Soon after reclaiming the presidency in 2008 in the second democratic turnover of power in Taiwan, the historically anti-labor Kuomintang (KMT) enacted sweeping pro-labor reforms to the legal framework governing employment relations on the island. The revisions entered into law not only at a time when the former authoritarian party controlled both the executive and legislative bodies, but also in an international setting marked by an onslaught of anti-labor legislation and austerity measures. Adopting a broadly Polanyian theoretical framework, this study illuminates historical processes of social resistance and political change underlying the seemingly paradoxical 2011 reforms. It argues that the former authoritarian party implemented the reforms in order to fragment organized opposition to cross-Strait economic liberalization. The pro-labor reforms therefore served to expand and deepen an emerging cross-Strait neoliberal policy regime while sidelining concerns over the potential socio-political and economic implications of free market integration with China.