China and The Belt and Road Initiative: Transnational Labor Law Under State Capitalism 4.0

Since the 2007 global financial crisis, many have questioned the predominant form of neoliberal capitalism that has underpinned a U.S.-led global economic order since the 1980s. Meanwhile, China's state capitalism, led by the Chinese Communist Party, has been ascendant. Some have even posited a “Beijing Consensus” as an alternative to the “Washington Consensus.” This essay advances the concept of State Capitalism 4.0, which is premised on the Chinese party-state's control over state-owned enterprises (SOEs) and private firms, mediated through regulatory and institutional arrangements and the strategic exploitation of technology. I apply this concept to analyse China's approach to transnational labor issues as Chinese enterprises expand their activities abroad and mobilize a growing number of Chinese workers transnationally, especially under the Belt and Road Initiative (BRI). Reflecting on the implications of State Capitalism 4.0 for transnational labor law, I argue that the strategic exercise of state regulatory powers can strengthen labor standards through domestic laws and institutions but is antithetical to a core international labor right: freedom of association.

states. 9 The expansion of the Chinese construction industry in the African continent over the past two decades is a prominent example. 10 Transnational Labor and the BRI Announced by President Xi Jinping in 2013, the BRI is a multi-trillion-dollar development plan involving an ever-growing list of countries and multilateral organizations. The core of the BRI consists largely of Chinese-led and financed infrastructure, transportation, and energy projects that have often been portrayed as key components of host countries' development plans.
Labor issues arising from BRI projects in "weak governance zones" 11 have attracted growing attention. 12 A 2017 report found that many Chinese firms in Africa employed and provided some skills training to local workers. However, it also noted Chinese firms' failure to promote local workers, their competitive threat to local businesses and jobs, and instances of major labor law violations. 13 Other studies of Chinese investments in Africa and Asia have mentioned tense labor relations and inferior wages and working conditions at Chinese firms compared to other foreign firms. 14 Some researchers have painted a more nuanced picture, however. 15 Companies' practices can vary depending on their size, sector, ownership structure, organizational resources and managerial competence, experience in operating internationally, and host countries' institutions. 16

Mobilization of Transnational Labor
The "exporting" of Chinese workers abroad has been a controversial aspect of Chinese outbound investments. In 2018, nearly one million Chinese workers were working overseas. Among the 492,000 workers sent abroad in 2018, approximately 227,000 undertook foreign contract projects (where Chinese enterprises sent their workers abroad for contracted projects operated by these enterprises in other countries) and 265,000 were involved in foreign labor service cooperation projects (which involve special recruitment agencies authorized by the Chinese government dispatching Chinese workers with overseas employers). 17 Asia was the main destination, fol-lowed by Africa. Nearly half of them were deployed in the construction industry, 18 a sector in which SOEs (as lead construction firms) play a leading strategic role in China's development and international expansion. 19 While some Chinese workers abroad are employees of Chinese firms, many are recruited in China and engaged on dispatch (labor hire) arrangements through "foreign labour cooperation agencies" licensed by the Chinese Ministry of Commerce. 20 Dispatch workers are commonly hired by the agency in China on a contract of two to three years or for the duration of a project. 21 In construction contracts in Africa and Asia, the engagement of Chinese dispatch workers has sometimes been specified as a condition of the bids put forward by Chinese firms. 22 Protecting the rights of these workers is often beyond the reach and enforcement of home and host country's labor laws due to a range of jurisdictional and geopolitical obstacles. 23 Labor disputes involving these workers have (for all practical purposes) required the Chinese government's direct intervention. For example, in 2008, the Ministry of Commerce investigated a dispute involving five hundred Chinese workers in Tanzania who went on strike for wage arrears by Chinese subcontracting firms. The overseas labor cooperation agency responsible for the workers' placement abroad had engaged in unlawful subcontracting to unlicensed firms. 24 In 2015, the same ministry explicitly acknowledged its involvement in handling "more than 10 major labour disputes in foreign countries like Angola." 25 As Cooke et. al observe, "without effective state intervention, the prospect of improving these workers' employment terms and conditions remains opaque, but the multiple roles of the state in this territory make any form of intervention a complicated undertaking. In recent years, government departments have issued numerous "opinions" and "guidelines" targeting Chinese firms' conduct abroad, including labor practices. 28 These measures direct the firms to comply with local laws and customs, protect workers' rights, offer job opportunities to residents, protect the environment, show "morality" in business dealings, and fulfil their social responsibilities in the host countries. Notably, a CSR guideline for the mining sector specifically refers to the ILO's Fundamental Principles and Rights at Work and the UN Guiding Principles on Business and Human Rights. 29 The binding nature and practical effect of these measures remain unclear. Opinions may be deemed soft law but they also reflect policies that the Chinese state is pursuing. Nevertheless, the state's top-down approach to regulating CSR is not underpinned by individual rights and institutional constraints on corporate behavior. Instead, as Larry Backer argues, CSR is "understood as another tool of state obligation." 30 As such, the Chinese government and firms commonly associate CSR with simply providing economic opportunities for the host country, coupled with charity and philanthropy such as donations to local schools. The discourse of "CSR with Chinese characteristics" does not contemplate the assertion of civil and political rights by individuals against enterprises (or the state). The discourse also leaves little room for civil society to mobilize and exert pressure on companies.

Implications for Transnational Labor Law
Some are wary of China's ambitions to expand its global influence through the BRI, including by assuming a more visible role in shaping the rules of international economic and political institutions. China's growing presence in transnational labor markets raises an important question about the approach of its institutions and actors to interpreting, implementing, and enforcing labor standards abroad.
China, a founding member of the ILO, has ratified four of eight ILO core conventions on fundamental principles and rights at work. However, the conventions guaranteeing freedom of association and collective bargaining have been extremely problematic for the Chinese party-state. China's approach to regulating domestic and transnational labor leaves little room for the autonomy of social actors. The rights to freely organize, form, join, and participate in trade unions and employers' associations independent of the state and to negotiate and conclude collective agreements on a mutual and voluntary basis do not exist in this framework. 31 Such rights are emphasised in the tradition of liberal capitalist economies (though not always implemented in practice) but are essentially antithetical to State Capitalism 4.0.
On the other hand, State Capitalism 4.0 offers the prospect of the strategic exercise of state regulatory powers to improve labor rights and working conditions. China's labor law reforms, especially since the 2000s, reveal its highly dynamic and evolving approach to international labor standards. A strong state-driven approach to implementing international undertakings into domestic labor laws and institutions has enhanced the protection of workers' rights, especially when backed by effective enforcement mechanisms. This can be gleaned from the enactment of the Labour Contracts Law in 2007 and numerous laws and policies aimed at raising labor and social protections, 28