The new law will make employment contracts mandatory, increase requirements on employers hiring short-term workers and establish standards for severance pay.
Employers have argued that it erodes China’s low-cost labor advantage because it makes workers more difficult to hire and fire. However, scandals such as the discovery of enslaved workers in Shanxi province’s brick kilns in June have sparked outrage at the nation’s exploited workers.
The much discussed labor contract law was passed by the standing committee of the National People’s Congress, the country’s highest lawmaking body, at its quarterly meeting in late June.
In addition, the committee re-examined the draft anti-monopoly law which would place foreign purchases of Chinese firms under closer scrutiny. The draft law requires foreign buy-ins to be examined on national security, in addition to antitrust grounds.
The new state investment agency, tasked with managing a portion of China’s foreign exchange reserves, was also on the agenda with the Ministry of Finance receiving approval to issue US$200 billion in yuan-denominated bonds. This will be the agency’s startup capital.
Much of the focus, though, was on auditor-general Li Jinhua, who presented findings from a government-wide audit.
Li, nicknamed “iron face” for his perceived incorruptibility, said more than US$5 billion in central government funds was mismanaged or misused last year – US$919 million embezzled or misappropriated and US$4.86 billion poorly managed.
Culprits included the government departments responsible for culture, the environment, media and publishing as well as the National Development and Reform Commission.
Li also warned that local governments would now have to pay for any misused social security funds, following last year’s US$420 million social security scandal in Shanghai.
The banking industry was not spared. Li said US$2 billion was used illegally or improperly by China’s six largest banks, and that real estate and foreign exchange loans were poorly regulated.