China at a Glance

Social Security in China

China's social security is not comprehensive. Elders are expected to be taken care of.

The classic expat assignment is still common among foreigners working in China. However, you may also want to start working in China as a self-made expat without company support, due to the explosive economic growth. Our info on visas, work permits, and social security comes in handy in any case!

Former Social Security System

When obtaining your work permit, you may have received an official “Employment Certificate for Foreigners Issued by the Ministry of Labor and Social Security of the PRC” for your visa application. But don’t let the existence of said Ministry of Labor and Social Security fool you into believing that there is a comprehensive nationwide social security plan of any kind, as the existent one may not fulfill your needs and expectations.

First of all, China’s long tradition of Confucian values stresses the importance of xiào (filial piety) as one of the greatest virtues in the world. In practice, this often means that younger people do not only have to respect their elders, but also assume the responsibility for taking care of their aged parents.

Furthermore, in Communist China, the dān wèi (work unit) functioned both as a method for implementing the hierarchy and policies of the Party and as a way of looking after its members’ most basic needs. Such a dān wèi would create its own housing facilities, nurseries, schools, clinics, etc.

Changes to the Social Security System

However, the dān wèi system has been gradually collapsing since the early 1990s. On the one hand, this means more personal freedom for the Chinese population: No longer do they need to ask their work unit for permission to make a trip, get married, or have a child.

Unfortunately, the social welfare functions of the dān wèi system haven’t all been replaced yet. In the late 1990s, the Chinese government introduced basic pension plans and healthcare coverage for all employees and workers in the cities. Moreover, as a sort of grassroots experiment, the Chinese government has also been trying to strengthen the local shequ (neighborhood community institutions) in the cities, including their social welfare functions.

So far, these plans have only been partially successful. For example, while Chinese retirees do have a constitutional right to an old-age pension, they are often paid by SOE (state-owned enterprises). Many of them now can’t afford financing their former workers’ retirement anymore. The nationwide pension plan providing a basic income to retirees, at least among the urban population, is not quite comparable to other social welfare schemes like the Basic State Pension in the UK or the Deutsche Rentenversicherung in Germany.

Social Security for Expats

As of October 15, 2011, foreign employees working in China also have to pay contributions the social insurance system. This includes health insurance, maternity care, unemployment benefits, accident insurance, and the Chinese pension plan. However, lots of questions concerning the practice of these new laws remain unanswered. For example, foreign residents working in China on a Z visa are usually required the country once they lose their job. Now that they pay for unemployment benefits, are they entitled to remain in China as long as they are eligible for those benefits?

As far social security goes, you will at least get your own pension contributions back if you decide to waive your right to a Chinese state pension upon leaving the country. So it is highly recommended to pay pension contributions out of your own pocket (e.g. as part of a private pension plan during your time in China). If your country has a national social security system, too, you might even have to pay contributions twice – both in China and in your home country. So far, China has only entered into bilateral social security agreements with Germany and South Korea to coordinate the pension programs for people who have lived and worked in both countries.

When it comes to health care, you are now nominally covered for your time as a foreign resident who works in China. However, expats might still prefer to take care of their own health insurance to ensure an adequate coverage. If your employer does not provide you with additional medical insurance, you have to look into either international or Chinese insurance providers. Your premium and treatments will be calculated and provided on an individual basis – which may be bad news for expats with pre-existing conditions.