Updates on the Social Security for Foreign Employees in Major Cities

Published on 2013-01-16

On Wednesday, 9th January the British Chamber of Commerce Shanghai invited Vivien Chan, a Senior Manager at PwC IAS Shanghai, to answer some of our questions and give us an update on the status of the Social Security Law in China.

In July 2011 the China Social Security Law was introduced to strengthen the social insurance system for both Chinese and foreign employees and the employers. Although yet to take effect in Shanghai, this has become a growing concern for foreign businesses, unsure of when, and how its implementation will affect their business.

On Wednesday, 9th January the British Chamber of Commerce Shanghai invited Vivien Chan, a Senior Manager at PwC IAS Shanghai, to answer some of our questions and give us an update on the status of the Social Security Law in China.

According to the law, foreigners working in mainland China and their employers should make social security contributions, which include pension, medical, unemployment, maternity and work-related injury insurance. In theory, this should mean foreigners are entitled to the same benefits enjoyed by the Chinese employees. In practice however, the mechanism as to how this exactly will work is unclear. The government is yet to provide any solid guidance on how foreigners will benefit from this, for example how one could claim back what he has paid into pension insurance, once that person has left China permanently.

Germany and South Korea have already signed Totalisation Agreements exempting their nationals from paying part of the required amount (pension and unemployment insurance for Germany, and pension insurance for South Korea) as they are already covered in their home countries. Twelve other developed countries are also currently under discussion with China trying to relieve their foreign individuals’ insurance obligation (Japan, France, Belgium, Czech Republic, Finland, Sweden, Denmark, Spain, Switzerland, Canada, Netherlands, Singapore).

Although not yet implemented in Shanghai, the law has been formalised in many major Chinese cities such as Beijing, Guangzhou, Shenzhen, Zhuhai, Suzhou and Wuxi. As more and more local governments begin to implement this law, it would suggest that Shanghai will also be subjected to it. As to when this will happen, it is merely speculation but with the possible costs associated with the implementation, Vivien Chan stressed the importance of:


  1. Keeping track of local developments
  2. Monitoring compliance requirements
  3. Having clear HR/mobility policies on social security and tax treatment
  4. Planning ahead and consulting before taking any actions


Given the importance of the issue, the British Chamber of Commerce Shanghai will keep members updated with any further developments in due course. Please don’t hesitate to contact Ariel Tang at ariel.tang@britishchambershanghai.org if you have any further questions, or would like to see a copy of the presentation.