Yes. If you are a foreigner employed by a company in China, social insurance is not optional. Article 97 of the Social Insurance Law provides that foreigners working in China participate in social insurance by reference to the same rules that apply to Chinese employees.
The law: what is actually required
The Social Insurance Law (2010, in force since 1 July 2011) covers five schemes: basic pension, basic medical insurance, work injury insurance, unemployment insurance and maternity insurance. Article 97 states that foreigners who work in China participate in social insurance in accordance with this law.
The implementing rule is the Interim Measures on the Participation of Foreigners Employed in China in Social Insurance (Order No. 16 of the Ministry of Human Resources and Social Security), which took effect on 15 October 2011. In practice the employer registers the foreign employee and pays the employer share, while the employee share is withheld from salary.
Enforcement is real. Article 63 of the Social Insurance Law allows the collection authority to order the employer to pay, or make up, any shortfall. Article 86 adds a late fee of 0.05% per day from the date the contribution was due, plus a fine of one to three times the unpaid amount if the employer still does not pay.
What this means in practice
You cannot lawfully trade social insurance for extra cash. An employer who lets a foreign employee opt out is exposed to the late fee and fine above, and the employee loses pension and medical cover. Claims that foreigners are exempt are wrong unless a treaty says otherwise.
One genuine exception: China has signed bilateral social security agreements with 13 countries, including Germany, Korea, Denmark, Finland, Canada, Switzerland, the Netherlands, France, Spain, Luxembourg, Japan, Serbia and Kyrgyzstan. Most are in force. Under these agreements, posted workers often stay covered by their home scheme and are exempt from certain contributions in China, usually pension. If you are seconded rather than locally hired, ask HR to check whether a certificate of coverage applies.
A quick scenario
A British engineer is hired by a Shanghai subsidiary. HR offers to pay him the social insurance contribution as cash instead, saying everyone wins. That is a compliance risk, not a perk. The subsidiary is the unit required to contribute, and it can be ordered to pay arrears with a daily late fee and a fine of up to three times the unpaid amount. Keeping contributions on record also makes residence permit renewals and future pension claims simpler.
Common questions
Q: Which contributions are included for foreign employees?
A: Five schemes: basic pension, basic medical insurance, work injury, unemployment and maternity insurance.
Q: Can my employer simply pay me the money instead?
A: No. Article 86 of the Social Insurance Law allows a daily late fee of 0.05% and a fine of one to three times the unpaid amount.
Q: I am posted from Germany for two years. Do I still contribute in China?
A: China has bilateral social security agreements with 13 countries, including Germany and Korea. Posted workers are often exempt from certain contributions such as pension, so ask HR about a certificate of coverage.
Q: What happens if my employer never registers me?
A: Under Article 63 the collection authority can order the employer to pay or make up the shortfall; Article 86 then adds the late fee and fine.
Q: Is this different from the private health insurance I bought myself?
A: Yes. Private medical cover is a commercial product; social insurance is the statutory scheme under Article 97 and does not replace it.
Wang Guan | Co-founder, Beijing Haolue Law Firm | +86 17813108512