Font Size:
+-
A Foreigner’s Guide to the New (Mandatory) Social Insurance System
Oct 09, 2011By Christopher Myer, eChinacities.comIn June of 2011, the draft of the "Provisional Measures for Foreigners Working in China regarding Participation in the Social Insurance Scheme" was publicly released, stating that starting from July 1st, foreigners would have to pay into the Chinese social security system, and consequently sparked worries about what that exactly meant and whether or not we could opt out of it. Just a few months later, on September 6th, 2011, despite our hopes that it would simply disappear, the China’s Ministry of Human Resources and Social Security issued the "Final Provisional Measures" which will take effect starting on October 15th, 2011. While the "Final Provisional Measures" cleared up a few of the initial ambiguities about how exactly foreigners would pay into China’s social insurance system, many foreigners are still very sceptical about the actual benefits they can derive from contributing, and since this final draft still leaves many questions unanswered, it does little to quell anyone’s resentment. Given the complexity of the situation, and though it remains to be seen how this policy will take shape or form, it is important that foreigners working in China understand the "who, what, when, why etc." of what is about to happen.
.jpg)
Photo: photophoto.cn, 3lian
What is it?
The "Provisional Measures for Foreigners Working in China regarding Participation in the Social Insurance Scheme", "Social Insurance Law", or simply "The Law" for short, mandates that all people employed in China have the same right to enjoy China’s social insurance system, which consists of five types of insurance:
1) Basic pension
2) Basic medical
3) Unemployment
4) Maternity
5) Work-related injury
Who does it affect?
Chances are, if you are reading this article and are not a full-time student (or working illegally), this policy will affect you. According to "The Law", all foreigners employed by either Chinese or overseas-funded businesses, foundations, organisations, social groups etc., who have worked in China for longer than six months must participate in the social insurance system, i.e., pretty much all foreigners working in China (in the current version of "The Law", it remains unclear whether or not this includes Hong Kong, Macau and Taiwan residents who work in mainland China). Those hoping for some sort of "opt-out" option are also out of luck, as is stated numerous times through the various legislation and press releases… this is mandatory. Having an international insurance will not get you a ticket to bypass "The Law". The only chance you have at opting-out is if you are a foreign employee from one of the nations which has entered into a social insurance treaty with China, which is currently a very short list: Germany and South Korea. Even then, only under certain circumstances will you be given permission to opt-out.
When does it start?
When the first draft of "The Law" was released in June, it stated that starting July 1st, foreigners would begin paying into the social insurance system. After a few months of official silence on the matter, it was announced on September 6th that the "The Law would be taking effect starting October 15th." Also currently unclear is whether or not foreigners will owe back-pay for July, August and September.
How much is this going to cost?
Monthly social insurance fees will be paid by both the foreign employee and by the employer in accordance with the regulations set by "The Law". The fee will vary depending on the average salary in the city where you work. As such, expect to pay more if you live in one of the Tier 1 cities. For example, foreigners living in Beijing, Shanghai and Guangzhou must all pay about 11 percent of the first 12,000 RMB of their monthly salaries. Oddly, earnings above that amount are not taxed, which means that any foreigner living in Beijing, regardless of whether they pull in 10,000 RMB per month or 100,000 RMB per month, are all going to pay about 200 USD for social insurance (low-level teachers are no doubt pretty annoyed with this). In addition to this, employers are required to contribute even more to the social insurance system – double or triple the amount (up to three times the average salary in the city):
Beijing = about 32 percent of the foreigner’s monthly salary
Shanghai = 37 percent of the foreigner’s monthly salary
Guangzhou = about 24 percent of the foreigner’s monthly salary
Why?
And now for the big question that is on every foreigner’s mind: Why? The official line is that this policy will help foreign workers enjoy the same social security benefits in China as Chinese nationals do! While for many foreigners who already had insurance, this seems unnecessary, but this is exciting news for foreigners employed in China who currently have no insurance policy. But what about the rest of us? Expat criticisms to this plan have ranged from rationally upset: this plan punishes teachers and other "low wage" foreign employees in China while turning a blind eye to the millionaire businessmen and consultants; to overtly derogatory: the government is tired of foreigners working in China stealing all of the good jobs and earning a king’s ransom.
Although it is unlikely to be reported as such by the Chinese media, many people believe that the underlying intention of the new policy is to use this influx of cash to alleviate some of the pressure on China’s social safety net that is likely to occur in the near future as more and more Chinese reach the age of retirement. The numbers behind "The Law" seem to support this notion: according to one estimate, the new regulations mandating foreigners contribute to the social insurance system are expected to raise as much as 1.5 billion USD a year. As a foreigner working in China, I am obviously not thrilled about this idea…but I’ll be damned if that isn’t a brilliantly masterminded scheme!
Other Problems
So let's hypothetically say that the goal of this policy was not to use foreigners' money to pay for China’s soon-to-be massive wave of retirees… does the social insurance system actually benefit foreigners? Experts who have already studied "The Law" in depth seem pretty concerned about its ambiguities, vagueness and inability to provide details: the specifics of how to actually reclaim a pension after leaving the country, if it is 100 percent reclaimable, whether or not it is taxed and other questions remain unclear; how and where foreigners can use their medical insurance in China, i.e. in the international sections of Chinese hospitals or in international clinics, is also unknown; how foreigners can take advantage of the unemployment insurance, if as is often the case, visas do not allow them to live in China long-term without employment etc. The overarching concern however is what "The Law" will do to the job market prospects for foreigners in China. Besides the irritation that every foreigner employee in China just took a mandatory pay-cut of about 1,000 RMB per month, will employers still be willing to hire foreigners if they have to pay an additional social insurance contribution fee of 3,000-4,000 RMB a month? Time will tell.
Related links
Are Foreigners in China Overpaid?
2010 Expatriate Income Tax Planning in China
How To: Avoid Employment Scams in China
- 25
- 0
The problem is, Who wants to go to a Chinese hospital? Has anybody noticed how bad the medical care is? How dirty the hospitals are? Who cares about the pension or unemployment? Its not like any foreigner will ever be able to claim that without a Chinese "greencard". And those are just about impossible to get, even if you are married to a local!
- 17
- 0
Yeahhh righttt!!... We're not fools, this will surely benefit the pockets of government officials more than anything else!! First try to make our living experience here in China more comfortable, let us buy train tickets easily from the Automated Ticket Machines, put more english signs everywhere, let us check-in into any hotel, require some of your officials to speak some decent english instead of asking for 'gifts', damn, make us feel included into this society.....then we will gladly consider paying you insurance!!
- 12
- 0
I don't want to be included. I want to spend my couple years here and go home unnoticed.
- 4
- 4
It seems like your idea of making foreigners feel included is to speak to them in English and put up English signs.
In actual fact, when Chinese people insist on speaking to me in English even though I address them in Chinese, that makes me feel very un-included.
- 1
- 0
haha....I wish the same man but it seems it won't be possible, so we'll have to demand few things if they want us to pay insurance.
- 3
- 3
Jixiang, are you here trying to brag about your ability to speak and/or read chinese?? If you can't read chinese bro, those english signs would certainly be useful to you and most of us foreigners.
- 0
- 0
It was told that no benefits payed by a foreigner would be allowed to be collected until 15 years of work in china. Is this True ?
- 0
- 0
retirement benefits- you must pay into for 15 years before you can collect
medical benefits- starts immedately however it is based on 30yuan/mth (if you work and pay into the benefit system, after 1 year, you can get 360yuan back from the government)
- 1
- 6
I think it is a good step taken by the Chinese government towards a better social system. Unfortunately it is a bit disapointing that the low income are under pressure by this measure and it will increase the pressure for companies. But for sure this measure will increase the number of people working illegaly with a business visa.
- 3
- 0
Its just one of ways to forcebly demand money in the name of Law. I doubt till today if any foreigner used any hospitals here since can be treated only at few designated hospitals which are very costly. So firstly for foriegners this is just forced charity (11% is it joke?) and secondly for employers will think twice before hiring foriegners since they are also equally affected by this.
- 1
- 6
Chinese excluded teachers from small minority countries to teach their children,thereby being the first country to bring in exclusion to project open discrimination.They have now devised a means to suck cheap cash from the so-called native speakers.After cutting 1000,1500 from them each month,most will be left with little to show as salary.Chinese see all foreigners in their country as Americans.Let those Americans who have run their own country to its knees with credit cards,pay the new tax here,since they are the ones that are given all jobs!
- 0
- 5
....hey turd, you can kiss my American ass and you better pray never to meet me...YOU will certainly PAY !
- 1
- 0
HAhahhhh!@!! the guy got you good with logic, and you got angry Mark D.. I have 1 for you..
LOOOOOOSSSSSSEEEEEERRRRRR!!!!!
learn to loose a battle biatch!
- 8
- 2
I am one American who sees no benefits into paying into the Chinese infrastructure..I already do so voluntarily....It is the same corrupt gouging of the Ameican middle class, (which is the colllege educated crowd that meets the criteria to work in China..Not to mention also the Australian and Britsih middle class), that NWA's are trying to loot America with. It is racist against the Anglo Saxon race. I have been working here as a teacher..working my ass off, for over 2 years....and have seen no integration of my person whatsoever...If any it has been marginal and delegated by excuses and coy derision...That's the sugar-coating here, "coy derision"....If they want to steal anymore from US benevolence, labor and services to support their crooked behaviour, I would suggest it is time that the American Middle class in China begin exporting its own criminal elements, even if it means the military, into China, disguised as Robin Hoods, to show the Chinese what affect such larceny brings...as they try to cover their asses with their own. Engage a "Shut-Door policy"...Time to let the Chinese HAVE-NOTS steal from their own HAVES, instead of painting a foreign face on their gluttony, wounded egos, bloated libidos and smarm.
- 13
- 11
Dude, it's you Americans who have supported wars and reckless empire building throughout the world. The blowback from all of that falls on your own feet for not working to overthrow your own corrupt corporatist state a long time ago. The coming collapse of the U.S. dollar is directed related to the ignorance of the American population and their slavish obedience to the warfare/wellfare state that IS the vortex sucking the worlds wealth down the drain!!!
- 9
- 1
You are right. Us "foreigners" here in China don't owe China or Chinese people anything. Another racist example of Chinese entitlement mentality.
- 4
- 10
Dude, go back to your brainwash and blowjobs..because yer head doesn't seem to crawl beyond life before about the mid nineties...It was the US who volunteered to help the Chinese be liberated from Japan in WWII....It was then the US who decided to show an inferior aggressor MERCY by not nuking them in the Korean War for INTERVENING and willfully killing American Soldiers...And of coursse they were starving when American business once again accepted their invintations to do business here in the 1970's....Though, what did that get us? How much Chinese investment went into Vietnam?...or Cambodian regimes?.....As far as the Korean war is concerned, a lot of scholars like to make the US look small by saying they were scared of the Soviets but China damn well knew the Soviets weren't going to do anything more than loot them if the US decided to squash the Chinese...So this is the f'n rewards the US gets for showing benevolence to fellow human beings? I seriously ask you, where does China get off telling the US middle class it doesn't DESERVE it's rewards after working their asses off under the most regulations on this planet...just so they can buy worthless crap to put food on little Zhou Min's plate...but now it's so Zhou Min can drive a Mercedes?...and be hailed by his people as as a clever "Revolutionary"?..Screw you, "dude"..Bury you in the same pit...If the US dollar collapses, it will because too many foreign subversives have gained entrance into the system...ONLY REASON...If the US has start all over again, so be it..But it is the most progressive and righteous minded idea on this planet.,,,The only one trying to dismantle the dangers of collectivism and thuggery like racism and nationalism and facists...that is where it's genius lies. Just mess with it, bub..Dare you. The prevailing wisdom onthis planet is not, "Trick people long enough and they will believe you"..It is "Trick people long enough and they will BEAT you"....and how God isn't on anyone's side but its that goodness that might look the other way to keep things in balance....It's weird how some people can be on this planet for so long and still not get it.
- 15
- 0
Firstly, I hope you understand that when you say "Americans" your talking about several million Chinese people too(and every other nationality). If the millions of Chinese in America had a problem with what America has been doing I sure never heard anything about it. They could vote and protest against anything that the American government has done but they didn't few Americans have until recently.
Second, when you say "Americans supported war". What you mean is the American government supported wars. Regardless of what you may think, Americans have very little say in what happens in our government. The American government is run by the "Elite" in America. The top 10% of the country financially, makes all the decisions. G.W. Bush lost two elections and was still made president twice. During the recession the government gave even more money to the bank and wall street owners of the country. The federal reserve (private bank) which controls all American money is mostly owned by foreign groups. The American people want universal health care, cheap education, jobs etc, but our government doesn't listen. They do what ever they want.
Lastly, America owes 14 trillion in debt. Who do they owe the most to? China? NO!!!!!!!! 40% of that debt is to the American people! Stolen from our social security, pension and insurance funds by our own government. 8% of the debt is to China. The movement to stop all this has started in America and I hope it works. Though I doubt that the American government will allow any drastic changes to their money making machine.
- 1
- 0
Dont forget, that is why the French hate you so much! Thanks to YOU the French still speak French and not German. TWICE!!!!
- 6
- 1
If the Federal reserve is private is not important. It is still backed up congress and controlled through monopoly use of force (ie. the law)
It's still part of the government in the same way corporations are given their "personhood" through government decree. I agree that Americans have little control over their government through the voting booth. It's time for mass disobedience, it's time to stop paying taxes, it's time to say NO to wars....
In the mean time, if you haven't got your own house in check. Stop blaming China. The Chinese people also lack control over decisions being made at the top. At least they know it though! Most Americans vote and think they've actually got a say when they don't!
- 2
- 1
You better go back to logic class. I suppose your crappy American education is implicated here. Your use of CAPS on the word INTERVENING is pretty ironic considering those Americans that were being killed were also INTERVENING in a country that is not their own.
Typical American logic.
Blind as they get when it comes to double-think!
- 0
- 2
An "American" spelling behavior as behaviour...
The game is afoot!
- 3
- 0
Brent, You are absolutely correct. I too am American and deeply ashamed of the situation that is leading to the collapse of freedom all over the world. However I must say that it is just a contiuam of the policies of the European nations that go back 500 years or more. We should have a probably could have stopped it had we just opened our minds early enough and not been so stupidly independent of each other.
- 2
- 13
Haha...man are you serious? Your country's lower and middle class go off to the countries of impoverished people that own nothing and kill them...all in the bullshit name of "American freedom and democracy", when actually, any idiot can see that it's all about America's rich getting their greasy hands on those resources and/or controlling those nation's economies. Buddy, with all the prosperity that your country has enjoyed over a long period of time, your people think it's right to go into the country's of other people who have NOTHING and I mean NOTHING compared to what your country would have offered you...and kill them in the name of America. That's just low, unappreciative and disrespectful. It's all bulllshit what you said...you are a typical American sucker. Get off your high horse Mr USA. Your country's international record over the last 50 years stinks! Go and enlist in your country's military and come home in a body bag cause that's the best thing you can do for America. Until that day be sure to sing God Bless America at least 3 times before bed every night. I'm sure you believe every word in the song too. Fool.
BACK
