After the 1980s, the governments of China and Taiwan, across the Taiwan Strait, promoted reform, a more transparent policy, and democratization, in order to compete in a globalizing world. In the 1980s, China had begun to emphasize economic reform and Taiwan had begun to emphasize political reform. Both ignored reform on the social dimension. Employment relations were subordinated to the priorities of economic and political reform. In the 1990s, Taiwan’s democratic transformation created a pluralistic society and gave the trade unions room to take root. However, free collective bargaining has not been realized due to the marginalizing of both employer organizations and trade unions. In China, the state decentralized the business sector, allowing unilateral employer activities in employment relations. Statutory rules were enacted after the 1994 labor law. This article compares the changes that have taken place in the industrial relations systems in Taiwan and China, and assesses the roles of the two governments in the employment relations area as each responded to globalization.