Race to the Bottom? A Study of FDI, Government Development Strategy and Labor Rights in China Open Access

Huang, Sinkey (2016)

Permanent URL: https://etd.library.emory.edu/concern/etds/m900nt75j?locale=en


China's export-oriented economic growth model and the frequent strikes in its coastal region often lead to the belief that China is suffering from the classic "race-to-the-bottom" effect. According to the theory, the pressure to attract footloose capital can lead to the deterioration of labor rights conditions because host countries loosen labor regulations as a way to lower production costs for foreign companies. On the other hand, facing a surge in labor unrest and decreasing supply of cheap labor, Chinese leaders are pressured to switch to a different development model driven by skill-intensive industries. While there are theories on how foreign direct investment (FDI) influence government protection of workers' rights, few theories capture the link between government development strategy and labor rights protection. In this study, I examine the impact of FDI and government development strategy on labor rights conditions in China by analyzing data collected from province-level government work reports and statistical yearbooks published by the Chinese authority. My quantitative analysis suggests that China's reliance on exports has a negative impact on labor rights conditions, and Chinese provincial leaders are pursuing a more sustainable development path to resolve the increasing tension between foreign capital and Chinese workers. However, confronted with the pressure to maintain social stability and stimulating economic growth, local officials are tightening their control on labor relations instead of protecting workers' interests in response to a higher level of foreign direct investment.

Table of Contents

Introduction. 1

Literature Review. 4

The Effect of FDI on Labor Rights. 4

Building a Harmonious Labor Relationship in China. 10

Theoretical Framework. 16

Research Design. 19

Independent Variables. 21

Dependent Variables. 25

Results. 29

The Impact of FDI on Labor Rights Protection and Social Control. 29

The Impact of Government Development Strategy on Labor Rights Protection and Social Control. 35

Government Development Strategy and the Level of FDI. 41

An Overtime Time Dimension. 44

Discussion and Conclusion. 51

References. 54


Summary of Explanatory Variables. 58

Coding Rules for Government Development Strategy Score. 59

Coding Rules for Government Emphasis on Labor Rights (Score). 60

Government Development Strategy Score and Index. 61

Government Emphasis on Labor Rights (Score). 62

FDI Policy Goal Score and Index. 63

Correlation Matrix for Labor Union Statistics. 64

FDI and Government Strategies on Number of Labor Relations Warning Systems Established (2001, 2006, 2011). 65

Government Development Strategy Index by Region. 65

FDI Flow by Region (1991-2013). 68

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