However, the regulations have met with strong opposition from foreign investors in China. On the last day of public opinion soliciting, the EU Chamber of Commerce in China and the American Chamber of Commerce in Shanghai both filed their suggestions. While the former raised 11 suggestions, the latter produced a proposal book of 42 pages, with concerns about almost every clause of the law.

The EU Chamber of Commerce in China said the law would have a major impact on foreign investment in China since it would dampen the flexibility of hiring for foreign companies and eventually lead to a rise of production costs, which will force foreign companies to reconsider their investment plans.

The American Chamber of Commerce in Shanghai voiced a more clear-cut opinion--they believe this law will exert negative impact on China's investment environment.

The implementation of this law might prompt some foreign companies to withdraw their investment from China, said Xu Tingting, a representative from employees at multinational companies from Shanghai, at a workshop organized by the legislature.

Ma Jianjun is an experienced labor attorney from a law firm in Shanghai. He shared the worries of Xu Tingting, adding, "Low labor costs are an important competitive advantage for China as a foreign direct investment destination. Many foreign companies, especially those in manufacturing industry, come to tap low labor cost more than anything else. When the cost is raised, why should they stay?"

Shi Meixia, a professor at Beijing Jiaotong University, held a different opinion. "China's labor contract system has been improving steadily for the last two decades, whereas the country has been attracting more and more foreign investors."

Liu said that since China's workers' welfare system is underdeveloped, the cost of labor in China in general is still at a low level compared with industrial countries. He said the sufficient protection of workers' interests could stimulate workers' enthusiasm and enhance working efficiency, which could eventually improve the investment environment. By contrast, if workers' interests do not get sufficient protection, it could put labor and management relationships into jeopardy and strike a heavy blow to the investment environment.

Guo Jun, another official with the All-China Federation of Trade Unions, voiced this opinion more frankly. "The impact of this law would not go beyond retrieving the inappropriate profits made from violating labor interests," he said.

A growing problem affecting China's employment market in recent years has been companies importing the temp agency system of Western countries in order to save money. Liu explained that while temp agencies are for temporary and supportive work like babysitting, many companies now recruit people from them for permanent jobs to evade signing labor contracts.

Without laws or regulations governing temp agencies, the status of them had been vague, which stirred up many group labor disputes. One case involved workers in McDonald's and KFC outlets in south China who filed complaints about low salaries in March and April. They claimed that their employers paid them a salary lower than the minimum standard enacted by local governments. The situation became complicated because the fast food giants were not their direct employers since they were hired through temp agencies.

The Labor Contract Law clearly stipulates that as employers temp agencies have to sign a contract of two years or longer with their workers. In addition, if the worker becomes involved in a legal dispute, his or her temp agency should assume responsibility. Thus the interests of labor and temp agencies are somehow tied in together.

Delay of salary payment is another factor hindering stable labor and management relations in China. In order to ensure the timely payment of salaries, the law stipulates that if employers purposefully put off the payment of salary, workers can apply to local courts for mandatory enforcement.