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Guide 2024
Find everything you need for confident contracting and working in China: labour law, taxation, employment compliance, payroll, benefits, and more.
China
The People’s Republic of China is a country in East Asia, and is the most populated country in the world. It is dynamic, vibrant, and boasts a wide variety of cultures, religion and geography; from bustling metropolises to stunning rural landscapes.
The workplace culture can be initially daunting for foreigners due to a lot of overtime, little annual leave and differing holidays, however, there is much less bureaucracy than in the West. China is also one of the safest countries due to a high police and CCTV presence, and local life is quite cheap compared to other places.
- Capital: Beijing
- Spoken Languages: Mandarin (Yue (Cantonese), Xiang (Hunanese) as official minorities)
- Currency: Chinese Yuan (CNY) – Renminbi (RMB) (Interchangeable)
- Minimum monthly wage: CNY 1,450 – 2,690 (Gross)
Entry Visa
Foreign citizens must obtain a Z-Class Visa (valid for 30 days) in order to first enter the country; the individual must first obtain a Foreigner’s Work Permit Notice online, and after that can apply for the visa at a Chinese embassy or consulate. The Work Notice is obtained by the employer, provided the potential employee has at least 2 years of professional work experience to fill the relevant vacancy, and does not have a criminal record.
Work Permit / Residence Permit
After entering the country, the individual must register at the local police station that governs the area where they are going to reside within 24 hours, and pass a medical verification as soon as possible.
A Work Permit must be acquired first, and this is overseen by the Ministry of Human Resources and the Social Insurance; the process can take up to 10 days, and the employer can help with that. After receiving the permit, the Residence Permit has to be obtained by the individual in person at the Exit-Entry Administration Bureau – after that, the individual is considered a resident in China.
Social Security Registration
Registration for Social Security is compulsory, and must be done by the employer within 30 days of the date the employee started work.
Working Hours
According to labor laws, a standard working week in China is 8 hours/day, with a maximum of 44 hours/week; any other overtime must be compensated. However, this is not very well enforced.
Public Holidays
- New Year’s Day, 01 Jan
- Chinese New Year / Spring Festival, 10 Feb – 17 Feb
- Quingming Festival / Tomb Sweeping Day, 04 Apr
- Labour Day, 01 May – 05 May
- Dragon Boat Festival, 10 – 12 Jun
- Mid-Autumn Festival, 15 – 17 Sept
- National Day, 01 – 07 Oct
Vacation Allowance
The vacation allowance in China is dependent on the employee’s years of work experience. If an employee does not use all the allowance, the employer is required to compensate them 200% of their daily wage per day of leave that they did not take.
| Number of Years Worked | Leave Amount (Days) |
| < 1 | 0 |
| 1 – 10 | 5 |
| 10 – 20 | 10 |
| 20 + | 15 |
Sick Leave
The amount of sick leave an employee is entitled to in China depends on their seniority in the company and amount of years worked; the compensation is also calculated based on these rules.
| Work Experience | Years with current employer | Allowed sick leave |
| < 10 years | < 5 years | 3 months |
| < 10 years | ≥ 5 years | 6 months |
| < 10 years | < 5 years | 6 months |
| ≥ 10 years | ≥ 5 years, < 10 years | 9 months |
| ≥ 10 years | ≥ 10 years, < 15 years | 12 months |
| ≥ 10 years | ≥ 15 years, < 20 years | 18 months |
| ≥ 10 years | ≥ 20 years | 24 months |
| Years of consecutive service at the company | Sick-leave wage as a percentage of an employee’s salary |
| During the first 6 months | |
| < 2 years | 60% |
| 2–4 years | 70% |
| 4–6 years | 80% |
| 6–8 years | 90% |
| ≥ 8 years | 100% |
| Consecutive leave more than 6 months | |
| < 1 year | 40% |
| 1–3 years | 50% |
| > 3 years | 60% |
Maternity / Paternity leave
- Maternity: 158 days (May differ slightly depending on the province)
- Paternity: 14 days (May differ slightly depending on the province)
- Childcare Leave: 5 – 15 days / year for each parent until the child reaches 3 / 6 years old (depending on province)
Termination & Severance
Upon employment termination, the employee is entitled to severance pay as long as they worked at the company for more than 6 months, and amounts to a month’s pay per year worked in the company (6-12 months counts as one year). This amount can be negotiated with the employer during the signing of the employment contract.
Notice Period
The standard notice period is 1 month for both employer and employee; however, if the termination is coming from the side of the employer, they may choose to pay the employee a month’s wages instead.
Social Security
Employee social insurance contributions are deducted automatically from the wage and paid by the employer. The contribution amounts vary slightly depending on the local jurisdiction of the company.
|
City |
Shanghai |
Beijing |
Guangzhou |
|||
|
Insurance Type |
Employer |
Employee |
Employer |
Employee |
Employer |
Employee |
|
Pension |
16% |
8% |
16% |
8% |
14% |
8% |
|
Medical |
10.5% |
2% |
9.8% |
2% |
6.35% |
2% |
|
Unemployment |
0.5% |
0.5% |
0.5% |
0.5% |
0.32% – |
0.2% |
|
Work-related injury |
0.16% – |
0% |
0.2% – |
0% |
0.1% – |
0% |
|
Total |
27.16% – |
10.5% |
26.5% – |
10.5% |
20.77% – |
10.2% |
|
Ceiling for monthly salary base |
CNY 31,014 |
CNY 28,221 |
CNY 22,941 – Pension CNY 33,786 – Other |
|||
Pension
Pension in China is covered by Social Security contributions, and all individuals working in the country are eligible to the benefits regardless of their nationality, provided they have reached the required age and have completed a 15 year pension insurance period.
Taxation in China
The Chinese fiscal year runs from January 1 to December 31.
Tax Rates
The following progressive rates apply for 2024. Tax payable is calculated by (Taxable Income * Tax Rate) – (Quick Deduction).
| Annual Taxable Income (CNY) | Rate (%) | Quick Deduction (%) |
| 0 – 36,000 | 3% | 0 |
| 36,001 – 144,000 | 10% | 2.520 |
| 144,001 – 300,000 | 20% | 16,920 |
| 300,001 – 420,000 | 25% | 31,920 |
| 420,001 – 660,000 | 30% | 52,920 |
| 660,001 – 960,000 | 35% | 85,920 |
| 960,001 + | 45% | 181,920 |
Tax Returns
The annual income tax return must be filed between 1 March and 30 June of the following year, either online or by visiting the local Tax Office.
Double Taxation
China has tax treaties with multiple other countries, which can reduce payable tax on certain incomes.
Health Insurance
While China does have public health care that is available to foreigners, it is possible to obtain private insurance coverage. Some companies also offer their employees benefits from their worldwide group health insurance scheme.
Cost of Living
The cost of living in China is generally on the low side; however, it does depend on the province. The estimated monthly cost for a single person is around CNY 3,300 – 6,700, with 2,600 – 4,600 going to rent.
How We Can Help
We provide a full set of services in China allowing corporate clients, recruitment agencies and professional contractors to operate in an optimal manner while ensuring that all local employment obligations are taken care of.
Access Financial offers the following solutions in China:
- Employed Solution
- Employer of Record (EOR)
If you would like to discuss how Access Financial can help in China, please contact us.
Disclaimer
We have prepared this as a guide only; it does not form part of an offer. Please request illustrations based on your specific case from one of our solution managers.
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