My friend recently sent me this:

“According to Shanghai Daily, the National People’s Congress Standing Committee is currently discussing a draft law that will shorten the minimum stay for foreigners who come to China to 90 days, with the residence permits ranging in validity from six months to five years.

The draft law was designed with the aim of curbing the illegal entry, stay and employment of foreigners and stipulating harsher punishments for people who enter or exit the country illegally.

Since foreigners need to go through screening again when they want their residency permits renewed, the new rule will raise the frequency of checks, legislators said.

Foreigners need a work permit to be legally hired, and certain groups, such as those entering on an L or F visa – referring, respectively, to students staying for less than six months for cultural-exchange programs and tourists – are not allowed to be employed in China. Foreign students are also not allowed to work here.

I’m pretty sure the article has that “respectively” bit confused, as L visas would apply to tourists. While F visas would apply to people entering China for “China for a visit, an investigation, a lecture, to do business, scientific-technological and culture exchanges , short-term advanced studies or internship.” Students staying to study for more than 6 months require an X visa.

The report goes on to say that the number of “foreign visitors” (by definition, aren’t all visitors foreign?) has increased by 10 percent each year since 2000, and currently there are about 220,000 foreigners legally working in China, which represents about 37 percent of the legal foreign residents in the country.

The Ministry of Public Security said they seized more than 20,000 foreigners across the country last year who were illegally staying or working.

They were fined or deported depending on the seriousness of the offense.

Many of the illegal foreign workers were found in the language training, domestic housekeeping and showbiz sectors, the ministry said.

Illegal workers usually entered on a student or short-visit visa, it said.

The capital city of Beijing is currently cracking down on foreigners working illegally in China or staying in violation of visa rules.

Police say the number of illegal foreign workers in the country has been growing substantially over the past few years.

As has been said countless times since the whole “crack down” began about a month and a half ago, the tightening of the screws really only applies to foreigners working illegally in China, so if you’re not legal — get legal. If you’re working for a school that will not provide the proper visas, know that it’s on you, not them to assure your legality in the country, and any slap on the wrist they may receive for hiring you illegally will pale in comparison to the fines and possible deportation you face.

Looking at all the coverage this has received lately, I’m sure I’m not the first to see a connection between this “crack down” and the roll-out of the new law announced late last year requiring foreigners and their employers to pay social insurance. It’s not hard to see that if a bunch of foreigners are working “under the table”, that money isn’t going to be collected to the extent it could be.

Matthew Stinson recently wrote up “ Six Points on Social Insurance for Foreigners “, a collection six questions / thoughts that Matthew had after experiencing the new policy coming into play at his job. If you work in China and will be paying the tax, it’s a definite must read — and even if the new law doesn’t apply to you, it’s a worth a look.

The big take-away from it is just how messy the new system is — at least as messy as it was, if not more so. The even bigger take away is what a money grab it is. Though for some it is surely going to allow easier access to the country’s social programs, assure a retirement cushion, etc.; but for the vast majority, it’s a joke. It’s no small sum of money (in around 10% of your salary, matched by 33% from your employer), and it’s money that most foreigners (and even more so, their employers) are essentially going to be pissing down the drain, as they’ll never use the social programs they’re intended to bestow upon the payer.

The law only applies to foreigners with a “Foreign Experts Certificate,” aka the “work visa” aka the Z Visa aka the Zed Visa. Here’s where the perverse incentives come into play. If a foreigner has a tourist visa, business visa, or marriage visa and is thus working illegally (Yang Rui knows who you are!), he / she won’t have to pay into the system. In fact, the requirement that employers must make contributions on our behalf means that, all other things being equal, an illegal employee is going to be considerably cheaper than a legal one, even if the foreigner in question has exactly the same contract salary as his / her legal counterpart. Moreover, employers during the next round of contract renewals may decide to pressure employees into changing their visas and working illegally so as to cut costs, and foreigners themselves may agree, figuring that the risks of being one of the san fei is worth the benefit of paying fewer taxes. At the same time, an employer wishing to stay aboveboard may decide to keep employees legal but refuse to offer raises during the next contract on the grounds that we are now receiving the “benefit” of social insurance. We haven’t even factored freelance workers into the equation – those working legally should fall under the aegis of the social insurance law, which begs the question of whether they or their employers are prepared to pay the tax.

For most China-watchers / -livers, this surely seems somewhat typical. Tighten visa regulations to force foreigners into a more “legal” status and clean up industries that have become rife with illegal workers, to insure more uniform application of a new law for collecting taxes for legal works, which will in turn incentivise employers to higher workers illegally.

But, there you have it. I’m curious to hear if anyone has any experience with either tightening of visa restrictions or the roll-out of the new social insurance law. If so, please drop a note in the comments below. Posted in China Expat Advice , China Expat Life on June 28th, 2012.”