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Foreigners in China get new taxes, benefits

Foreign job seekers read information during a job fair for foreigners at the Beijing Talent Tower on March 29, 2008 in Beijing, China.

Tess Vigeland: If you're worried about whether you'll get Social Security benefits when you retire, you may consider looking for a job in China. Starting next month, China will extend its Social Security benefits to the more than half a million foreigners who work there. Of course that means foreigners will have to pay a new tax.

Our China correspondent Rob Schmitz is also in Shanghai and he sent this report.


Rob Schmitz: So here's the deal: in return for $100 a month, you, foreign executive working in China, get access to Chinese retirement benefits.

That'll include cheap prices at your local Chinese public hospital -- a place where, no matter how dire your condition is, you'll have to take a number and stand in line all day in a health care system that could make you wish you were at a hospital back in the states.

Shaun Rein is the managing director of China Market Research, a market intelligence firm based in Shanghai. He says most foreigners in China aren't thrilled with the deal.

Shaun Rein: The benefits that you get from the medical coverage is not very good. If given a choice, most employees would rather have private health care insurance. It's cheaper and they get better coverage.

The new tax will make it more costly to hire foreigners in China. Rein says China's doing this in part to make foreign companies hire more Chinese employees. But China also needs money for a multi-billion-dollar program to overhaul its health care system.

James McGregor, an author and a consultant in Beijing, says collecting a tax from foreigners that'll never benefit foreigners will help.

James McGregor: This will be just one more thing that is making China a more difficult place to do business. It's just par for the course. China's got the power, they've got the market, and they're kind of doing these things because they can.

Whether they will is another question.

Residents from Taiwan, Macau and Hong Kong have been subject to such taxes for years, but the government hasn't put much effort into collecting them.

In Shanghai, I'm Rob Schmitz for Marketplace.

About the author

Rob Schmitz is Marketplace’s China correspondent in Shanghai.

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