The Chinese labor market and corporate governance

Tony Fang and John Hartley

Chapter 4 in Research Handbook on Corporate Governance in China, 2025, pp 68-85 from Edward Elgar Publishing

Abstract: This chapter reviews the intersection of corporate governance and non-management labor in China. Key features of Chinese corporate governance include concentrated share ownership, the predominance of state-owned enterprises (SOEs), and the high level of government involvement. Concentrated ownership can increase the risk of self-dealing managers, which could negatively affect workers. SOEs have social stability as a goal, tending to employ excess workers. Their protected positions allow them to pay higher wages. Several important labor policy reforms were motivated by the consequences of the ownership structure of Chinese firms. Policies such as minimum wages have differential effects on SOEs compared to other firms. Reforms have increased both internal and international migration, to great labor market effect. The main labor institutions in China, labor unions, are state-sanctioned organizations tasked primarily with management functions. They can enhance certain facets of corporate governance through their strong ‘voice face,’ although they are not independent institutions capable of corporate oversight. Corporate supervisory boards feature employee representation—responsible for overseeing corporate governance, this board is effectively quite weak.

Keywords: Corporate governance; Labor market; China; Labor unions; Minimum wages; State-owned enterprises; Economic reforms; Hukou system (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035312603
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