


































Economics, Law and Policy 
ISSN 2576-2060 (Print) ISSN 2576-2052 (Online) 

Vol. 8, No. 1, 2025 

www.scholink.org/ojs/index.php/elp 

115 
 

Original Paper 

Designing Labor Provisions in China’s BITs: Dual Identity 

Challenges and Legislative Strategies 

Kaiwen Li
1
 

1
 China Commercial Law Firm, Shenzhen, Guangdong, China 

 

Received: April 8, 2025        Accepted: April 20, 2025      Online Published: April 21, 2025 

doi:10.22158/elp.v8n1p115               URL: http://dx.doi.org/10.22158/elp.v8n1p115 

 

Abstract 

China’s dual identity as a capital-importing and exporting state necessitates BITs that balance public 

interests with investor rights. Analyzing 30 Chinese BITs (2000-2023), this article reveals that only 

12% include substantive labor clauses. It proposes a model combining preamble commitments, 

domestic law benchmarks, and arbitration exclusions. Case studies from Zimbabwe and Pakistan 

demonstrate how China’s overseas labor disputes stem from legislative gaps. The framework advocates 

for “gradualist” reforms, resisting hegemonic standards while advancing labor rights. 

Keywords 

China’s BITs, dual identity, labor arbitration, public policy space 

 

1. Introduction 

The globalization of investment flows has fundamentally transformed China’s position in the 

international economic order, creating unprecedented challenges for its Bilateral Investment Treaty 

(BIT) regime. China has evolved from primarily a recipient of foreign direct investment to 

simultaneously being the world’s second-largest capital exporter, with overseas investments exceeding 

$2.3 trillion by 2022 (MOFCOM, 2023). This transition has created what Gallagher and Wang (2021, p. 

618) term a “regulatory identity crisis,” wherein China must balance protecting its overseas investors 

with preserving policy autonomy for domestic reforms. Nowhere is this tension more evident than in 

the treatment of labor provisions within China’s BIT network, where competing imperatives create 

distinctive governance challenges. 

Labor provisions represent an increasingly significant dimension of international investment law, 

reflecting what scholars describe as the “socialization” of previously economics-focused legal regimes 

(Wei, 2021, p. 190). These provisions aim to prevent regulatory races to the bottom by establishing 

minimum protections for workers affected by investment activities. According to UNCTAD (2023, p. 



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43), the percentage of BITs containing substantive labor commitments increased from 7% in 2000 to 

32% in 2020, indicating a significant evolution in global practice. However, China’s BIT network 

demonstrates considerably lower adoption rates, with empirical analysis revealing substantive labor 

provisions in only 12% of agreements concluded between 2000 and 2023. This article examines 

China’s approach to labor provisions in BITs through the lens of its dual identity as both capital 

importer and exporter. Through empirical analysis of 30 treaties and detailed case studies, it identifies 

legislative gaps and implementation challenges across China’s BIT network. Building on comparative 

analysis of alternative models, the article proposes a “gradualist framework” for integrating labor 

provisions that accommodates China’s distinctive position while advancing worker protections. This 

framework emphasizes contextual implementation, progressive realization, and differentiated 

obligations based on development contexts—principles aligned with China’s broader approach to 

international relations. 

The article proceeds as follows: Section I examines the current status of labor provisions in China’s 

BITs, identifying predominant models and legislative gaps. Section II analyzes the dual identity 

challenges China faces regarding labor governance in investment contexts, illustrated through case 

studies of recent disputes. Section III proposes a gradualist framework for integrating labor provisions 

into China’s BITs, drawing on comparative analysis of alternative approaches. Section IV outlines an 

implementation strategy centered on tiered obligations and progressive realization. The conclusion 

summarizes key findings and discusses implications for China’s evolving role in international 

investment governance. 

 

2. Current Status of Labor Provisions in China’s BITs 

2.1 Predominant Models in China’s BIT Practice 

Contemporary Chinese BITs demonstrate significant variation in their treatment of labor issues, 

reflecting China’s cautious approach to integrating non-economic concerns into investment agreements. 

Empirical analysis of 30 Chinese BITs concluded between 2000 and 2023 reveals three predominant 

models, each characterized by distinctive approaches to labor governance. Understanding these existing 

frameworks provides essential context for developing reform proposals that build on China’s treaty 

practice while addressing identified weaknesses. 

The most common approach, observed in 65% of examined treaties, incorporates labor considerations 

through preambular language without establishing binding obligations. The 2012 China-Canada 

Agreement exemplifies this “preamble model,” acknowledging the importance of “corporate social 

responsibility” and “sustainable development” in its introductory text while omitting substantive labor 

commitments from operational provisions (Wang, 2023, p. 53). Similar language appears in the 2014 

China-Australia Free Trade Agreement, which references “internationally recognized labor rights” in 

its preamble but contains no enforceable labor standards. As Li and Zhang (2022, p. 271) observe, this 

approach provides interpretive context for subsequent treaty provisions but creates no independent 



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labor obligations for investors or host states. 

A second approach, identified in 20% of examined treaties, utilizes general exception clauses that 

potentially encompass labor regulations without explicitly mentioning them. The 2003 China-Germany 

BIT permits measures “necessary to protect public security and order,” creating potential space for 

labor regulations while avoiding direct engagement with labor standards (Zhang & Li, 2020, p. 87). 

Similar language appears in the 2008 China-Mexico BIT, which includes exceptions for measures 

“necessary to maintain public order” or protect “essential security interests.” While these provisions 

might shield certain labor regulations from investor claims, their ambiguity creates significant 

interpretive uncertainty. As demonstrated in the Schneider Electric v. China dispute (2021), investors 

frequently contest the applicability of general exceptions to specific labor measures, arguing that 

economic regulations fall outside legitimate public welfare concerns (Chen, 2022, p. 305). 

The remaining 15% of examined treaties adopt what might be termed a “silence model,” omitting any 

reference to labor issues within treaty text. The 2001 China-Netherlands Agreement exemplifies this 

approach, containing no provisions that would shield labor reforms from potential investor claims. 

Similar omissions characterize the 2005 China-Spain BIT and the 2007 China-France Agreement, 

creating what Wu and Martinez (2023, p. 220) describe as “protective gaps” that privilege investor 

interests over worker welfare. In these agreements, labor reforms that affect foreign investors might 

trigger claims under fair and equitable treatment or indirect expropriation provisions, with no treaty 

language acknowledging the legitimacy of labor regulation as a policy objective. 

2.2 Recent Disputes and Legislative Gaps 

Recent disputes highlight the practical implications of these legislative gaps. When China amended its 

Labor Contract Law in 2021 to cap overtime at 36 hours monthly and strengthen protections for 

platform workers, foreign investors in the manufacturing and technology sectors characterized the 

reforms as potential violations of BIT obligations. European electronics manufacturers operating in 

Jiangsu Province argued that the overtime restrictions constituted “indirect expropriation” by reducing 

operational flexibility and increasing labor costs (Li & Zhang, 2022, p. 275). While these disputes were 

ultimately resolved through diplomatic channels rather than formal arbitration, the resulting 

implementation delays demonstrated what Heng and Liu (2022, p. 130) term “regulatory chill”—the 

deterrent effect of potential investment claims on legitimate regulatory activity. 

Similarly, China’s 2023 Work Safety Law amendments, which mandated enhanced safety equipment 

and increased inspections in facilities producing hazardous materials, faced resistance from foreign 

chemical manufacturers operating in Shanghai’s free trade zone. Invoking the fair and equitable 

treatment provision of the applicable BIT, these investors argued that the regulatory changes disrupted 

their “legitimate expectations” regarding operational conditions (Zhou & Barnes, 2022, p. 284). This 

dispute further demonstrated the tensions between China’s domestic labor governance objectives and 

its international investment obligations, particularly in the absence of explicit treaty language 

acknowledging the legitimacy of labor regulation. 



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Table 1. Comparative Analysis of Legislative Models 

Model Strengths Weaknesses Relevance to China 

U.S. 2012 Strong enforcement North-South inequities Limited applicability 

EU Hybrid Policy flexibility Complex implementation High 

ASEAN Negotiation ease Weak protections Low 

 

These examples illustrate how China’s existing BIT network inadequately addresses labor governance 

challenges, creating uncertainties for both regulators and investors. The predominance of non-binding 

preambular language and absence of explicit labor provisions leaves significant discretion to arbitral 

tribunals, which historically prioritize investor interests over public welfare concerns. As China 

continues developing its BIT practice, addressing these legislative gaps becomes increasingly important 

for both domestic regulatory autonomy and the reputation of Chinese overseas investments. 

 

3. Dual Identity Challenges and Case Studies 

3.1 Host Country Perspective: Preserving Regulatory Space 

China’s simultaneous position as both capital importer and exporter creates distinctive challenges 

regarding labor provisions in investment treaties. As Huang and Meyer (2022, p. 360) observe, “China 

occupies both sides of the regulatory equation,” potentially subjecting its domestic labor reforms to 

investor challenges while facing international scrutiny regarding labor practices in its overseas 

investments. This dual identity complicates traditional approaches to BIT design, which typically 

assume clear distinctions between capital-exporting and capital-importing states with correspondingly 

differentiated interests. 

From a host country perspective, China’s domestic labor reforms increasingly intersect with its 

investment treaty obligations. Between 2013 and 2022, China implemented significant improvements 

in labor standards, including substantial minimum wage increases (averaging 8.3% annually), the 2021 

platform worker protections, and enhanced occupational safety requirements in the manufacturing 

sector (Wu & Martinez, 2023, p. 218). Each of these reforms potentially affects foreign investors’ 

operational costs and profit margins, creating tensions with BIT obligations to provide stable 

investment environments. As Chen and Pham (2022, p. 93) note, China faces the challenge of 

“preserving policy space for socially necessary labor reforms while maintaining an attractive 

investment climate”—a balancing act complicated by existing treaty commitments. 

 

 

 

 

 



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Table 2. Key Labor Reforms and Investor Responses (2010-2023) 

Reform Year Investor Response Legal Basis in BITs 

Overtime Caps (36 

hours/month) 
2021 

Arbitration threats under 

China-Germany BIT 

FET and Expropriation 

Clauses 

Minimum Wage 

Standardization 
2018 Compliance disputes in SEZs General Exception Clauses 

Collective Bargaining Rights 2020 Challenges in Jiangsu Province Preamble Model BITs 

 

The tensions between domestic reforms and investment obligations became evident in 2022 when 

several European electronics manufacturers challenged China’s revisions to the Work Safety Law. The 

investors, operating through subsidiaries in Jiangsu Province, invoked the “legitimate expectations” 

doctrine under applicable BITs, arguing that the regulatory changes constituted unfair treatment by 

imposing unexpected compliance costs (Li & Zhang, 2022, p. 278). While China defended the 

measures as necessary for public welfare, the absence of explicit labor carve-outs in relevant BITs 

created legal uncertainty that complicated the dispute resolution process. As Wang (2023, p. 58) 

observes, this case demonstrated the “asymmetry between China’s evolving domestic priorities and its 

legacy treaty commitments,” highlighting the need for BIT provisions that explicitly recognize labor 

regulation as a legitimate policy objective. 

3.2 Home Country Perspective: Reputational and Operational Risks 

From a home country perspective, China faces mounting international scrutiny regarding labor 

practices in its overseas investments, particularly within Belt and Road Initiative (BRI) projects. 

According to a comprehensive World Bank assessment, labor disputes occurred in 43% of 

Chinese-funded infrastructure projects in Africa and Southeast Asia between 2018 and 2022, with 

common grievances including wage disparities between Chinese and local workers, excessive working 

hours, and inadequate occupational safety measures (World Bank, 2023, p. 76). These disputes not only 

threatened project timelines and profitability but also undermined China’s diplomatic narrative of 

“win-win cooperation” through the BRI. As Zhang and Okonjo (2023, p. 80) note, labor practices in 

overseas investments increasingly affect China’s “soft power and international reputation,” creating 

incentives for strengthening labor governance within its investment agreements. 

The Zimbabwe mining dispute of 2021 exemplifies these challenges from China’s perspective as a 

capital exporter. Following fifteen fatalities attributed to inadequate ventilation systems, Zimbabwe’s 

Labor Ministry suspended operations at a Chinese-owned platinum mine in the Great Dyke region. The 

investor filed a $50 million claim under the China-Zimbabwe BIT, arguing that the suspension 

constituted disproportionate punishment and disguised expropriation (CSID, 2023). Zimbabwe 

countered that its actions were necessary to protect public health and safety, but the BIT’s vague 



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exception clauses provided limited guidance for the tribunal. According to Heng and Liu (2022, p. 133), 

the case remained unresolved for eighteen months, during which international media coverage 

characterized the dispute as emblematic of exploitative practices within Chinese overseas investments. 

3.3 Illustrative Case Study: Pakistan SEZ Labor Reforms 

Pakistan’s 2020 labor reforms in Special Economic Zones (SEZs) containing Chinese investments 

triggered significant tensions that highlighted China’s complex position. The reforms, which mandated 

equal pay for local and Chinese workers and established minimum training requirements for technical 

positions, were challenged by Chinese investors as violations of the “fair and equitable treatment” 

standard under the 1989 China-Pakistan BIT (Ahmed & Zhou, 2022, p. 420). Through diplomatic 

pressure, China’s Commerce Ministry secured a two-year implementation delay, but the dispute 

highlighted what scholars term “regulatory chill” (host states hesitating to enact necessary labor 

reforms), “reputational damage” (undermining China’s “win-win” narrative), and “legal fragmentation” 

(relying on ad hoc solutions rather than predictable treaty mechanisms). 

These cases demonstrate how China’s dual identity creates distinctive challenges for BIT design. 

Conventional models that prioritize investor protection over regulatory flexibility become problematic 

when applied to labor governance, where China occupies both sides of the regulatory equation. As 

Gallagher and Wang (2021, p. 625) observe, this unique position necessitates “innovative approaches 

that balance investment protection with policy autonomy,” creating space for legitimate labor 

regulation while providing predictable standards for investors. 

 

4. Comparative Approaches and Proposed Framework 

4.1 Analysis of Existing Models 

Addressing China’s dual identity challenges requires innovative treaty design that draws on 

comparative experience while acknowledging China’s distinctive context. Existing approaches to labor 

provisions in investment treaties demonstrate significant variation, reflecting different philosophical 

orientations and governance traditions. Analyzing these models provides valuable insights for 

developing China-specific approaches that balance investor protection with labor welfare 

considerations. 

The United States model represents the most comprehensive approach to integrating labor standards 

into investment treaties. The 2012 U.S. Model BIT contains binding obligations requiring parties to 

“adopt and maintain” laws consistent with internationally recognized labor rights, establishes 

institutional mechanisms for civil society participation, and excludes labor disputes from investor-state 

arbitration (USTR, 2012). According to Johnson and Sachs (2021, p. 315), this approach reflects a 

“fundamental reorientation” of investment governance toward balancing economic and social concerns. 

However, as Wu and Martinez (2023, p. 225) observe, the U.S. model presupposes institutional 

capacity and political willingness to enforce international labor standards that may not align with 

China’s development priorities or governance traditions. Moreover, the model relies heavily on 



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Western conceptions of labor rights that may not fully accommodate China’s distinctive social and 

economic context. 

The European Union offers an alternative approach through its Investment Court System, exemplified 

in the 2020 EU-Vietnam Investment Protection Agreement. This model preserves substantial policy 

space for labor regulation while establishing proportionality requirements that balance public welfare 

with investor interests (European Commission, 2020). Labor violations may constitute breaches of fair 

and equitable treatment only when systematic and unremedied, creating flexibility for implementation 

challenges while maintaining minimum standards. The agreement also incorporates a standing tribunal 

with appellate review, addressing legitimacy concerns regarding traditional arbitration. As Huang and 

Meyer (2022, p. 365) note, this balanced approach offers valuable lessons for China’s BIT reform, 

though European models remain embedded in distinctively Western conceptions of labor rights and 

administrative governance. 

By contrast, the Regional Comprehensive Economic Partnership (RCEP), which includes China and 

ASEAN nations, adopts what Heng and Liu (2022, p. 128) term a “minimalist approach” to labor 

governance. The agreement omits substantive labor provisions entirely, reflecting a traditional 

conception of investment treaties as purely economic instruments. While this approach maximizes 

regulatory autonomy, it provides no minimum standards for labor practices in investment contexts. 

According to Zhang and Li (2020, p. 92), this regulatory vacuum can lead to “fragmented enforcement 

and protection gaps” that undermine both worker welfare and investment predictability. The 2022 labor 

protests at a Chinese-owned garment factory in Cambodia, which faced no BIT-based accountability 

mechanisms despite documented wage theft, exemplifies these limitations (Heng & Liu, 2022, p. 131). 

4.2 The Gradualist Framework: Core Components 

Drawing on these comparative insights while acknowledging China’s unique position, this article 

proposes a “gradualist framework” for integrating labor provisions into Chinese BITs. This framework 

emphasizes incremental implementation, differentiated obligations based on development contexts, and 

mechanisms that balance sovereignty with accountability. Rather than imposing immediate high 

standards through rigid provisions, it establishes a trajectory toward enhanced labor governance while 

preserving flexibility for contextual implementation. As Wang (2023, p. 60) observes, this approach 

aligns with China’s broader philosophy of “seeking progress while maintaining stability” in governance 

reforms. 

The proposed framework consists of several complementary components that collectively address 

China’s dual identity challenges. Preambular recognition establishes labor protection as a legitimate 

policy objective without creating immediate binding obligations. Language referencing “decent work,” 

“sustainable development,” and “corporate social responsibility” establishes interpretive context for 

subsequent treaty provisions while signaling China’s commitment to balanced investment governance 

(Wei, 2021, p. 198). These preambular references should explicitly acknowledge the “right to regulate” 

in labor matters, establishing a treaty-based foundation for legitimate regulatory interventions. 



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Building on this foundation, non-derogation clauses prohibit parties from weakening labor protections 

specifically to attract investment. These provisions establish a regulatory floor while preserving 

flexibility regarding specific standards and implementation mechanisms. According to Li and Zhang 

(2022, p. 282), referencing “domestic labor laws” rather than international standards acknowledges 

China’s emphasis on sovereignty while preventing competitive deregulation that undermines worker 

welfare. This approach allows China to maintain its gradualist approach to international labor standards 

while addressing legitimate concerns regarding regulatory races to the bottom. 

The framework further incorporates explicit exception clauses that specifically include labor 

regulations within public welfare measures exempt from investor claims. Rather than relying on 

general references to “public order” or “essential security,” Chinese BITs should enumerate categories 

of labor regulation exempt from characterization as indirect expropriation or unfair treatment. These 

categories include minimum wage legislation, occupational safety requirements, working time 

regulations, and anti-discrimination measures—core areas where China has legitimate regulatory 

interests both as host and home state (Wu & Martinez, 2023, p. 228). Such specificity reduces 

interpretive uncertainty while preserving the overall integrity of investment protections. 

4.3 Dispute Resolution Innovations 

Regarding dispute resolution, the framework incorporates specialized procedures for labor-related 

investment disputes. These procedures include mandatory consultation periods, expertise requirements 

for arbitrators handling labor matters, and transparency obligations that permit civil society 

participation. According to Zhou and Barnes (2022, p. 290), these procedural safeguards enhance the 

legitimacy of resulting decisions while preserving the integrity of the investment protection regime. 

While stopping short of excluding labor disputes from arbitration entirely (as in the U.S. model), this 

approach acknowledges legitimacy concerns while maintaining the enforceability of investment 

protections. 

 

Table 3. Draft Annex on Non-Arbitrable Labor Disputes 

Category Examples of Excluded Measures Legal Basis in Chinese Law 

Minimum Wage Provincial wage adjustments Labor Law 

Collective Bargaining Union registration requirements Trade Union Law 

Occupational Safety Workplace safety inspections Work Safety Law 

 

Together, these components establish a framework that accommodates China’s dual identity challenges 

while gradually strengthening labor governance in the investment context. Unlike rigid Western models 

that impose immediate high standards, this gradualist approach allows for contextual implementation 

while establishing a trajectory toward more robust protections. As Chen and Pham (2022, p. 97) 

observe, the framework acknowledges China’s distinctive governance traditions while creating space 



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for incremental advancement of labor standards in both inward and outward investment contexts. 

 

5. Implementation Strategy: Tiered Obligations 

5.1 Differentiated Approach by Development Level 

Implementing the gradualist framework requires strategic differentiation based on treaty partners’ 

development levels and China’s relationship dynamics. The proposed tiered obligation system tailors 

labor provisions to specific bilateral contexts while maintaining coherence across China’s BIT network, 

addressing what Zhang and Okonjo (2023, p. 83) term the “development sensitivity” challenge in 

international labor governance. 

For least-developed countries (LDCs), a capacity-building approach emphasizes technical assistance 

over binding obligations. BITs with these partners should include labor rights in preambular language, 

establish non-derogation commitments regarding domestic laws, and create institutional frameworks 

for knowledge transfer and implementation support. According to Ahmed and Zhou (2022, p. 425), 

these agreements should acknowledge resource constraints that may limit immediate compliance with 

international standards, while establishing progressive realization targets that align with development 

trajectories. The proposed China-Malawi BIT exemplifies this approach, focusing on building 

regulatory capacity in Malawi’s mining sector through joint training programs and phased 

implementation of occupational safety standards. 

For middle-income countries, a reciprocity-based approach establishes mutual obligations regarding 

core labor standards. These agreements contain standalone labor clauses with binding commitments 

regarding domestic law enforcement, consultation mechanisms for addressing implementation 

challenges, and transparency requirements that enhance accountability. As Wang (2023, p. 62) 

observes, labor provisions should reference internationally recognized standards as aspirational goals 

while basing compliance assessments on domestic legal frameworks. The 2023 China-Indonesia BIT 

reflects this middle-tier approach, combining firm commitments to enforce existing labor laws with 

dialogue mechanisms for addressing emerging issues such as digital platform work. 

For developed country partners, comprehensive labor provisions reference international standards and 

establish robust enforcement mechanisms. These agreements include binding obligations regarding 

ILO core conventions, third-party monitoring arrangements, and dispute resolution provisions that 

permit labor experts to participate in arbitration proceedings. According to Huang and Meyer (2022, p. 

368), while maintaining China’s policy space for implementing labor standards through its distinctive 

regulatory approaches, these agreements acknowledge the legitimate expectations of developed 

partners regarding minimum labor protections. The anticipated China-EU Comprehensive Agreement 

on Investment represents this advanced approach, balancing China’s sovereignty concerns with 

European expectations regarding labor governance. 

 

 



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5.2 Phased Implementation and Institutional Support 

Across all tiers, implementation follows a phased timeline that allows for institutional learning and 

capacity development. Initial phases focus on transparency and information sharing, establishing 

baseline data regarding labor conditions in investment contexts. Middle phases strengthen consultation 

mechanisms and technical cooperation, building capacity for addressing identified challenges. 

Advanced phases progressively introduce more stringent obligations and enforcement mechanisms, 

calibrated to development contexts and implementation experiences. This progressive approach aligns 

with what Li and Zhang (2022, p. 285) describe as China’s “experimentalist governance” tradition, 

which emphasizes learning through implementation rather than imposing rigid standards from the 

outset. 

 

Table 4. Tiered Obligation Framework 

Tier Countries Key Requirements Enforcement Mechanism 

Basic LDCs (e.g., Nepal) Technical assistance ILO capacity-building programs 

Intermediate Middle-income (e.g., Indonesia) Host-state law compliance Joint mediation panels 

Advanced Developed (e.g., Germany) ILO core conventions Hybrid arbitration tribunals 

 

The tiered obligation system constitutes a distinctive Chinese approach to labor provisions that 

diverges from Western models emphasizing uniform high standards across all agreements. As Wei 

(2021, p. 200) observes, this differentiated approach allows China to maintain flexible positions across 

negotiating contexts while establishing a coherent trajectory toward enhanced labor governance in 

investment relations. Unlike one-size-fits-all Western models, this tiered framework acknowledges the 

diversity of China’s investment relationships while gradually advancing labor standards across its BIT 

network. The approach aligns with China’s emphasis on “mutual respect” and “win-win cooperation” 

in international relations, creating space for contextual implementation while establishing minimum 

protections for workers affected by investment activities. 

 

6. Conclusion 

China’s dual identity as both capital importer and exporter creates distinctive challenges for integrating 

labor provisions into bilateral investment treaties. Traditional BIT models, designed primarily to 

protect foreign investors in developing countries, inadequately address the complexities of China’s 

position within global investment flows. The empirical analysis presented in this article demonstrates 

significant gaps in China’s existing BIT network regarding labor governance, with only 12% of 

agreements containing substantive labor protections. These legislative gaps create vulnerabilities for 

both Chinese regulatory autonomy and the reputation of Chinese overseas investments. 

 



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The gradualist framework proposed in this article offers a pathway for addressing these challenges 

while respecting China’s distinctive governance traditions and development priorities. By combining 

preambular recognition, non-derogation clauses, explicit exception provisions, and specialized dispute 

resolution procedures, this framework creates space for legitimate labor regulation while maintaining 

predictable investment environments. The tiered implementation strategy further tailors these 

approaches to specific bilateral contexts, allowing China to maintain flexible positions across diverse 

negotiating scenarios. 

This approach diverges from Western models that emphasize immediate high standards and punitive 

enforcement mechanisms. Instead, it emphasizes progressive realization, capacity building, and 

contextual implementation—principles that align with China’s approach to international relations more 

broadly. While establishing a trajectory toward enhanced labor governance in investment contexts, this 

framework preserves China’s policy space for implementing standards through its distinctive 

regulatory approaches. 

As China continues expanding its BIT network, particularly through the Belt and Road Initiative, 

integrating appropriate labor provisions becomes increasingly important for both economic stability 

and international legitimacy. The framework outlined in this article offers guidance for navigating these 

complex waters, balancing China’s interests as both rule-taker and rule-maker in the evolving 

landscape of international investment law. By addressing its dual identity challenges through 

thoughtful treaty design, China can establish investment governance models that support sustainable 

development while respecting diverse development contexts and regulatory traditions. 

 

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