Complaints about a new tax on foreign workers mandating they pay social security contributions are misguided and unfair, and foreign firms in China have no right to expect special treatment, Xinhua news agency said yesterday.
Foreign executives in China have expressed concern that the scheme would increase costs in the world’s second-largest economy, and that the plan was too vague and would be hard for companies to implement.
An official said on Friday that they had jumped the gun in rolling out the rules before the government had worked out exactly how the system would be implemented, but said there would be no going back.
Xinhua, in an English--language commentary, scolded foreign firms for assuming they were “entitled to favorable policies while operating here.”
“As China continues to make changes to its market economy, the equalization of treatment for domestic and foreign firms has become an irreversible trend. The lenient policies of yesterday have worn out their usefulness, and foreign companies should keep that in mind,” it wrote.
“It is logical that as the economy grows, labor costs will rise accordingly. The idea that rising costs eat up China’s competitiveness is arbitrary in nature. The age of ultra-low labor costs is nearing its end,” the Xinhua report said.
China is following international norms by including foreigners in its social security net, Xinhua said. Such commentaries are a reflection of government thinking rather than an official statement of policy.
“Ample opportunities exist for foreign investors who are eyeing China for future growth. Rather than airing grievances, they should simply change their China strategy and share more knowledge with their Chinese partners,” it wrote.
“The still-robust foreign direct investment data released over the past year proves that fewer policy incentives have not made China any less attractive to foreign companies,” Xinhua added. “It is likely that what foreign companies care about most are China’s 1 billion consumers and stable long-term growth prospects. Regardless of their motivation, it is in their best interest to change their mentality and embrace new conditions in order to avoid missing the boat.”
China’s new rules will make it more like policies in many EU countries, where citizens and foreigners alike pay into the system.
The commentary made no mention of the problems the government says it has yet to work out with the system, such as how foreigners are supposed to pay when local tax offices say they remain unclear on how to accept payments.
Xinhua also gave no clue as to how foreigners would be able to access services such as unemployment benefits, since work visas are tied to jobs and become invalid when a worker is laid off.
The government said it was trying to come up with a solution to these issues as soon as possible, although the rules went into effect on Oct. 15.
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