BEIJING — China enacted a labor law last week meant to improve workers' rights amid complaints about unpaid wages and other abuses, at the same time trying to assure wary foreign investors that they will not be hurt by the new standards.

The law is the most significant change in Chinese labor law in more than a decade. Its approval followed 18 months of deliberation, public debate and complaints by activists that foreign business groups were trying to erode workers' rights. It takes effect Jan. 1.

The legislation sets standards for labor contracts, use of temporary workers, layoffs and other employment conditions in a rapidly changing economy, according to a report issued by the legislature. The text of the law has not been released.

"The law is meant to protect workers and their rights," Xin Chunying, deputy chairwoman of the legislature's Law Committee, said at a news conference.

Foreign business groups expressed alarm at an early version of the law that sharply limited use of temporary workers and required approval from China's state-sanctioned unions for layoffs or firing workers. Companies argued that overly restrictive rules would raise the cost of business.

The report Friday made no reference to union approval of layoffs, saying only that a company must inform its union of planned reductions and listen to its opinion.

But the law retains provisions limiting probationary periods and requiring severance pay for more workers, according to the report issued by the NPC.

"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 rare step of asking for public comment on the proposed law.

The government received more than 190,000 responses from workers, Chinese citizens 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 investors that expressed concern about earlier versions of the law, accusing them of trying to get Beijing to reduce protections for workers.

Most complaints are directed at Chinese employers or smaller companies run by foreign entrepreneurs. Major Western companies generally offer the best pay and working conditions. But state media are quick to publicize accusations of misconduct against well-known American and other Western employers.

Passage of the law comes as the communist government tries to update its legal and political structures to keep pace with market-oriented economic reforms.

The labor law was first proposed in December 2005 amid complaints that employers mistreated workers by failing to provide contracts, withholding pay or not paying 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 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 $200 billion into a new company to invest part of China's foreign reserves abroad, creating one of the world's biggest investment funds.

The Finance Ministry will capitalize the planned State Investment Co. by obtaining foreign currency from government reserves in exchange for bonds.

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