As a follow-up on my posting two weeks ago regarding the new law that requires foreigners to pay social security tax in China, local authorities in Beijing has published detailed implementation guidelines and set out how the money should be paid into pension fund. However Shanghai’s labor authorities have yet to draw up a similar document. It means that Shanghai based companies and their foreign employees do not have to start contributing, just yet.
There are more than 600,000 expats working in mainland China, employed by everything from global industrial giants to small restaurants, forcing them to participate the social security system would pump about RMB 3 billion (about $48 million) into the pension fund accounts. Most of these expats are in mainland China for just a few years and unlikely to collect Chinese pension. I am somewhat surprised that Shanghai is delaying the order from central government. But I am happy to see that Shanghai is pro-business and is acting in the interest of foreign businesses and their expat employees and allaying their concerns about a worsening investment climate in the world’s fastest-growing economy. The city’s municipal government is keen to avoid worsening the pressures faced by foreign businesses amid the global economic downturn.
We shall wait and see what would happen in other major cities, and how long Shanghai would be able to delay the implementation.
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