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The Labor Contract Law of the People’s Republic of China, adopted at the 28th Session of the Standing Committee of the 10th National People’s Congress of the People’s Republic of China on June 29, 2007, is hereby promulgated and shall come into effect on January 1, 2008. This law was enacted and formulated in order to improve the labor contract system, specify the rights and obligations of both parties to the labor contracts, protect the legitimate rights and interests of the workers, and construct and develop a harmonious and steady employment relationship. The enactment process of the labor contract law in the PRC and it’s political and economic background were studied in this paper, with critical attention paid to understanding that the Chinese labor contract law appeared through the severe debate and struggle among the interested parties (i.e., management, labor, trade unions, foreign investors, government, etc.). This paper argues that the legislative direction of the labor contract law in the PRC was already determined by the change of the policy of the Chinese Communist Party when the first draft was established. The Chinese government collected public opinion as a way to check the response of the people, and to prevent criticism and confusion in advance which might occur after enacting the law. In this way, the government produced an appropriate legislation that corresponded with its policy.The government had collected various public opinion in the process of enacting the labor contract law. Interested parties such as management, labor, trade unions, foreign investors and government offices gave various opinions. In particular, inter alia, scholars had played a very important role prior to the law’s enactment. For one, the debate between Professor Chang Kai (representing labor) and Professor Dong Bao-hua (representing management) had attracted considerable attention. The positive function of labor law scholars in the legislation process of enacting the Chinese labor contract law provides its own lessons. Their positive participation in legislation process gave Chinese society a chance to newly understand the labor law, labor situation, legislation purpose, legal system, and the role of the state. This legislation process demonstrates how scholars can play a positive role in helping the state enact appropriate laws during a time of enormous social transformation.