Spotlight on China – A guide to implementing employee benefits technology

China’s employee benefits landscape is shaped by a complex national framework and highly localised administration. Employers must navigate mandatory social security contributions, varying housing fund rates, and city-specific rules that can significantly affect the cost of employment. For organizations operating across the region, technology plays a crucial role in keeping benefits compliant, consistent, and easy for employees to understand.

Mandatory benefits

Under Chinese labour laws, employers must contribute to the ‘Five Insurances and One Housing Fund’. Although the structure is national, contribution rates and caps are set locally and are jointly funded by employers and employees.

The Five insurances

1. Pension insurance provides retirement income. Employers typically contribute 14–20% of salary, with employees contributing 8% – depending on city rules.
2. Medical insurance covers basic healthcare and hospitalisation. Employers generally contribute 6–10% and employees 2%, plus a small contribution to critical illness cover.
3. Unemployment insurance provides income support during unemployment. Contribution rates vary (around 0.5–1% for employers and 0.2–0.5% for employees).
4. Work-related injury insurance is funded entirely by employers, with rates from 0.2–1.9% depending on industry risk level.
5. Maternity insurance is employer-funded at around 0.5–1%, and provides maternity leave and medical cost cover.

Housing fund

This is one of the most significant employment costs in China. Both employer and employee contribute 5–12% of salary, with exact rates and contribution caps set locally. Funds can be used for buying property, paying rent, or repaying mortgages.

Supplementary and voluntary benefits

Due to China’s competitive labour market, employers commonly offer additional benefits.

Retirement benefits

Large domestic firms and multinationals may offer enterprise annuity plans, contributing around 3–5% on top of statutory pension insurance.

Healthcare benefits

To complement state provision (which only covers a portion of hospital bills), employers often offer:

• Group medical insurance including private hospital access and outpatient cover – due to long waits and limited resources, employees value this highly
• Critical illness insurance for major diseases
• Annual health screening packages
• Wellbeing programmes, such as fitness support, stress-management services, and annual health checks

Employers with the most competitive packages also fund family members’ cover, and dental (“tooth cleaning”) is a widely valued add-on.

Life & accident insurance

Corporate plans often include life and personal accident cover, with benefits linked to salary multiples or fixed payouts for senior employees and expatriates. Policies may offer lump-sum pay-outs of 2–4 times annual salary or fixed sums of RMB 500,000–2 million.

Paid leave

Employees receive 5–15 days of statutory annual leave depending on tenure, alongside 11–13 public holidays, plus generous maternity leave that varies by region (between 98-158 days).

Regional variations to consider

China’s benefits system operates locally, meaning costs and administration differ by city.

Beijing

• Pension: employer 16%, employee 8%.
• Housing fund: generally, 12% each, one of the highest in China.
• Supplementary medical insurance is widely offered, especially in white-collar sectors.

Shanghai

• Pension: employer 16%, employee 8%.
• Housing fund: 7% each.
• Popular top ups include flexible benefits and wellbeing allowances, child education subsidies, and lifestyle perks.

Shenzhen

• Pension: employer 13%, employee 8%.
• Housing fund: 5–12%, depending on employer choice.
• High prevalence of enhanced medical cover due to tech and expat workforce.

Guangzhou

• Pension: employer 14%, employee 8%.
• Housing fund: typically, 5–12%.
• Employers frequently offer family-focused benefits and educational allowances.

Other Tier 2 and Tier 3 cities (e.g., Chengdu, Hangzhou, Wuhan) follow the same national framework but often with lower contribution rates, reducing overall cost.

Popular voluntary benefits

Employers increasingly offer lifestyle-focused benefits to support retention:

• Annual bonuses, often 1–4 months’ salary and paid before Chinese New Year (based on individual and company performance).
• Meal and commuting allowances, particularly in major cities such as Shanghai and Shenzhen – with some employers offering this via an allowance.
• Education and training support, including language courses and professional certifications.
• Housing or rent subsidies, especially in Beijing and Shanghai which have particularly high living costs.
• Wellbeing perks, such as counselling, on-site medical and gym subsidies.
• Holiday buy schemes, gaining popularity among multinational employers in the tech and professional services sectors.

Key considerations for implementing benefits in China

1. Prepare for regional complexity

Contribution rates, eligibility rules and housing fund requirements vary significantly. Benefits technology can help apply the correct rules by location and keep information accurate for employees.

2. Model housing fund costs

In cities such as Beijing and Shanghai, housing fund contributions can considerably increase employment costs. Visibility and flexible modelling tools are essential.

3. Strengthen retention with voluntary benefits

Younger employees, especially in tech hubs, place high value on lifestyle and career-development benefits.

4. Provide bilingual communications

Offering benefits information in both Chinese and English ensures clarity across diverse employee groups.

To learn more about delivering localised and compliant benefits across China — or to see how a global benefits platform can help automate regional requirements — speak to one of our benefits experts.