This chapter assesses the Chinese state’s drive for economic growth and response to labor activism through legal reforms and labor legislation. In response to labor activism through state-sanctioned channels and outside of existing legal pathways, government officials have broadened employment and workplace rights in an attempt to preserve “social stability.” The conception of worker citizenship enshrined in the 1995 Labor Law is intended to overcome the rural/urban divide associated with differential rural and urban household registration, even when inequalities in terms of wage and welfare entitlement between urban employees and rural migrants remain. With the legalization and institutionalization of a national contract labor system in the mid-1990s and early 2000s, the socialist “iron rice bowl” tenure of the urban state and collective sectors was largely smashed. Re-employment of laid-off workers through agencies has opened new sources of grievances and terrains of state–labor–capital contests. In January 2008 the government implemented the Labor Contract Law to strengthen rights protection, including the job security of subcontracted workers. The Chinese government’s relentless pursuit of greater labor mobility and market competitiveness, however, has continued to conflict with workers’ struggles for individual and collective rights. The corporate drive to assure labor flexibility and higher profits has further weakened the law. Through subcontracting and outsourcing, employers have gained access to low-cost contingent laborers, engendering injustice and illegality. Labor challenges will inevitably confront a tactical mix of reconciliation and repression on all fronts, resulting in uncertainty and instability.