FILE -BYD vehicles are for sale in a dealership in Camacari, Bahia state, Brazil, Friday, March 7, 2025. (AP Photo/Eraldo Peres, File) Beijing can control much of what happens inside China. What happens when Chinese companies go abroad is another matter.
This month, Hungarian labor inspectors sanctioned three contractors involved in building BYD’s electric vehicle factory in Szeged. In Brazil, a court ordered contractors at BYD’s Brazilian factory to pay more than $7 million in damages, half of which was for compensation for affected workers.
This month, China’s State Council issued its Regulations on Outbound Investment, set to take effect July 1. Much of the outside commentary has focused on national security and investment review. But equally notable is something else: For the first time, a state council-level outbound investment regulatory framework explicitly requires enterprises to protect workers’ rights and comply with the laws of host countries.
This is no coincidence. As Chinese companies expand overseas, they operate in an information environment defined by independent trade unions, free media, regulatory agencies and civil society organizations that are beyond Beijing’s control.
Over the last several years, problems with labor conditions at Chinese overseas projects have appeared with increasing frequency in international media. The Wall Street Journal, Washington Post, Financial Times and Reuters have all reported on wage theft, forced labor allegations, workplace injuries and labor rights disputes at Chinese-run operations abroad.
More importantly, this information travels back to China. When Brazilian authorities rescued more than 160 workers — most of them Chinese nationals — from a BYD construction site in Bahia state in 2024, local labor inspectors described their working conditions as analogous to slavery.
The incident quickly became a trending topic on Chinese social media, prompting a pointed question from many users: Why do practices that Chinese enterprises treat as routine become classified as forced labor the moment they cross China’s borders?
The Chinese government has long used nationalist narratives to reinforce public identification with China’s rise. But when Chinese workers are subjected to labor abuses at Chinese-run overseas operations, those incidents attract greater public attention and are harder to attribute to foreign interference or geopolitical motives.
International regulatory and judicial systems are simultaneously raising the cost of non-compliance. From U.S. import restrictions linked to labor-abuse allegations at Linglong Tire’s Serbian operations, to a Northern Mariana Islands court ordering Imperial Pacific International to pay $5.4 million in compensation to Chinese workers, to the European Union’s Forced Labor Regulation nearing implementation in 2027, labor issues are increasingly moving beyond the workplace and into the realms of trade policy, legal liability and market access.
Following the BYD case in Hungary, members of the European Parliament have raised questions about whether existing EU laws and enforcement mechanisms are sufficient to oversee third-country enterprises operating within the union. The debate over Chinese companies’ overseas labor practices is moving from construction sites into European policymaking chambers.
The significance of these cases lies beyond the size of the fines. It is the new reality they signal. Overseas labor violations are generating costs that are increasingly concrete and quantifiable, while continuously undermining the Chinese government’s positive narrative about Chinese enterprises’ global expansion.
Beijing has taken notice. In 2025, the China Enterprise Confederation launched the Labour Compliance Guide for Chinese Enterprises Operating Abroad with the support of the International Labor Organization. The Ministry of Commerce subsequently issued guidelines for Chinese companies working overseas. This year, a draft industry standard for the mining sector began incorporating prohibitions on forced labor and human rights due diligence requirements.
These measures do not mean the problems have been solved. The new standards still lack clear complaint mechanisms, oversight systems and penalty procedures, meaning that their practical effects will continue to depend on host-country enforcement, importing-country regulation and sustained external monitoring. What they do indicate is that overseas labor issues have begun to shape China’s outbound investment governance.
For Washington, this presents an opportunity. Labor rights enforcement has evolved from a moral argument into a source of economic leverage. By linking market access to labor compliance, the U.S. and its allies can impose costs that Chinese firms cannot easily ignore. They can influence corporate behavior in ways that traditional diplomatic pressure often cannot.
Beijing can manage dissent at home. It cannot as easily manage the regulatory environments its companies must navigate in Hungary, Brazil or Mexico.
The international community need not choose between engagement and confrontation. But it must stop pretending that goodwill alone will move the needle. Overseas labor conditions are becoming a genuine constraint on Chinese outbound investment — and the window to shape that dynamic, before norms harden and supply chains deepen, is narrowing.
Li Qiang is the founder and executive director of China Labor Watch, and a human rights advocate with over 30 years of experience investigating global supply chains.
Add as preferred source on Google Tags Beijing Brazilian authorities BYD China Labor Watch China's State Council european parliament European Union (EU) Hungarian labor inspectors International Labor OrganizationCopyright 2026 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Comments: Link copiedMore Congress Blog - Labor News
See All
Congress Blog - Labor When it comes to retirement, a year can change everything by Dana Goldman and Anup Malani, opinion contributors 1 week ago Congress Blog - Labor / 1 week ago 
