"This concern of foreign investors is totally unnecessary," Xin told reporters.

"If there is some bias in the application of the law, it would be in favor of foreign investors because local governments have great tolerance for foreign investors in order to attract and retain investment," Xin said. "Even if they (companies) violate labor law, they (officials) are still hesitant to resist them."

The American Chamber of Commerce in China said it had not seen the final version of the law and could not comment. But its chairman, James Zimmerman, issued a statement thanking the government for taking the step of asking for public comment on the proposed law.

The government received more than 190,000 responses from workers and Chinese and foreign companies.

"Our members appreciate the Chinese governments openness in seeking comment from a broad range of stakeholders, including the foreign business community," Zimmerman said.

Labor activists criticized foreign business groups that expressed concern about earlier versions of the law, accusing them of trying to get Beijing to reduce protections for workers.

Passage of the labor law comes as the government is trying to update its legal and political structures to keep pace with a rapidly changing society and market-oriented economic reforms.

The labor law was first proposed in December 2005 amid complaints that employers were mistreating workers by failing to provide written contracts, withholding pay or requiring unpaid overtime.

China is in the throes of a scandal over the enslavement of nearly 1,000 children and adults who were abducted and forced to work in brick kilns. Operators beat and starved workers, often with local government protection.

Under a provision added to the new labor law, officials could be prosecuted for abuses of authority or negligence that leads to "serious harm to the interests of workers," according to the official Xinhua News Agency.

The law "is expected to improve protection of employees' legal rights following the exposure of forced labor scandals in brick kilns in central and north China," Xinhua said.

Also Friday, lawmakers approved a measure to let the government inject US$200 billion into a new company to invest part of China's foreign reserves abroad, creating one of the world's biggest investment funds.

A law approved by the legislature would allow the Finance Ministry to capitalize the planned State Investment Co. by obtaining foreign currency from government reserves in exchange for special bonds.

The government announced plans for the agency in March in an effort to make more profitable use of China's US$1.2 trillion in reserves, which now are kept in U.S. Treasury securities and other safe but low-yielding instruments.

1

2