China's social insurance system is one of the most comprehensive in the world, covering pension, medical, unemployment, work injury, and maternity insurance, plus the Housing Provident Fund. Since 2011, foreign employees have been required to participate. This guide explains the contribution rates, compliance requirements, bilateral exemptions, and withdrawal rules for foreign employees.
The Five Insurances and One Fund (五险一金)
China's social security system is commonly referred to as "Five Insurances and One Fund" (五险一金):
| Insurance/Fund | Purpose | Employer Rate | Employee Rate |
|---|---|---|---|
| Pension Insurance (养老保险) | Retirement benefits | ~16% | 8% |
| Medical Insurance (医疗保险) | Healthcare coverage | ~8-10% | 2% |
| Unemployment Insurance (失业保险) | Income during unemployment | ~0.5-1% | 0.5% |
| Work Injury Insurance (工伤保险) | Workplace injury compensation | ~0.2-1.9% | 0% |
| Maternity Insurance (生育保险) | Maternity benefits | ~0.5-1% | 0% |
| Housing Provident Fund (住房公积金) | Housing savings | 5-12% | 5-12% |
| Total | ~30-40% | ~15-22% |
Contribution Base
Social insurance contributions are calculated based on the employee's actual monthly salary, subject to minimum and maximum limits:
- Minimum base: Typically 60% of the local average monthly salary from the previous year
- Maximum base: Typically 300% of the local average monthly salary from the previous year
- Salary below the minimum → contribute at minimum base
- Salary above the maximum → contribute at maximum base
Example: Shanghai 2025 Contribution Bases
| Limit | Monthly Amount (RMB) |
|---|---|
| Minimum contribution base (60%) | 7,384 |
| Maximum contribution base (300%) | 36,921 |
| Average monthly salary (2024) | 12,307 |
Registration Process
Step 1: Employer Social Insurance Registration
After WFOE registration, the company must register with the local Social Insurance Bureau within 30 days of obtaining the Business License. Required documents:
- Business License
- Organization code certificate
- Bank account opening permit
- Company seals
Step 2: Employee Enrollment
For each foreign employee, enroll them in the social insurance system:
- Foreign employee's passport
- Work Permit
- Employment contract
- Social insurance registration form
Step 3: Monthly Contribution
The employer deducts the employee portion from monthly salary and contributes the combined employer + employee amount to the Social Insurance Bureau by the designated date (usually the 15th of the following month). Most cities use an automated bank deduction system.
Bilateral Social Insurance Agreements
China has signed bilateral social insurance agreements with several countries. Citizens of these countries may be exempt from certain Chinese social insurance contributions if they are already covered by their home country's system:
| Country | Exempt Contributions | Validity |
|---|---|---|
| Germany | Pension, unemployment | Up to 60 months |
| South Korea | Pension | Up to 60 months |
| Denmark | Pension | Up to 60 months |
| Finland | Pension | Up to 60 months |
| Canada | Pension | Up to 60 months |
| Switzerland | Pension | Up to 72 months |
| Netherlands | Pension | Up to 60 months |
| France | Pension | Up to 72 months |
| Spain | Pension | Up to 72 months |
| Luxembourg | Pension | Up to 60 months |
| Japan | Pension | Up to 60 months |
| Serbia | Pension | Up to 60 months |
Benefits for Foreign Employees
Pension Insurance
- Eligibility: 15 years of cumulative contributions (may be relaxed for foreign workers in some cities)
- Benefit: Monthly pension after retirement age (60 for men, 50-55 for women)
- Withdrawal: If the foreign employee leaves China permanently before reaching retirement age, they can withdraw the personal account balance (employee portion + interest)
Medical Insurance
- Coverage: Outpatient and inpatient medical expenses at designated hospitals
- Reimbursement rate: Typically 70-90% for inpatient care, 50-70% for outpatient
- Personal account: Portion of contributions goes to a personal medical account card (社保卡) for pharmacy and outpatient expenses
- Annual cap: Varies by city (typically RMB 200,000-500,000 for serious illness)
Work Injury Insurance
- Coverage: Medical expenses, disability benefits, and death compensation for work-related injuries
- 100% employer-funded (no employee contribution)
- Claims process: Report injury within 30 days; obtain work injury certification from Labor Bureau
Maternity Insurance
- Coverage: Maternity medical expenses + maternity allowance (salary replacement during leave)
- 100% employer-funded
- Eligibility: Usually requires 12 months of continuous contributions (varies by city)
- Both male and female foreign employees are covered (male employees' spouses may also benefit)
Housing Provident Fund
- Purpose: Long-term housing savings for purchase, construction, renovation, or rental
- Contribution rate: 5-12% of salary (employer and employee each contribute)
- Withdrawal: Can withdraw for home purchase, major renovation, rental payment, or permanent departure from China
- Low-interest loans: Can apply for HPF mortgage loans at below-market rates
- Foreign employees: Required to participate in most Tier 1 cities (Shanghai, Beijing, Shenzhen); some smaller cities still exempt foreign employees
Withdrawal When Leaving China
When a foreign employee permanently leaves China, they can withdraw certain social insurance balances:
| Insurance Type | Withdrawable? | What You Get |
|---|---|---|
| Pension (personal account) | ✅ Yes | Employee contributions + interest |
| Pension (employer portion) | ❌ No | Remains in social pool |
| Medical (personal account) | ✅ Yes | Remaining personal account balance |
| Unemployment | ❌ No (generally) | Cannot withdraw; stays in pool |
| Work injury | ❌ No | Employer-funded, no personal account |
| Maternity | ❌ No | Employer-funded, no personal account |
| Housing Provident Fund | ✅ Yes | Full personal + employer contributions + interest |
Withdrawal Process
- Cancel Work Permit and Residence Permit
- Obtain "Departure Certificate" or cancelled residence permit page
- Submit withdrawal application to Social Insurance Bureau
- Provide passport, social insurance card, bank account information
- Funds transferred to designated bank account (typically RMB account)
Timeline: 2-4 weeks
Note: The HPF withdrawal process is separate and handled by the Housing Provident Fund Management Center.
Employer Compliance Obligations
- Timely registration: Register new employees within 30 days of employment
- Monthly contributions: Deduct employee portion and pay combined contribution by the 15th of each month
- Annual base adjustment: Update contribution bases annually based on previous year's average salary
- Reporting: File annual social insurance reports
- No evasion: Underreporting salary or not enrolling employees is illegal and subject to penalties
- Record-keeping: Maintain contribution records for at least 15 years
Penalties for Non-Compliance
| Violation | Penalty |
|---|---|
| Failure to register employees | Fine: RMB 10,000-30,000 + back contributions |
| Failure to contribute on time | Daily penalty: 0.05% of unpaid amount + back contributions |
| Underreporting contribution base | Back contributions + fine + interest |
| Fraudulent claims | Fine: 2-5x the fraudulent amount + potential criminal charges |
Conclusion
Social insurance compliance is a critical obligation for any employer in China, including those hiring foreign workers. The total cost of 30-40% of salary for employer contributions is significant and should be factored into your hiring budget. However, the bilateral social insurance agreements can provide meaningful savings for employees from covered countries. Proper registration, timely contributions, and understanding of withdrawal rules will ensure compliance and avoid costly penalties.
For more information on hiring foreign employees, see our guides on Hiring Foreign Employees and Individual Income Tax.