Chinese firms slow to comply with mandatory social insurance rule

NEW DELHI: While a top Chinese court has made it mandatory for employers and workers to contribute to social insurance schemes for workers, in practice, only around one-third of companies in the country are following the order, according to a media report.

The reason for the social welfare measure not taking off is that the companies see such payments as leading to an increase in costs that reduces their profit margins, while workers say that they do not have enough money to make their contribution, the report on The Japan Times news portal said.

From September 2025, the court made it illegal for workers and employers to avoid social insurance payments, setting the stage for a long-term redistribution of resources from producers to consumers via the welfare system.

Economists see the Supreme People's Court ruling as a pivotal test of Beijing's efforts to improve household finances and rebalance an export-reliant growth model that causes trade tensions and fuels disinflationary pressures, the article stated.

However, six months on, workers, employers, and economists say compliance remains partial, raising questions over China's ability to pursue structural economic shifts, it pointed out. (IANS)

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