By Wang Guanqun
BEIJING, Nov. 7 — Foreign employees working in China have been required to pay into the country’s social security system since Oct. 15, according to a latest social insurance regulation.
Once the details are rolled out, more than 230,000 foreigners in China will be included in the country’s welfare system for pension, medical insurance, unemployment, work injury and maternity benefits.
The new scheme will be implemented by local governments before the end of this year, but companies will have to back-pay contributions from Oct. 15.
In Beijing, the salary cap for paying social insurance is 12,603 yuan (2,000 U.S. dollars) in 2011. For a foreign employee earning that or higher, his employer has to pay about 4,096 yuan every month, and the employee himself needs to pay about 1,326 yuan.
Some foreigners believe the implementation of the new regulation is still short on details, and worry they may not receive the benefits after joining the network.
For instance, a foreigner who loses a job in China instantly loses the right to live here, and it is still unclear how he or she is going to benefit from the unemployment insurance and retirement pension.
At a press conference held on Oct. 28, Xu Yanjun, deputy director of the National Social Security Management Center of the Ministry of Human Resources and Social Security, admitted that the system needs to be improved to function more efficiently.
However, China created its basic social security system just several years ago and is still working on strengthening the system. The imperfection of the system should not eclipse the necessity for foreigners being included, nor should it justify the rejection of the plan.
The lack of social security for foreign workers may lead to many labor disputes. It is an international norm to protect employee’s rights, regardless of whether they are foreigners or locals.
In the U.S. and Europe, it is a common practice to treat foreign and domestic workers equally and entitle them to the same social security norms, allowing foreigners the same social welfare benefits as nationals.
“There’s nothing wrong with the country making sure that everyone has basic insurance.” K. Lesli Ligorner, an attorney in Shanghai for Paul Hastings, was quoted by USA Today as saying.
Some criticize the new policy as a scheme to fill the deficit in China’s domestic social security system. This is also untrue for a country like China with such a huge population.
“We have no intention of grabbing money from foreigners, and the money of these 200,000-plus workers is insignificant when we’re talking about the welfare of China’s entire population,” Xu Yanjun explained to reporters.
Under the new rules, companies hiring foreigners, most of them foreign companies, will face more labor costs on doing business in China. Some see the raising costs for the foreign companies as a sign of a deteriorating business environment in China, which is a total misreading.
Chinese companies have been obliged to buy insurance for their Chinese employees for years. Leaving foreign employees out of the system gives their employers an unfair cost advantage in hiring.
As China is deepening reform in its market economy, the equalization of treatments for domestic and foreign businesses has become an irreversible trend. The cancellation of some favorable policies in the past for foreign firms conforms to the trend.
Besides, domestic companies hiring foreigners also need to pay contributions on top of the payments made by the employees. The new rules are not solely targeting on the foreign businesses.
Xu Yanjun vowed there would be no going-back on the scheme.
“Rather than airing grievances, they (foreign firms in China) should simply change their China strategy and share more knowledge with their Chinese partners,” a Xinhua commentary suggested last Monday. 
On Xinhua Web site: http://news.xinhuanet.com/english2010/china/2011-11/07/c_131232672.htm