kong, Macau, and Korean small enterprises, FIEs are often abusive sweatshops. They tend to cluster around the larger seacoast towns, and are, therefore, often a long distance from the home villages of workers attracted to them from the interior because of lack of work in their own areas.
These primarily “foreign-invested” small enterprises frequently prefer to hire compliant teenage girls, who come looking for temporary extra income for their village families, rather than hiring male heads of households seeking steady and reliable sources of income for their families,and  who are more volatile if they become excited.
Conditions do vary — often between “foreign-invested” enterprises set almost side by side. The author has also visited modern and much more congenial workplaces among the smaller FIEs. In one Pudong venture, for example, conditions seemed comparable to the best in similar enterprises in Hong Kong, office personnel were better dressed than is usual even in his home university.
This may also correspond to how much human resources policy a large multinational buyer or investor exerts on the local supplier or agent. There have been extensive campaigns by Hong Kong and overseas Chinese labour groups aimed at consumers in Western countries intended to force multinational consumer goods producers to exert influence on their out-sourcing suppliers. In many cases the multinationals have adopted policies and even source inspection junkets. However, these yield mixed results.36
Moreover, the picture is not complete without considering the corruption, both in the form of squeeze that local officials can put on the small foreign entrepreneurs for setting-up approvals (especially in the Special Economic Zones [SEZs]),37 and on the migrant workers looking for opportunities beyond their home villages. Reports tell us that migrant peasant workers in the heartland who make the “choice” to find work in the coastal enterprise zones are under pressure to hand over “as much as a year’s salary,” to local cadres for the privilege of relocating to the coastal enterprise zones, where yet another payoff may be required by the local labour bureau for permission to take a job there.38
If, however, workers stay just beyond the limits of the SEZs — as for example, in Baoan County in Guangdong Province, which lies just outside the Shenzhen SEZ across the border from Hong Kong — there is theoretically no legal barrier to relocating to the area. But, there, wages are substantially lower (recently wage levels in Shenzhen were two to five times higher than in Baoan), and work safety standards and labour law guaranties may be ignored by the local authorities.39 As one plant manager in this region put it: “the reforms are not 100% observed.”
Yet, concern in the early days that the reforms might, indeed, be enforced — adding the increased costs of the minimum wage, regulated working hours, mandatory leave and rest days, unemployment insurance, social security tax, medical insurance, and workers compensation — led to widespread fear in particular among overseas Chinese small investors that China might be pricing itself out of the market. There was immediately concern — before the Asian economic crisis — about whether it would not be more profitable to move investments to such places as Indonesia or Vietnam:

According to Taiwan estimates, the cost of their investments in China would increase by between 9 per cent and 13 per cent. If the scheduled labour law rights and responsibilities are implemented, they believe the cost to (other) foreign investors will increase at a rate of at least 20 per cent …

Not only will the costs to foreign investors increase, but also the enterprises in China and joint venture partners will have increased costs because, under the labour regulations enterprises, whether invested in from outside China or from abroad, big, medium-sized, or small, all will increase their costs. The direct and indirect reasons for these increases are as follows … the eight-hour day, the average 44-hour week … compared with common practices of 8-10 hour day, the six-day week, at least … 48 working hours a week. Shortened working hours will require employing more workers and increased labour costs.40

Conditions in FIEs are not universally bad, as observed above. An outspoken branch manager at a particularly desirable Pudong installation pointed out to the author that since they needed the extra hours, they included a waiver in the work contract for “business meetings” on Saturdays. Because, here, conditions and compensation are also more attractive, there has not been any complaint.
The statute also provides that:

The employing unit may extend working hours due to the requirements of its production or business after consultation with the trade union and labourers, but the extended working hour[s] for a day shall generally not exceed one hour; if such extension is called for due to special reasons, the extended hours shall not exceed three hours a day under the condition that health of labourers is guaranteed. However, the total extension in a month shall not exceed 36 hours. (Sec. 41)

Complaints echoed by the China Labour Bulletin are, however, that, particularly in the outsourcing factories in the Pearl River delta region, hours range well beyond that permitted by statute, labourers are induced to sign “contracts” that they may not be able to read even if given the chance, and that they are uninformed about their statutory rights including to representation by a plant union.41

V. Are All Expectations of the Labour Law Reform Attainable?

In the days when it seemed the Cold War would go on indefinitely, the author and a delegation of student colleagues made a visit to East Germany on a student exchange. As we were shown the achievements of the socialist state a friend whispered: “If we had been born here, we would have no choice but to be revolutionaries.” “I doubt it,” I replied, “we would probably be trying to make the system work!”
The problem is, how do you make the system work when you believe in the need for the benefits that would exist in an ideal socialist society, and you also recognise that the economy requires basic market economy reforms? In some ways, the 1994 PRC Labour Law Reform is such an attempt to make the system work. On the other hand, the admittedly progressive reform comes as a kind of death blow to the socialist law labour constitution.
A vital concern with the advent of such far-reaching new labour legislation is the question: how realistic are the more grandiose of these expectations? There are inherent obstacles to realisation of the most progressive changes in Chinese society, whether in Hong Kong or on the mainland. The PRC Labour Law Reform guaranties a maximum 44-hour week and eight-hour day with one hour overtime (normally) compensated at time and a half, for example. We do not have such liberal statutory guaranties in Hong Kong — where, in normal times, there is a much more vibrant economy.
We do have a relatively progressive labour constitution in Hong Kong.42 Progressive, that is, from a capitalist point of view. We do have the assurance of six day work week (five and a half days is now more common), a number of statutory public holidays, and two sick leave days a month the first year of employment and four days a month after that. But there is nothing so progressive, in Hong Kong, as a limit to the number of hours worked per week. A university appointment letter, like other employment contracts in Hong Kong, envisages 38 hours a week of regular office hours (assuming you eat lunch on your own time). But that is a minimum. There is no limit to how long you may be asked to, or expected to, or feel driven to work beyond that.
Academic people do not keep track of overtime — or expect to be paid for it. Our former students do keep track. A 10-12, at times 12-16, hour day is not uncommon for us both. No one stands at the door to keep us in. Colleagues who have worked in Wall Street law firms can guess how office discipline works in some multinationals in Hong Kong. People watch each other — and watch themselves. But our BBA graduates submit to it for only a fraction of the pay.
Our graduates do harbour the thought of being paid overtime, however — and their employment contracts generally do call for it, although not the statute. Yet none of them would be so bold as to demand compensation — beyond what their employers occasionally actually provide as a substitute. (Frequently only compensatory leave time — if there is ever a slack period to collect it.) This applies not only to local Chinese firms — it applies to multinationals as well.
The framers of the PRC labour reform law have foreseen the eventuality that some employers may seek to defeat not only favourable provisions of contract, but also of the statute — as, for example, in ignoring statutory work hours:43

Conclusion and modification of a labour contract shall follow the principles of equality, voluntariness and unanimity through consultation, and shall not run counter to the stipulations of laws, administrative rules and regulations. (Sec. 17)

An invalid labour contract shall have no legal binding force from the very beginning of its conclusion. (Sec. 18)

Easily said, but how does it look in practice? Here the author must rely on reports of our Business School graduates with the Big 4 multinational accounting firms who are regularly sent to the mainland on assignment. They report that whereas in Hong Kong they may be expected to work 10-12 hours a day, and in busy periods, 12-16 hours a day, in the PRC, they regularly expect to work 12-16 hours a day or longer.
Obviously, a person following such a routine soon reaches a level of diminishing return. In that case, if the point of physical exhaustion is reached, in China the employee may simply put his head down on the desk. (Our graduates come back amazed at the fact that their mainland colleagues bring in their folding cots and take a nap during their two-hour lunch breaks.) But our Hong Kong graduates know that the job must get done during the mainland assignment period. If they leave “early” one day, they expect to work longer hours the next.
How then to justify the disparity they see in working hours and tempo with their mainland colleagues? Local management does not question it — nor do local colleagues: “The Hong Kong people are paid twice as much and no one questions that they work twice as hard,” our people conclude about how they are seen. Of course, Hong Kong graduates would not be sent to the mainland in the first place, if the firm believed that they had adequately trained people on the spot. Mainland colleagues, for the most part (although they also earn perhaps twice as much as they would in SOEs), take a different view. They mutter in Chinese business Chinglish: “You pay what, you get what.”
One could, of course, argue that these Hong Kong business school graduates are not “labourers”, they are “professionals”. For university professors in Hong Kong, maybe there is some theoretical parallel with the business managers and partners of major firms. For our BBA accounting graduates, however, that parallel is very strained. For at least the first half of their careers, they are employees.
Yet, why are even Hong Kong academic people driven by the same silent Chinese work ethic as big business and industry? In university, just as in business and industry, we combine a somewhat demeaning American corporate HR (i.e., “human resources”) language with Chinese submissiveness. Anyone beyond clerk accepts it silently as the fate of the working man or woman.
What I suggest is that even in Hong Kong, the labour constitution aspires to conditions that our social reality does not achieve. The stress and anxiety of middle management in Hong Kong is legend. But how hard is the pressure on “working class” labour? In Hong Kong, this class does watch the clock — if they work in the public sector. (In the public sector, especially, point 5:00 o’clock is the end of the working day for non professional staff.)
Until the introduction of “contract employment” in the civil service, as a result of the Asian financial crisis, there were expectations of both management and labour being protected in their jobs. My impression is that today labour is as unprotected as middle management in the private sector. But Hong Kong is also China. That is how we work here.
The above reasons have also led to a considerable amount of job hopping in middle management in the private sector among the younger generation.

VI. Consequences for Enforcement of Rights

Recently, the author and a colleague attempted to explore the record of reported cases under the 1994 Labour Reform Law in order to get an impression of the extent of efforts to enforce workers’ rights through the labour tribunals and the courts. Case reporting in China follows a different concept from either typical common law or civil law case reports.44 In the labour law area, we found a number of “manuals” containing discussions of cases that had arisen in particular geographical areas in the previous year. These obviously were intended to advise practitioners and/or legal officers on appropriate means of interpreting statutes and regulations — not to record legal argument or bases of reaching a reasoned decision. We summarized a number of such typical guidance cases collected in one of these manuals45 for that year, together with our impressions about the kinds of matters arising in litigation, the ostensible sources of conflict, and the style of treatment by the tribunals and the reporters.46
All of these cases appear somewhat disembodied from name, time, or place. One cannot tell from the reports whether the parties were represented or advised by counsel. The cases appear to have been chosen not as examples of problem solving, but rather as examples of applicability or non-applicability of the statute and regulations. Since most illustrations are of applicability, they give the impression that on the whole the law, or the tribunals, favour the labourer over the employer. It is common for Chinese judges to discuss cases in progress. This form of case writing seems to offer the distilled advice on what is likely to arise under the statute.
While few might challenge the employer over hours, pay, and many other working conditions, there are fundamental expectations in modern civilised society and developed economies, such as workers’ compensation. That is not always the case in the mainland, however. One does expect workers’ compensation to be paid in solvent SOEs. The labour disturbances in the PRC referred to above have arisen from non-payment of pension and welfare benefits in those parts of the country where formerly leading industries had become insolvent. (That problem arises from putting the social insurance scheme at risk by dependence on economic performance of the employer industry.) The challenge to enforcement of the worker’s compensation provision in the small private enterprise FIE “realm”, on the other hand, appears to stem from non-payment of insurance premiums.47
Reporting on such matters is not widespread in China. Therefore, an article by a freelance journalist about a successful workers’ compensation lawyer in Shenzhen aroused considerable notice in Hong Kong.48 According to the newspaper report, this self-trained lawyer had, from 1997-2000, sued a hundred factories on behalf of over a hundred claimants injured in industrial accidents, claiming a 90% success rate. It was also reported therein that the manager of a Taiwan-invested metal factory refused to comply with an award of RMB 192,081 to a worker who had lost his right arm in an industrial accident, and that he and managers of nine other Taiwan-invested factories had protested to the Shenzhen government that “accidents are part of industry” and that “[the heralded lawyer’s] existence is negatively affecting Shenzhen’s investment environment.”
It is extremely difficult to collect more than anecdotal case material of this kind. However, this man’s notoriety apparently led to his being eventually expelled from Shenzhen.49
Clearly, if there were basic efforts by government agencies to enforce the statutory universal workers compensation insurance scheme, it should be possible for mainland officials to bring about a reasonably orderly claims settlement system. While it is conceivable that local management on behalf of overseas Chinese invested enterprises do express sentiments as primitive in their attitudes towards workers’ welfare as those described in the article cited above, there should never be a need for litigation in the worker’s compensation area, if workers compensation insurance is in place as mandated by statute.50
That kind of incident suggests laxity on the part of local administration. Such incidents could hardly happen if the same thoroughness of the licensing procedure was applied in the small capitalist FIE “realm” as it is to major foreign multinationals as outlined in section II above.

VII. In-House Labour Organisation

The principle followed in the codification of the Labour Law was similar to that applied in the enactment of the Trade Union Law, which was adopted and came into effect in April, 1992.51 Although the Labour Law was largely drawn from a number of separate statutes, rules, and decisions, which had until then been applicable variously to state-owned, collective, private, and so-called foreign-invested enterprises, there are also some notable changes in the law as codified.
Formation of labour unions is governed by the 1992 Trade Union Law. This legislation calls for formation of “mass organisations of the voluntary unity of the working class”. It calls for trade unions to “educate workers to apply a good attitude towards their work, and to take good care of state properties”. As such the legislation retains the spirit of the Marxist collectivist social ambitions of the past, without much concession to the notions of the proclaimed social market economy of the present.
Aside from the continuing resistance to the recognition of independent trade unions in China, there can be little doubt that — at the theoretical level — the legislative advances incorporated in the PRC Labour Law Reform of 1994 begin to approach labour’s social aspirations in a social democratic society. From the point of view of the social promises of a socialist state, however, they necessarily represent a considerable loss of social welfare benefits.52
Just as in the case of the Labour Law, however, the laws affecting Labour Unions also operate in different “realms”. To say that, however, does not ease the pain of having to guess how the law is expected to operate in one’s own “realm”.
Thus, when it was announced that recent amendments to the Labour Law required that union representatives “must attend” all meetings of foreign invested enterprises (FIEs), this had to create immediate alarm among multinationals and potential foreign investors in Hong Kong.53 “What exactly is a ‘meeting’?”, it must be asked. Presumably formal meetings of the board of directors are intended to be covered. But what about weekly or even daily management meetings? Indeed how many persons must be present before any management discussion or instruction becomes a meeting?
As always, the greatest impact on compliance occurs in the “realm” of the large multinationals operating in China. It is tell-tale that the reporter from the South China Morning Post, who released this news, cites as her source Dr. Andreas Lauffs, the above-mentioned author and editor of the manuals for compliance, which are directed at the human resources departments of all multinationals.
Doubtless, concern in this “realm” is precisely what those who formulated this new provision had in mind. If law in practice operated only in this theoretical “realm”, labour, at least, would benefit far more from the Labour Law Reform. The tragedy of the labouring class in China is that all this takes place far above their heads. A chief complaint of would be labour organisers is that the average working man and woman in the Hong Kong, Taiwan, and other overseas Chinese FIEs surrounding Hong Kong, and along the China coast, may not even be aware that they are entitled to a local union.
Clearly, the central government — and the ordinary labourer — has to be concerned about possible decisions of the company affecting downsizing, or involving loss of jobs, for example. Does that mean that no conversation can take place without a union representative screening it for labourers’ concerns?
But, who exactly are union representatives? The Labour Union Law does not provide for independent labour unions or for senior officers elected directly by the membership. Concern of the rank and file membership has, therefore, been that the official union may be too close to management. In one rather desirable urban FIE, for example, the HR manager at first could not remember whether there was a workplace labour organisation. Later she recalled that, indeed, there was one, but that it had not been active for some time. The organisation leader had been the accountant, someone rather close to management, who was no longer with the company, and both positions had remained vacant for some time.

VIII. Conclusion

If the foregoing offers any lessons in the area of PRC labour law, or, dare I say, in the area of the concept of law itself, it seems to be that “law”, or better, “order” in China, is primarily a concern for those who draft the law and the legislators who implement policy. The agency of government charged with administration of the statute, or set up to enforce formalities of licensing, to carry out the formalities of compliance, particularly with managers of multinational firms, also operates at a highly bureaucratic level.
This part of the system is an edifice that seems to hang in the air. Enforcement effort by the agencies appears to be largely satisfied by on paper transactions. This does not mean that workers have no recourse whatsoever. It may be true that in the “realm” of the SOEs labourers are less hesitant to bring complaints. But if labourers are in the multinational “realm” that is already better off, they hesitate to disturb the way things are. Workers at the lower economic level of small FIEs tend to have come great distances to obtain work, presumably also at a higher wage scale. For them, too, being better off implies that they will not disturb the way things are. Social guaranties for the better off, therefore, tend to be as illusory as those for the less privileged. But the administration tends to take the calm as contentment. If, then, distress or disturbances do arise, as in the reports mentioned above, plant managers tend to be “away at a meeting” and mayors, who protesters seek out next, call out armed police.
This is not to say that individual questions of access to benefits, or even corrections of incidents of maladministration are never successful. Certainly individual labourers are not totally unable to pursue their rights in the PRC. Doubtless the foreboding that those with grievances could take them higher, and might do so, must have an inhibiting effect on those charged with compliance in management and enforcement. Nevertheless, the picture of “law in practice” which the system discloses is far more one of a bureaucratic machine, than one where occasional aberrations are closely followed up. As in all systems, the labourer may grumble. Yet, we see little evidence of active pursuit of corrective measures by the authorities — except or until scandal or disaster raises its head.54 And then the city, the province, or the central government itself must act.55

ADDENDUM: Matching Legislative Zeal with Socialist Roots

Citing the PRC Constitution and Legislative Enactments Since the 1970ies

I. Despite Legislative Reforms the PRC Remains a Socialist State

The People’s Republic of China is a socialist state under the people’s democratic dictatorship led by the working class and based on the alliance of workers and peasants.

Constitution of the PRC (1982), Art. 1.1

II. NPC enacts 320 laws since the 1970ies

The National Peoples’ Congress (NPC) has enacted more than 320 laws and decrees since the late 1970s when China launched its reform and opening up policy. Among them, 83 were promulgated by the Ninth NPC during the past four years.

This year, the Ninth NPC is expected to put the final touches on over 20 laws and decrees it has formulated or amended.

Since late 1999, China has begun to review its laws and regulations to make sure they comply with WTO requirements.

It has completed revision of seven laws, such as the Patent Law, and laws on Sino-foreign cooperative ventures and solely foreign-funded ventures, as part of its commitment to the WTO.

The State Council also promises to enact and amend 30 administrative regulations, of which 25 have been finished.

In addition, it abolished 12 administrative regulations that contradict WTO requirements. The number of rules and policies amended and annulled by ministries and commissions in line with the WTO spirit amount to more than 100.

(China Daily, Hong Kong Edition, Tues., March 5, 2002, p. 1)

III. Wrapping up the Legal System: Deputies Plan to Complete Target on Honing Laws by End of Tenure

… Zeng [Jianhui, spokesman for the Ninth NPC] said China has established the Constitution and Constitution-related laws, basic laws covering all social and economic areas, and related regulations since starting the opening-up process in the late 1970s, paving the way for the formation of the primary legal system. Zeng said the complete legal system is expected to be in place by 2010.

… Yesterday, Zeng reiterated that China would continue to formulate new laws and revise and repeal existing laws to keep them in line with the rules of the World Trade Organization (WTO), which China joined late last year. “During the three year phase-in period, we will beef up several existing laws including the Insurance Law, and draft the Anti-Monopoly Law,” Zeng said.

(China Daily, Hong Kong Edition, Tues., March 5, 2002, p. 1)


*A.B. (hons.) Harvard; M.A., Yale; Dr.jur.utr. (scl) Freiburg i. Br.; JurisDr., Pennsylvania; LL.M., Virginia; Adjunct Professor of Law, School of Business and Management, Hong Kong University of Science & Technology, and Visiting Fellow, Clare Hall, Cambridge.

Acknowledgements: This paper was originally presented at the international Conference on “Political Practice in Modern China,” at the East Asia Institute of the University of Cambridge, 25-27 June, 2002. The author is grateful for a grant from the Universities’ China Committee in London, that made attendance at the Cambridge conference possible. Research in this area was supported in part by a Competitive Earmarked Research Grant and a Direct Allocation Grant of the University Grants Committee (Hong Kong), and by the opportunity for research and reflection provided by Clare Hall, the College of Advanced Studies, of the University of Cambridge.

The author is indebted to Professor Malcolm Warner of Wolfson College / Judge Institute of Management Studies of the University of Cambridge for his encouragement, and the model of his own pioneering work in the area. He would also like to thank Jonty Lim, Esq. (Shearman & Sterling, New York), Wild Chang, Esq. (of the New York and Massachusetts Bars), and Mr. Jackie Chan, and Mr. Steve Ng (KPMG, Hong Kong) for their assistance in research and comment and criticism.

1 Jianfu Chen (1999), Chinese Law: Towards an Understanding of Chinese Law, its Nature and Developments, London-Leiden series on law administration and development, Vol.3 (The Hague; Boston, Kluwer Law International).

2 Oskar Weggel (1976), Das Außenhandelsrecht der Volksrepublik China (Baden-Baden: Nomos), p. 156.

3 The China Daily counts “more than 320 laws and decrees [enacted] since the late 1970s” with 20 more now before the 9th National Peoples’ Congress (NPC). See: China Daily, Hong Kong Edition, Tues., March 5, 2002, p 1, quoted in the addendum to this article.

4 China Labour Bulletin (CLB), reports that many new hires in the sweatshop FIEs (i.e., “foreign invested enterprises”) are obliged to sign contracts which they have neither read nor understood. See: e.g., Reform, Corruption and Livelihood, (CLB, October, 1998) (Vol. 1 of a compilation of telephone discussions between CLB chief co-ordinator, Han Dongfang and working people in Mainland China), Chapter 14 (Part 1), “Women Workers: First In, First Out”, and Chapter 14 (Part 2), “A Taiwanese Investor in Shenzhen”, online version at

5 ILO Convention, No. 14 (1921), which requires that workers be given one day of rest per week (ratified, 1934); ILO Convention, No. 26 (1928), which seeks to set a minimum wage (ratified, 1950); ILO Convention, No. 100 (1950), which seeks equal pay for equal work (ratified, 1990).

6 ILO Convention, No. 47 (1935), which requires a 40 hour work week (not ratified by China).

7 For a brief history of the scope of drafting, see: Lin Feng (1997), “Labour Law,” in: Wang Chenguang and Zhang Xianchu, eds. (1997), Introduction to Chinese Law, (Hong Kong; Singapore: Sweet & Maxwell).

8 The text was published in Renmin Ribao at the time. A translation was included with a summary as Appendix 2 in Malcolm Warner (1995), The Management of Human Resources in Chinese Industry, (London: Macmillan; New York: St. Martin’s Press). The codification has also been used as a model for six additional laws covering social insurance, work safety, and labour supervision. See: “New Laws Gear Up Legislative Procession,” Beijing Review, January 16-22, 1995, p.6.

9 See also: O. Lee (1997), What Ever Became of Socialist Law? Back to the Industrial Revolution in China’s Joint Ventures, in: Sally Stewart and Anne Carver, eds., Coming of Age: Developments in Sino-Foreign Joint Ventures, Vol. 5 of Advances in Chinese Industrial Studies, (Greenwich, Conn.: JAI Press).

10 The translation of the version dated 5 July, 1994, is from China Daily , 6 July, 1994, p.2, as cited by ILO’s Natlex at .

11 See China Labour Bulletin, at

12 Cases where the worker was sued for trying to leave (or for moonlighting) before his contract had run, and where a worker refused to leave, and sued when he was not renewed, are cited in O. Lee and J. Lim (2001), Progressive Capitalism or Reactionary Socialism? Progressive Labour Policy, Ageing Marxism, and Unrepentant early Capitalism in the Chinese Industrial Revolution, 10.2 Business Ethics 97, at 100-1. In Hong Kong, where we have similar employment contracts, there is generally a provision allowing the employee to leave on payment of a penalty and forfeiture of benefits. This is a concern at the professional and mid-management level. Typically, employment contracts are not really negotiated either in Hong Kong or on the mainland. However, the PRC statute obviously favours the market economy employer, as policy formerly favoured the state owned enterprise. As mentioned, the PRC statute does allow for “collective bargaining”. But that concept traditionally requires both arms length negotiation on the part of the labour representatives, and also an interest in securing flexibility in job changing and/or renewal terms. This cannot be assumed where both the FIEs and the SOEs offer take-it-or-leave-it contracts.

13 Marx was revolutionary in a capitalist economy. This law is conceived of as reformist in a Marxist society. Paradoxes must arise if a Marxist society pursues what would theoretically seem to be a reactionary course of action for practical reasons.

14 Hilary Josephs (1996), “Labor Law Reflects New Realities,” China Law Forum, fall; also: In the meantime, see also Hilary Josephs (2003) Labour Law in China (Huntington NY, Juris Publ.)

15 See the first discussion of the 1994 reform law in M. Warner (1995), The Management of Human Resources in Chinese Industry (London: Macmillan; New York: St. Martins Pr.) at p. 214.

16 See particularly the early discussions in China Labour Bulletin, No 6, August, 1994, p. 7; and also in No. 7, September, 1994, pp. 1-4.

17 See: “A New Problem—Labor Relations in Foreign Enterprises,” Beijing Review, May 15-21, 1995, pp. 6ff., at p. 19.

18 Since the early 1980s regulations have been relaxed to allow individuals to go into business for themselves. However, such persons, and their employees, were also required to leave the work unit and relinquish attendant claims on housing, health insurance, and pensions. In an article in China Business Review, “New Kids on the block,” May-June, 1994, pp. 36ff., Susan McEwen, summarizes the steps necessary to register as a small business entrepreneur: “Once these preliminary steps are completed [i.e., police, heath, safety, and licensing checks] the geti bu or siying qiye [i.e., businesses limited to seven employees or to eight or more] must register with the local bureau of industry and commerce. Entrepreneurs must submit proof of residence, a declaration of the scope and location of the business, a description of the equipment to be used, and proof of sufficient capital. Depending on the specific industry sector, siying qiye must also fulfill certain capital requirements. All private enterprise owners must prove their work status when registering. To do this, the owner must present a former identification card, unemployment or retirement certification, or a certificate of approval from his former danwei [work unit]” (p. 36).

19 “Provisional Regulations for the Establishment of Investment Enterprises by Foreign Business Entities” (1995), taken as the basis for a legal memorandum provided to the author for review at the time, called for the foreign investor seeking to set up a holding company in the PRC to demonstrate a total asset base of at least US$400M with at least one established joint venture already established having in excess of US$10M in paid up contribution, with at least three more projects underway, or the foreign investor must have had at least 10 manufacturing joint ventures with a total paid up capital contribution in excess of US$30M.

20 Lauffs, Andreas, gen. ed. (1997), China Staff Employment Manual (Hong Kong: Asia Law & Practice, Lauffs, Andreas, gen. ed. (1995a), China Employment Manual , 2nd ed. (Hong Kong: Asia Law & Practice); Lauffs, Andreas, hon. ed. (1995b), China Update: The PRC Labour Law , (Hong Kong: Asia Law & Practice).

21 Han Dongfang, editor of the China Labour Bulletin (CLB), expresses similar frustration over failure to implement even legislation favourable to labour. He cites reports in the Workers’ Daily about either outright conflicts of interest, or self-serving misconstruction of statute by officials of plant branches of the national union, who are often officials of both the company and the union. Although the Trade Union Law calls for election of officers by “members’ meeting”, “representatives’ meeting”, or “primary trade union committee”, it is reported that many workers are harassed or illegally rejected for election to union office in favor of hand picked candidates. Similarly, whereas “any worker” has the right to join the union, a temporary worker who had had union dues deducted from her pay, was, erroneously, informed that, as a “temporary worker”, she could not be a member of the union when she sought to draw minimal benefits that she had previously received. See CLB article of 12 March, 2003, online at:

22 This crucial dilemma in access to the courts in Hong Kong is treated in the Postscript to: O. Lee (2000), “Media Alarm and the Handover: the ‘Right of Abode’ Cases and Constitutional Crisis in Hong Kong,” Humboldt-Forum-Recht, HFR 10-2000,

23 As in the case of the last of the Vietnam boat people, who won asylum after 25 years, or the illegal immigrants seeking “right of abode” who won in the Court of Final Appeal — although, on petition of the Hong Kong Government, the Standing Committee of the National People’s Congress found error in the decision. Ibid.

24 E.g., in Attorney General of Hong Kong and Humphreys Estate, [1987] 2 W.L.R. 343 (PC). Here the richest developer in Hong Kong exchanged properties with the Government. The Government totally restored, and the developer destroyed, the buildings on their respective sites. But the developer changed its mind and withdrew after three years. Although both parties appeared to have changed circumstances completely, the case was decided on literal reading of the original written offer. It was held that, although the Government had relied to its detriment, because they had initially reserved a right to withdraw until a formal signing (which had not occurred), that right applied by mutuality to the developer, which, despite its requesting permission to destroy the building on the site for its own purposes, receiving permission to destroy the building, and destroying the building, among other things, had not given indication of its intent to give up its right to withdraw.

25 See, esp. the work of Malcolm Warner, (1995). The Management of Human Resources in Chinese Industry (London: Macmillan; New York: St. Martins Press); (1996) “Chinese enterprise reform, human resources and the 1994 labour law”, International Journal of Human Resource Management, 7: 779-796; and M. Warner [ed] (1999). Beyond the Iron Rice-Bowl, London: Macmillan; New York: St. Martins Press.

26 BBC News, “Six million lose jobs in China,” World: Asia-Pacific, Wednesday, 28 June, 2000, 13:57 GMT,

27 BBC News, “China’s state industries cut losses,” World-Asia-Pacific, Monday, 3 July, 2000, 16:26 GMT,

28 BBC News, “Mass labour protest in China,” World: Asia-Pacific, Tuesday, 16 May, 2000, 15:58 GMT,

29 BBC News, “Six million lose jobs in China,” World: Asia-Pacific, Wednesday, 28 June, 2000, 13:57 GMT,

30 BBC News, “China’s unemployment challenge,” Business, Tuesday, 19 March, 2002, 14:34 GMT,

31 Ibid.

32 See BBC News report in n. 20 above.

33 See: BBC News, “Beijing protesters block traffic,” World: Asia-Pacific, Wednesday, 27 March, 2002, 09:33 GMT,

34 See BBC News, “China labour protest suspended,” World: Asia-Pacific, Friday 22 March, 2002, 08:48 GMT,

35 See: BBC News, “China unveils huge welfare plan,” World: Aisa-Pacific, Sunday, 11 March, 2001, 03:57 GMT,

36 See, for example, the fliers by P.K. Shek in the series Change published by the Hong Kong Christian Industrial Committee: “Reebok, don’t do empty talk with Human Rights” (Feb., 1996); and “Mourn for the Deaths. Fight for the Lives!” (Apr., 1996).

37 See, esp., Brewer Stone, “Sino-Foreign Joint Ventures and Governmental Corruption,” in: Sally Stewart, ed., Joint Ventures in the People’s Republic of China: in Advances in Chinese Industrial Studies, Vol. 4 (Greenwich, Conn.: JAI Press, 1994), pp. 29ff.

38 See: e.g., “No Workers’ Paradise: Labour Activists Make Little Headway in Shenzhen,” Far Eastern Economic Review, June 14, 1994, pp. 35f.

39 See: e.g., “The Sweatshops Nearby,” Far Eastern Economic Review, May 14, 1992, pp. 56ff. The situation may have improved in Baoan itself since this report was written in 1992. At that time, it was expected that the Shenzhen SEZ might be expanded to include Baoan, which would have had the intial effect of depressing wages in the SEZ by doubling the size of the labour pool. It would also have applied the labour protection rules in force in Shenzhen to Baoan. The Labour Law which came into effect in January 1995 has done that in any case, whether or not there is the will or local capability to enforce it.

40 Wang You-chin (consultant, Dunstan Styles & Co., Hong Kong, and Law Consultant, Shenzhen District People’s Government, and Xiamen District People’s Government), “Difficulties with the Implementation of the Labour Law” (in Chinese), Hua Nan Ching Chi Hsin Wen [South China Economic News] (Hong Kong, January 26, 1995), p. 12.

41 See: China Labour Bulletin, at:

42 See: esp. Employment Ordinance, Cap. 57; Labour Tribunal Ordinance, Cap 25; and Employees’ Compensation Ordinance, Cap. 282, Laws of Hong Kong, also: See also the instructive surveys by H.A. Turner, Patricia Fok, and Ng Sek Hong (1991), Between Two Societies: Hong Kong Labour in Transition (Hong Kong: Centre of Asian Studies, Univ. of Hong Kong), and Ng Sek Hong and Victor Fung Shuen Sit (1989), Labour Relations and Labour Conditions in Hong Kong (Macmillan).

43 There is no statutory limit on working hours in Hong Kong. However, there are other dubious human resources (HR) practices such as treating “downsizing” as “counselling-out”. The employee is asked to resign in lieu of an unfavourable assessment (which has not actually been given, so it cannot be reviewed). By this means the firm avoids both contractual and statutory provisions for severance and/or long-service pay. Confidentiality is limited in the closed business society — so the benefit to the employee appears to be only a negative one: “He did not make trouble…”

44 See, e.g.: Liu Nanping (1991), “‘Legal Precedents’ with Chinese Characteristics, published cases in the Gazette of the Supreme People’s Court,” 5 Journal of Chinese Law 107ff.

45 Laodong Fazhi Peitao Fagui: Anlie Qingshu, 1996 (1997), (Labour Law and Accompanying Regulations: a Selection of Cases (1996), (Beijing: Industrial Management Publications).

46 See: O. Lee and Jonty Lim (2001), “Progressive Capitalism or Reactionary Socialism?” 10.2 Business Ethics: A European Review (Cambridge), pp. 97ff.

47 See: Part 2, “Failure to Pay Labour Insurance,” in “CLB Analysis of the New Trade Union Law,” China Labour Bulletin, 3/28/02, p.3

48 Lin Gu (2000), “One man’s bid for workers’ justice: migrant labourers crippled in Shenzhen factories find an angel in crusading lawyer,” South China Morning Post (SCMP) (Hong Kong), March 26, 2000, p.1

49 AP, December 28, 2001, “China labor rights lawyer ordered to close,” ,, last seen, March, 2002. See also Craig Smith, “China Tells Lawyer Who Aids Injured Workers to Close His Office”, at; in Chinese:

50 See the China Labour Bulletin’s survey of the problem of long-standing failure of management in various places to pay for workers’ compensation insurance: 28 March, 2002, p. 3,

51 A translation of the latter is also included in Warner (1995), as Appendix 1.

52 See: O. Lee and Jonty Lim (2001), Progressive Capitalism or Reactionary Socialism?, above n. 12. See also: O. Lee (1997), What Ever Became of Socialist Law?. above n. 9.

53 See: Vanessa Gould, “Unions gain veto on management decisions,” South China Morning Post (SCMP), Sat., 26 Jan., 2002.

54 Authorities have been repeatedly obliged to take notice of situations where labourers who were confined to dormitories on factory premises were unable to escape when fire broke out, and when punishment for petty theft was deemed unduly humiliating, as in the case of a woman confined to a dog cage with a pair of allegedly stolen shoes tied around her neck. Even then, it seems, the labour movement — particularly in Hong Kong — has been greatly concerned to demonstrate the degree to which foreign management negligence has been involved in industrial fatalities and illness. A number of these cases were discussed by the present author in: What Ever Became of Socialist law?, above n. 9.

55 Notable among incidents of this type in the past year were an explosion in a grammar school in Jiangsi Province where schoolchildren were engaged in making fireworks on school premises. This involved not only a violation of the prohibition on hiring children under 16 (Labour Law, Sec. 58), but also the apparent need to exploit eight year old pupils to supplement the school budget. See: BBC News, “Rising child labour in China,” World: Asia-Pacific, Wednesday, 7 March, 2001, 17:00 GMT,

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