This episode covers social insurance compliance issues faced by some European companies, with comments from Jeanette Yu, chair of the Chamber’s Human Resources Working Group; the China Pathfinder 2022 report; producer and consumer prices in January; and the Guangzhou government’s economic support measures. Join the event on China’s Transition through COVID and its Economic Recovery on 20th January in Beijing or online.
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The segment on Guangzhou’s latest economic support measures was brought to you by Lynn Wu, Business and Government Affairs Manager at the Chamber’s South China Chapter.
Providing social insurance for employees outside of a company’s registered location
China Pathfinder 2022: H2 2022 Update (Atlantic Council and Rhodium Group)
Official January consumer and producer price indices (in Chinese)
Guangzhou economic support measures (in Chinese):
Chamber hybrid event: China’s Transition through COVID and its Economic Recovery
RUI: Hello and welcome to China Shortcuts,
MARIANN: the European Chamber’s weekly catchup about the Chinese business landscape.
RUI: Some European Chamber member companies recently reported that a growing number of regions in China started to strictly enforce the rule that companies can only provide social insurance for their employees at their registered location.
MARIANN: This rule, stipulated by the country’s social insurance law has been circumvented by companies who employed staff outside their registered location by paying social insurance for their staff through HR agencies. However, measures issued by the Ministry of Human Resources and Social Security in March 2022 effectively banned this practice, creating challenges for employers.
RUI: We reached out to Jeanette Yu, chair of the Chamber’s HR working group to find out what companies can do to make sure that their employees can access social benefits at their place of work.
JEANETTE YU: If a company wants to provide the social insurance for the employees at the place where the company is not registered, it can have two solutions. One is that the company sets up a registered business unit such as branch office at the place where the employee works so that the company can provide social insurance for the employee on site. The other is that the company does not hire the employee directly but through an HR agency or a service provider on the site of employee, and the employee works for the company by the way of secondment or providing outsourcing service. In such a case, the HR agency or the service provider hiring the employee on site can provide social insurance for the employee at the place.
RUI: A report jointly released by the Atlantic Council and the Rhodium Group, on 8th February, found that even though China’s government has been signalling that its focus is shifting from political to economic priorities, so far, evidence of a more meaningful commitment to structural reform is hard to find.
MARIANN: According to the China Pathfinder 2022, policy activity in the latter half of last year was dominated by measures to offset the economic slowdown and reassure foreign investors. Policymakers focused on financial system development, competition policy, trade, direct investment, and portfolio investment – five out of the six economic clusters that are included in the report’s framework. The one area where fewer developments were seen was innovation. The findings overall showed a mixed picture as to whether China’s economic system moved toward or away from market economy norms in the second half of 2022. The report concluded that in the year ahead China will be tested on its willingness to enact market reforms, as Beijing will have to rebuild confidence with foreign investors as well as domestic consumers and businesses.
RUI: Producers’ prices in China continued to drop in January for the fourth consecutive month, while consumer prices edged up at a slightly faster pace than in December, according to data released by the National Bureau of Statistics on 10th February.
MARIANN: The bureau explained that the cost of goods at the factory gate was affected by the fluctuation of oil prices on the global market as well as by the drop in domestic coal prices in January. Meanwhile, consumer prices rose at the fastest pace in three months as the dropping of COVID-restrictions and the Spring Festival holiday had a warming effect on consumption.
RUI: On 8th February, the Guangzhou government announced new economic support measures, with a special focus on the high quality development of market entities.
MARIANN: The local government intends to provide incentives for foreign investment, and support for foreign-invested projects that are new or aimed at increasing capital. The new measures also include sections on facilitating the entry and exit of key foreign business personnel and of top overseas talent. Companies operating in Guangzhou would also enjoy various tax benefits, and reduced costs for utilities, logistics and land use.
RUI: After having upheld stringent COVID control measures for almost three years, China abruptly abandoned its dynamic zero strategy in early December, and announced that it would focus its efforts on a strong economic recovery.
MARIANN: The unexpected break from strict pandemic controls led to a surge of infections nationwide. As the country is moving on with its reopening, some public health experts have estimated that a second wave of infections is likely to take place in the coming months.
RUI: Join us on 20th February to hear a panel of economists and health experts share their views on what to expect from China’s recovery and future waves of infections.
MARIANN: Thanks for listening. Tune in again next week.
RUI: In the meantime, find useful links in the episode notes.