Social insurance in China
comprises the ‘five insurances and one fund’: pension, medical, unemployment, work injury and maternity insurance plus the housing fund, contributed by employer and employee at city-specific rates on capped bases. Employer totals commonly run 25–40% of salary depending on the city.
What makes China’s system distinctive
- City-level administration: rates, bases and caps are set locally — Shanghai and Chengdu are different systems in practice.
- Contribution bases: salary within a local floor and cap (linked to city average wages), reset annually.
- Foreign employees: participation is mandatory nationally, with exemptions only under bilateral totalisation agreements (Germany, Korea and others; corridors are limited).
- Housing fund: 5–12% each side, formally for housing purposes, withdrawable under conditions and by leavers.
Employment through a local entity or licensed structure is a precondition — direct foreign-payroll employment of China-based staff is not a compliant option.
FAQ
Can foreign employees opt out of Chinese social insurance?
Only where a bilateral agreement covers them and home-coverage certificates are obtained — a short list of countries, applied city-by-city in practice. Otherwise participation is mandatory, and ‘net of social insurance’ side deals create employer liability.
What happens to contributions when an expat leaves China?
Pension account balances can be withdrawn on final departure or left to accumulate; housing-fund balances are withdrawable with departure documentation. Medical and other branches are non-refundable. Processes run through the local bureaus where contributions were made.