China's Revised social contribution basis

In China, each employee is required to be enrolled in the Chinese social security system and contribute monthly, along with the employer, to five social insurance schemes (besides the housing fund, that is managed separately): pension insurance, medical insurance, work-injury insurance, maternity insurance, and unemployment insurance. The contributions are made according to two parameters: i) the social contribution basis, which is the average monthly salary of the employee in the previous year, within the lower and upper limits defined by the authorities, and ii) the contribution rates.

Shanghai:

The municipality of Shanghai revised the lower and upper limit of the social contribution basis applicable in the municipality of Shanghai for the period starting from July 1st, 2021, to June 30th, 2022.

According to the Announcement “on Matters related to the average salary of employees in urban city in 2020” issued by Shanghai Municipal Human Resources and Social Security Bureau, the yearly average salary of urban employees in the municipality in 2020 was RMB 124,056, which is equal to a monthly average salary of RMB 10,338. Compared to 2019, the figure increased by 7.9%.

The lower and the upper limit for the monthly social insurance contributions will be adjusted accordingly: from July 2021, the upper limit, which is capped to three times the monthly average salary, increased from RMB 28,017 to RMB 31,014, while the lower limit will be adjusted from RMB 4,927 to RMB 5,975.

The rates for the calculation of the social insurance contributions remain unchanged.

The revised contribution basis will impact two categories of employees: those with a salary lesser than the lower limit and those with a salary higher than the upper limit.

For the first category, the monthly minimum contribution will increase from RMB 1,338 to RMB 1,623 (for the employers’ part) and from RMB 517 to RMB 627 (for the employee’ part). For the second category, the maximum monthly contribution will increase from RMB 7,609 to RMB 8,423 (for the employer’s part) and from RMB 2,942 to RMB 3,256 (for the employee’s part).

Jiangsu:

The province of Jiangsu revised the lower and upper limit of the social contribution basis applicable in the province of Jiangsu for the period starting from July 1st, 2021, to June 30th, 2022.

The lower and the upper limit for the monthly social insurance contributions will be adjusted accordingly: from July 2021, the upper limit, which is capped to three times the monthly average salary, increased from RMB 19,335 to 20,586, while the lower limit will be adjusted from RMB 3,368 to 3,800.

The rates for the calculation of the social insurance contributions remain unchanged.

Shandong:

The province of Shandong revised the lower and upper limit of the social contribution basis applicable in the province of Shandong for the period starting from Jan 1st, 2021, to Dec 31th, 2021 in Dec 2020.

The lower and the upper limit for the monthly social insurance contributions will be adjusted accordingly: from Jan 2021, the upper limit, which is capped to three times the monthly average salary, increased from RMB 17,284 to 19,012((provisional), while the lower limit will be adjusted from RMB 3,269 to 3,457 (provisional).