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  5. Merging Business and Human Rights in China: Still A Long Way to Go

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FOCUS June 2014 Volume Vol. 76

Merging Business and Human Rights in China: Still A Long Way to Go

Huang Zhong and Cheng Qian

Respect for human rights by Chinese business companies is a new concept that has to be incorporated into the Chinese corporate culture amidst the continuing high- speed growth of Chinese industries. Ironically, the image of Chinese corporate irresponsibility may become the main driver for Chinese business to link its operations to human rights.

Legal Policy

The 2004 amendments to the Constitution of the People’s Republic of China include guarantees regarding private property1 and human rights. Article 33 of the chapter on fundamental rights and duties of the Constitution provides: “The state respects and guarantees human rights.”2
The Chinese government sees these new constitutional provisions as a step towards Chinese democracy and a sign of recognition by the Communist Party of China (CPC) of the need for change in view of the rise of upper and middle classes, who want protection of their property.
However, constitutional rights in China are not bases for legal action since constitutional court and judicial review mechanism do not yet exist. This situation is deemed to be the greatest defect of the Chinese legal system, showing gap between legal rhetoric and judicial practice. Nevertheless, the constitutional provisions on private property and human rights stipulate that the Chinese government shall endeavor to respect and promote the property and human rights of the individual. They form a strong constitutional basis supporting the development of link between business and human rights.
The Chinese government during the 2005 National People’s Congress, adopted the “Socialist Harmonious Society” approach that officially changed China's focus from economic growth to overall societal balance and harmony. The idea is clearly visible in banners all over China.3 As a result, companies were pressured to consider corporate social responsibility in order to fulfill the new government approach.
In 2012, the Chinese government adopted its second National Human Rights Action Plan (2012-2015) and explained that

[Th]e formulation of the National Human Rights Action Plan is an important measure taken by the Chinese government to ensure the implementation of the constitutional principle of respecting and safeguarding human rights. It is of great significance to promoting scientific development and social harmony, and to achieving the great objective of building a moderately prosperous society in an all- round way.4

The National Human Rights Action Plan has become a basis for assessing the work being done by the Chinese government on human rights.

Corporate Social Responsibility

In January 2008, the State- Owned Assets Supervision and Administration Commission of the State Council (SASAC) published the Guide Opinion on Social Responsibility Implementation for State-owned Enterprises Controlled by the Central Government (Guide Opinion).5 The Guide Opinion is regarded as an important legal document since it explicitly expresses its purpose of comprehensively implementing the “spirit of the 17th CPC National Congress and the Scientific Outlook on Development, and [giving] impetus to state-owned enterprises (SOEs) directly under the central government (CSOEs) to earnestly fulfill corporate social responsibilities, so as to realize coordinated and sustainable development of enterprises, society and environment in all respects.”6
SASAC’s explanation on the background of the Guide Opinion clearly shows that the Guide Opinion is meant to meet the new global trend, namely, the proliferation of corporate social responsibility (CSR) initiatives including the United Nations (UN) Global Compact, ISO 26000, and multinational companies' codes of conduct and sustainability report. However, as the spokesman of the SASAC stated, the CSR principles for the CSOEs should not only be in line with the international trend but also be consistent with the national and organizational reality in China.7

Grievance Mechanisms

China has laws on judicial grievance mechanisms. The Criminal Procedure Law aims to “... protect the citizen’s personal rights; their property rights, democratic rights and other rights...”
However, the court system in China has various problems that hinder ordinary people’s access to justice. Financial and human resources supporting the operation of the courts are not evenly available in urban and rural areas; with the urban areas receiving more resources. The court system also suffers from several problems that required the CPC Central Committee to issue a communiqué to overhaul the judicial system in order to “uphold the constitution and laws, deepen reforms in administrative law enforcement and ensure independence and fairness in prosecuting bodies and courts, as well as to improve judicial practice and protection of human rights.”8
Since the court system could not successfully resolve the rising number of conflicts and meet public expectation, people with grievances may seek justice through other means, such as filing petitions to government authorities (Xinfang) in Beijing. In practice, petitions that bypass local authorities have been viewed as a source of unrest. Regulations issued in 2005 attempted to compel local officials to improve their system of assisting petitioners and thus reduce the number of petitioners seeking help in the capital.
While the Labor Law, the Law on Employment Contracts, the administrative regulations enacted by the State Council, the ministerial rules, and the judicial explanations of the Supreme People's Court have contributed to the protection of labor rights, the real situation in the factories regarding labor protection is still grim. Workers are normally not properly informed about the details of the labor contract before signing, which can cause the invalidation of the contract. In many cases, workers have labor contract with labor dispatch agencies. As a result, the factories may arbitrarily refuse to accept the workers, leading to loss of job security.9  Considering that the All China Federation of Trade Unions (ACFTU) does not function as the legitimate agency representing all workers, especially rural migrant workers, many workers face serious obstacles in settling their grievances.

Response to International Initiatives

Since its launch in 2002, the Global Compact Local Network China has continuously been developing and expanding. In recent years, a large number of both state-owned and private companies have joined the initiative; so far, the total number of Chinese participants of the UN Global Compact has been over three hundred companies.
Transnational corporations are typically under pressure from their stakeholders to adopt specific CSR principles and policies. As a result, incorporating CSR into supplier sourcing decisions are practices that would diffuse CSR policies throughout Chinese companies. For example, major automotive manufacturers for years have required Chinese suppliers to have ISO 14001 environmental management system standards. A new ISO business standard, ISO 26000, introduced in 2010, provides guidelines for social responsibility.

Issues Involving Companies

Chinese companies have been involved in several issues affecting the environment, health of people in the community, workers and consumers. Industrial pollution caused the daily pollution index in major cities to rise at dangerous level, and led to the rise of “cancer villages” where the number of residents withcancer is disproportionately high. Among the labor issues, the lack of independent labor union is a major concern. For consumers, the recent spate of food safety issues (tainted milk for example) have involved big companies and raised alarm on the safety of Chinese goods in general.

Case Study

PetroChina Company Limited (PetroChina) is a CSOE that has become one of the leading oil companies in the world. The controlling shareholder of the PetroChina is the state-owned enterprise China National Petroleum Company (CNPC).10  PetroChina has expanded its business in many countries and regions of the world, in cooperation with other leading energy companies.
PetroChina has no specific department dealing with human rights affairs; however it has human rights initiatives, and tries to address human rights issues under its “sustainable development,” “people oriented approach,” and corporate social responsibility programs. It established the Health, Safety and Environment Committee under its Board of Directors to make policies related to environmental rights, labor rights, and indigenous people’s rights.
Although PetroChina does not operate in Sudan, it has been accused of complicity with the human rights violations committed by the Sudanese government against the people in southern Sudan during the so-called Darfur crisis. Its major shareholder, CNPC, has been implementing oil projects in southern Sudan for many years including during the time of the Darfur crisis.
NGOs filed in 2008 a formal complaint with the UN Global Compact Board against PetroChina for the alleged acts of CNPC that violate human rights in Sudan. The UN Global Compact Office responded that since CNPC is not a signatory, it could not be subject to the measures available under the terms of the UN Global Compact. The Vice-Chair of the UN Global Compact also states that “companies have to make their own decisions based on whether they feel able to operate in line with the principle they subscribe to as well as any advice or sanction from their home government and of course whether there are United Nations sanctions involved.”11
This case opens a debate on the extent of liability of a company for the human rights abuse, or complicity in human rights violations, attributed to another company which is its major shareholder. The complaint of the NGOs is based on the premise that PetroChina has close financial engagement with its major shareholder (CNPC) in the Sudan oil projects and thus should be made responsible for the human rights violations committed by the Sudanese government, a partner in the oil projects.
Additionally, the case provided an opportunity for the UN Global Compact to explain how its Integrity Measures system works.

Final Note

It is necessary for the companies to develop their own internal systems based on human rights-based approach to access to justice principles in order to uphold the objectives set by both the Chinese government and the international community on the proper role of business in serving justice.

Huang Zhong is the Program Manager of the Wuhan University Public Interest andDevelopment Law Institute (PIDLI), while Cheng Qian  is a PhD candidate at Wuhan University School of Law, and a Greater China Researcher at Business and Human Rights Resource Centre.

For further information, please contact: Huang Zhong, Wuhan University Public Interest and Development Law Institute (PIDLI),Wuhan University School of Law, Mailbox 214, Wuhan, Hubei 430072 China; ph (86 27) 6875 3729; fax (86 27) 6875 3624; e-mail:;

∗ This article is an excerpt of the report of the same title prepared by the authors included in Bridging Human Rights Principles and Business Realities in Northeast Asia (Kuala Lumpur/Osaka: HURIGHTS OSAKA and SIRD, 2014).


1. Article 13 of the Constitution states: “The lawful private property of citizens is inviolable.”
2. The full text of the Constitution is available at
3. "China's Party Leadership Declares New Priority: 'Harmonious Society,'" The
Washington Post, 12 October 2006, available at
4. The National Human Rights Action Plan of China (2012-2015), 2012-06/ 11/c_131645029.htm.
5. SASAC, Guanyu Zhongyang Qiye Lvxing Shehui zeren de Zhidao Yijian [The Guide Opinion on Social Responsibility Implementation for State-owned Enterprises Controlled by the Central Government], available at 180/ni 566/ n259760/n264851/3621925.html.
6. Ibid.
7. See SASAC, Press Release, Q&A between the SASAC Official and News Reporters, available at n259760/n264866/3621552.html, last
visited 4 March 2014.
8. Xinhua, “China to overhaul judicial system: communiqué,” 12 November 2013 , See also Wong Kai Shing, CHINA: Reforming China’s Judiciary,, last visited 11 April 2014.
9. Tragedies of Globalization: The Truth Behind Electronics Sweat shops, see, last visited 28 April 2014.
10. Annual Report 2011, page 14.
11. “UN Global Compact Office responds to NGO Letter,” United Nations Global Compact, January 2009, news _ archi ves/2009_01_12b.html.