Archive for June 26th, 2012

Tuesday, June 26, 2012

Foreigners, and the Social Insurance System in China

There has been some talk about foreigners having to contribute to China’s social insurance system in recent months, but the proof of the pudding is the eating. It seems that by now, at least some local governments are beginning to implement mandatory contributions.

Matthew Stinson, in a post for Rectified Name, refers to Shanghai and Suzhou as places where contributions, at least by and for foreigners working at training centers, are now being paid. Tianjin, where Stinson lives, seems to become another such place. Stinson discusses both some of the arrangement’s background and details, and comes up with some thoughts about how it may, or may not, work.

Income distribution and social insurance have become prominent issues in China, not least as the country is facing challenging demographic trends. Part of deepening reform and opening further, as described by the CCP central committee’s cultural decision, is the promotion of cultural units’ human resources and income allocation, and social insurance systems’ reform. And allocation and social insurance issues go far beyond “culture” (if one wants to reject the idea that to the CCP, everything is “cultural”. Social insurance is a regular item on the State Council’s agenda (at least according to its published records), and social management (社会管理), supported not least by an improved identity card system (身份证制度), may help governments and Yang Rui to sort out the illegally uninsured “foreign trash”.

For sure, from a mere fiscal point of view, mandatory social insurance fees paid by foreigners, despite the drawbacks mentioned on Rectified Name, would provide some badly needed means to turn rural social insurance funding into something substantial.

That said, if social insurance fees were paid by migrant workers – and their bosses, obviously -, it would spell improvement on a very different scale. In such a (unrealistic) case, Li Keqiang, China’s likely chief state councillor, could issue problem-solving instructions Wen Jiabao, even at his best, could only dream of.

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