Social Security in China: How Much Does It Cost?

If you are an employ­er or an employ­ee in Chi­na, you may won­der how much social secu­ri­ty in Chi­na costs and what ben­e­fits it pro­vides. Social secu­ri­ty in Chi­na is a sys­tem that cov­ers five dif­fer­ent kinds of insur­ance and a manda­to­ry hous­ing fund. The sys­tem aims to pro­vide basic pro­tec­tion for work­ers and their fam­i­lies in case of old age, ill­ness, unem­ploy­ment, mater­ni­ty, or indus­tri­al injury. The cost of social secu­ri­ty in Chi­na varies depend­ing on the loca­tion, the income lev­el, and the type of employ­ment. In this arti­cle, we will explain the main fea­tures of social secu­ri­ty in Chi­na, how much it costs, and how to pay it.

What are the types of social security in China?

Social secu­ri­ty in Chi­na con­sists of five types of insur­ance and one hous­ing fund. Each type of insur­ance has its own con­tri­bu­tion rate, cal­cu­la­tion method, and ben­e­fit scheme. The five types of insur­ance are:

• Pen­sion insur­ance pro­vides month­ly pay­ments to retirees who have con­tributed to the sys­tem for at least 15 years. The pen­sion amount depends on the indi­vid­ual account bal­ance, the aver­age salary of the local area, and the num­ber of con­trib­u­tors. The retire­ment age is gen­er­al­ly 60 for men and 55 for women, but it may vary by indus­try and occupation.
• Med­ical insur­ance cov­ers part of the med­ical expens­es incurred by insured work­ers and their depen­dents. The med­ical insur­ance fund is divid­ed into two accounts: a basic pool account that cov­ers inpa­tient care and seri­ous ill­ness­es, and an indi­vid­ual account that cov­ers out­pa­tient care and pre­ven­tive ser­vices. The reim­burse­ment rate and the annu­al cap depend on the local reg­u­la­tions and the type of med­ical institution.
• Unem­ploy­ment insur­ance pro­vides month­ly pay­ments to work­ers who lose their jobs invol­un­tar­i­ly and meet cer­tain con­di­tions, such as hav­ing con­tributed to the sys­tem for at least one year, being reg­is­tered as unem­ployed, and active­ly seek­ing employ­ment. The unem­ploy­ment ben­e­fit amount is based on the local min­i­mum wage and the con­tri­bu­tion peri­od. The max­i­mum dura­tion of unem­ploy­ment ben­e­fits is 24 months.
• Mater­ni­ty insur­ance cov­ers part of the expens­es relat­ed to child­birth, pre­na­tal care, post­na­tal care, and fam­i­ly plan­ning ser­vices for female work­ers and their spous­es. The mater­ni­ty ben­e­fit amount is based on the aver­age salary of the local area or the employ­er. The mater­ni­ty leave dura­tion is 98 days for nat­ur­al birth and 128 days for cesare­an section.
• Indus­tri­al injury insur­ance cov­ers part of the expens­es relat­ed to work-relat­ed injuries, occu­pa­tion­al dis­eases, dis­abil­i­ty, or death for work­ers who suf­fer from such inci­dents. The indus­tri­al injury ben­e­fit amount is based on the degree of injury or dis­abil­i­ty, the aver­age salary of the work­er, and the med­ical expens­es incurred. The indus­tri­al injury insur­ance also pro­vides sub­si­dies for reha­bil­i­ta­tion, nurs­ing care, pros­thet­ics, and funer­al expenses.

The hous­ing fund is a manda­to­ry sav­ings scheme that helps work­ers buy or rent hous­ing. Both employ­ers and employ­ees con­tribute a fixed per­cent­age of the employ­ee’s salary to an indi­vid­ual account that can be used for hous­ing-relat­ed pur­pos­es. The con­tri­bu­tion rate and the with­draw­al con­di­tions vary by location.

How much does social security in China cost?

The cost of social secu­ri­ty in Chi­na depends on three fac­tors: the loca­tion, the income lev­el, and the type of employment.

The loca­tion deter­mines the con­tri­bu­tion base and the con­tri­bu­tion rate for each type of insur­ance. The con­tri­bu­tion base is the month­ly salary of the employ­ee that is used to cal­cu­late the social secu­ri­ty pay­ments. It is usu­al­ly capped at three times the aver­age salary of the local area. The con­tri­bu­tion rate is the per­cent­age of the con­tri­bu­tion base that is paid by the employ­er or the employ­ee for each type of insur­ance. It may dif­fer by province, city, or district.

The income lev­el affects the actu­al amount of social secu­ri­ty pay­ments that are made by the employ­er or the employ­ee. The high­er the income lev­el, the high­er the social secu­ri­ty pay­ments, up to a cer­tain lim­it. For exam­ple, if the aver­age salary of Bei­jing is 10,000 yuan and the con­tri­bu­tion base is capped at three times this amount (30,000 yuan), an employ­ee who earns 20,000 yuan will pay social secu­ri­ty based on this amount (20,000 yuan), while an employ­ee who earns 40,000 yuan will pay social secu­ri­ty based on the cap (30,000 yuan).

The type of employ­ment deter­mines whether an employ­ee is sub­ject to social secu­ri­ty pay­ments or not. Gen­er­al­ly, all employ­ees who work in Chi­na are required to par­tic­i­pate in social secu­ri­ty, regard­less of their nation­al­i­ty or con­tract dura­tion. How­ev­er, some excep­tions may apply for for­eign­ers who work in Shang­hai or who have bilat­er­al social secu­ri­ty agree­ments with Chi­na. Self-employed work­ers or free­lancers may also have dif­fer­ent rules for social secu­ri­ty payments.

To illus­trate the cost of social secu­ri­ty in Chi­na, let’s take an exam­ple of a Chi­nese employ­ee who works in Bei­jing and earns 20,000 yuan per month. Accord­ing to the lat­est reg­u­la­tions, the con­tri­bu­tion rates for Bei­jing are as follows:

Type of insur­ance	Employ­er rate	Employ­ee rate
Pen­sion insurance	16%	8%
Med­ical insurance	10%	2%
Unem­ploy­ment insurance	0.8%	0.2%
Mater­ni­ty insurance	0.8%	0%
Indus­tri­al injury insurance	0.4%	0%
Hous­ing fund	12%	12%

The con­tri­bu­tion base for Bei­jing is capped at 29,088 yuan, which is three times the aver­age salary of 9,696 yuan in 2021. Since the employ­ee’s salary (20,000 yuan) is low­er than the cap, the social secu­ri­ty pay­ments are based on the actu­al salary. The employ­er’s total con­tri­bu­tion is 7,800 yuan (39% of 20,000 yuan), while the employ­ee’s total con­tri­bu­tion is 4,400 yuan (22% of 20,000 yuan). The employ­ee’s net income after social secu­ri­ty deduc­tions is 15,600 yuan.

How to pay social security in China?

To pay social secu­ri­ty in Chi­na, employ­ers and employ­ees need to fol­low these steps:

1. Reg­is­ter with the local social secu­ri­ty bureau. Employ­ers need to reg­is­ter their com­pa­ny and their employ­ees with the local social secu­ri­ty bureau with­in 30 days of estab­lish­ment or hir­ing. Employ­ees need to pro­vide their per­son­al infor­ma­tion and bank account details. For­eign employ­ees also need to pro­vide their pass­port and work per­mit.
2. Declare the con­tri­bu­tion base and pay the social secu­ri­ty fees. Employ­ers need to declare the con­tri­bu­tion base for each employ­ee every year and pay the social secu­ri­ty fees every month. The dec­la­ra­tion and pay­ment can be done online or offline, depend­ing on the local reg­u­la­tions. Employ­ers need to with­hold the employ­ee’s share of social secu­ri­ty fees from their salary and trans­fer it to the social secu­ri­ty bureau along with their own share.
3. Check the social secu­ri­ty account and claim the ben­e­fits. Employ­ees can check their social secu­ri­ty account bal­ance and pay­ment records online or by phone. They can also apply for social secu­ri­ty ben­e­fits when they meet the eli­gi­bil­i­ty cri­te­ria, such as retire­ment, ill­ness, unem­ploy­ment, mater­ni­ty, or indus­tri­al injury. They need to sub­mit the required doc­u­ments and proof to the social secu­ri­ty bureau or the des­ig­nat­ed med­ical institution.

Frequently Asked Questions

Sources:

1. Chi­na Brief­ing | China’s Social Secu­ri­ty Sys­tem: An Explainer
2. The State Coun­cil of the Peo­ple’s Repub­lic of Chi­na | 关于调整 2021 年全国各地区城镇职工基本养老保险基金中央调剂比例的通知
3. The State Coun­cil of the Peo­ple’s Repub­lic of Chi­na | 关于印发 2021 年全国各地区城镇职工基本养老保险单位缴费比例的通知
4. The State Coun­cil of the Peo­ple’s Repub­lic of Chi­na | 关于印发 2021 年全国各地区城乡居民基本养老保险缴费标准和基础养老金标准的通知
5. The State Coun­cil of the Peo­ple’s Repub­lic of Chi­na | 关于印发 2021 年全国各地区城镇职工基本医疗保险单位缴费比例的通知
6. The State Coun­cil of the Peo­ple’s Repub­lic of Chi­na | 关于印发 2021 年全国各地区城乡居民基本医疗保险缴费标准和个人缴费补助标准的通知
7. The State Coun­cil of the Peo­ple’s Repub­lic of Chi­na | 关于印发 2021 年全国各地区失业保险单位缴费比例的通知
8. The State Coun­cil of the Peo­ple’s Repub­lic of Chi­na | 关于印发 2021 年全国各地区工伤保险单位缴费比例的通知
9. The State Coun­cil of the Peo­ple’s Repub­lic of Chi­na | 关于印发 2021 年全国各地区生育保险单位缴费比例的通知
10. Min­istry of Human Resources and Social Secu­ri­ty of the Peo­ple’s Repub­lic of Chi­na | 医疗保障政策文件
11. Min­istry of Human Resources and Social Secu­ri­ty of the Peo­ple’s Repub­lic of Chi­na | 养老保障政策文件
12. Min­istry of Human Resources and Social Secu­ri­ty of the Peo­ple’s Repub­lic of Chi­na | 失业保障政策文件
13. Min­istry of Human Resources and Social Secu­ri­ty of the Peo­ple’s Repub­lic of Chi­na | 工伤保障政策文件
14. Min­istry of Human Resources and Social Secu­ri­ty of the Peo­ple’s Repub­lic of Chi­na | 生育保障政策文件
15. Min­istry of Human Resources and Social Secu­ri­ty of the Peo­ple’s Repub­lic of Chi­na | 住房公积金政策文件
16. Min­istry of Human Resources and Social Secu­ri­ty of the Peo­ple’s Repub­lic of Chi­na | 社会保障双边协议