This paper provides a critical account of the various roles that labour-law regulation has played in China’s transition to a market-oriented economy. The analysis aims to contribute new insights to an ongoing debate on the relationship between economic development and legal rules and institutions in China. Discussions of social and labour rights have been on the periphery of a debate that has focused on property and contract rights (the so-called “Rights Hypothesis”). While numerous scholars have sought to debunk the explanatory power of the “Rights Hypothesis” in the case of China, I put forward an alternative “Social Rights Hypothesis.” My proposed hypothesis seeks to explain how labour-law rules and institutions have co-evolved with the emergence of a labour market in China’s economic development. Specifically, labour law has played not only a market-constituting role, but also market-corrective and market-limiting functions.
