American policy regarding China's labor laws always has been a double-edged sword. On the one hand, the U.S. continues to demand compliance with WTO standards, claiming China's failure to comply gives it an unfair competitive advantage. On the other hand, such compliance could prove costly for the hundreds of U.S. companies operating on the Chinese mainland.
The dilemma has crystallized with the promulgation of The Labor Contract Law of the People's Republic of China, now scheduled for a second reading by the Standing Committee of the National People's Congress. Although unionization is not mandatory in China, this pending law greatly expands the role of labor unions--known as "work councils"--by strengthening their right to engage in collective bargaining and making employers' operational decisions subject to their approval.