Social insurance is a mandatory, non-profit social security system established by law in China. It is administered by the human resources and social security departments of the PRC and the premiums are collected by the local tax authorities.

The basic principles of China’s social insurance are outlined in the Social Insurance Law of the PRC. There are 5 types of social insurance in China, that is basic pension insurance, basic medical insurance, unemployment insurance, work related injury insurance and maternity insurance.

Currently, the social insurance contribution rates for Chinese enterprises and employees are as follows:

1.       Basic Pension Insurance

The premiums are jointly contributed by the enterprise and the employee. Contribution is made according to a given percentage of the salary subject to payment of insurance premium, which is based on the average monthly income of the employee in the previous year. In general, the contribution of the enterprise shall not exceed 20% of its total payroll. The actual percentages are determined by provincial governments and may vary from place to place. The contribution of the employee is 8% of his/her salary.

2.       Basic Medical Insurance

The premiums are jointly contributed by the enterprise and the employee. In general, the premium paid by the enterprise equals to about 6% of its total payroll, while the employee contributes 2% of his/her salary.

3.       Unemployment Insurance

The enterprise contributes a certain percentage of its total payroll (the percentage varies from place to place), while the employee contributes about 1% of his/her salary.

4.       Work Related Injury Insurance

The premiums are solely contributed by the enterprise, which vary with the risk category of the injury, the work related injury insurance funds, and the frequency of occurrence of the work related injury and occupational disease concerned. Actual contribution rates are set by the social insurance administrative department of the State Council.

5.       Maternity Insurance

The premiums are solely contributed by the enterprise. Generally, it is paid at 0.5% to 1% of the payment base.

According to relevant laws and regulations, foreigners and Hong Kong, Macau and Taiwan residents employed in China’s mainland shall participate in social insurance and enjoy social insurance benefits in accordance with law. Foreign employees are eligible for social insurance exemptions if they come from countries that have social insurance exemption agreements with China.

For foreigners participating in social insurance for the first time, the employer shall present the valid passport, foreigner’s work permit (for employee with permanent residence status in China, the Permanent Residence Permit for Foreigners is required) together with the labour contract or dispatch service contract of the employee and other proofs to the local social insurance agency to complete registration formalities.

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