China – major overhaul of work permit system

China has announced implementation of a new single-permit work authorisation system for foreign nationals starting 1 November.

Beijing Immigration update China
The new integrated system is a major overhaul of the Chinese employment immigration scheme and will include new electronic application submission and processing. The system will also combine the current two permit categories – the foreign work permit and the foreign expert certificate – into a single permit with three occupation groups evaluated on a points-based system. The goal is to increase the population of highly skilled foreign talent working in China.

China’s labour market and rising immigration

Since 1978, China has been steadily transforming itself from a centrally planned economy into a market-driven economy. The economic reforms of the past forty years have resulted in the fastest sustained expansion by any major economy in the modern world, with average annual GDP growth of over 10 per cent.Currently the world’s second largest economy, China is expected to surpass the United States to claim the top spot by 2020. While still a developing nation in some respects, and with significant regional disparities in personal income and standard of living, the rapid economic growth has lifted more than 800 million Chinese out of poverty, according to World Bank statistics.Although China has historically been a country of significant emigration to the western world, the country has experienced a 35-fold increase in inbound immigration during that period. A 2015 report of the Center for China and Globalization revealed that almost 850,000 foreign nationals were residing in China – with the top five countries of origin for expatriate employees being the Republic of Korea, the United States, Japan, Burma, and Vietnam. A similar study by the HSBC Group ranked China the third most attractive country for foreign nationals working abroad, and unofficial estimates suggest that their number in China is now rapidly approaching one million individuals. 

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As the Chinese market economy matured and growth slowed somewhat in the last several years, the slower growth in heavy industry and manufacturing brought a relatively new phenomenon to China – corporate “lay-offs” and a low but measurable unemployment rate. However, this unemployment is primarily confined to the lower-skilled labour pool. In contrast, the Chinese high technology industry continues to expand and companies in that industry continue to experience an acute shortage of highly skilled labour.It is precisely this shortage and China’s desire to continue the rapid expansion of its high-tech sector which has driven recent immigration reforms. Recent years have seen a loosening of immigration laws and procedures in an attempt to attract the needed highly skilled foreign talent and encourage the return of highly skilled Chinese nationals from overseas.

The current system – what’s changing?

Because significant immigration into China has been a relatively recent trend, the roots of its current national immigration scheme go back only to its first federal immigration law in 1986 and later refinements in 2012. Much of the current law and practice remains largely local – governed by provincial, regional, and municipal agencies. Therefore, immigration processes in China also vary greatly by region. Because those procedures and requirements differ depending on the location of the foreign national’s work assignment, the appearance to many is that applications are considered almost on a case-by-case basis.This has resulted in a notoriously difficult application process for employees and very little predictability of result for employers. However, a new system to be administered by the State Administration of Foreign Experts Affairs (SAFEA) is attempting to streamline and standardize China’s immigration practice into a unified national system.A new integrated system will formally replace the current system nationwide 1 April 2017, but it will be launched on a trial basis on 1 November of this year in Beijing, Hebei, Tianjin, Anhui, Shandong, Guangdong, Sichuan, and the Ningxia Hui Autonomous Region. Those eight regions are home to the large majority of the companies employing foreign nationals in China.Under the new system, a single permit will replace the current two employment permits – the Ministry of Human Resources and Social Security’s (MHRSS’s) foreign work permit and SAFEA’s foreign expert permit. “The integration of the two different work permits is designed to remove impediments, such as inconsistent administration, policies and inefficient communication related to different and often complicated issues related to the jobs, identities and social status of foreigners,” according to the head of SAFEA. “It will help reduce repetitious checks and approvals, avoid administrative loopholes and improve efficiency by building a more active, open and efficient personnel introduction system…” A new electronic application procedure will reportedly allow applicants to complete and submit applications for the new single permit online. A permanent national code number will then be assigned to the applicant to link the applicant’s personal information and application through the system. The expectation is that this will reduce document submission requirements and significantly decrease the time for approval. Once approved through the new process, SAFEA will issue a “work permit card” equipped with a contactless RFID chip to link the foreign national to their immigration record.The new single work permit will be categorised into three groups – group A for “high-end personnel,” group B for “professional personnel,” and group C for “temporary and seasonal personnel in service and non-technical sectors.”Applicants in each group will then be evaluated on a points-based system, with points awarded based on salary, education, length of service, working hours in China, Chinese language proficiency, region of their workplace, age, and work experience. In evaluating work experience, SAFEA will reportedly also positively consider such criteria as the influence and reputation of the company sponsoring the applicant.The specifics of how points will be awarded in each category have yet to be announced. However, the stated purpose of this new three-category, points-based approach is to greatly reduce the number of permits for lower skilled workers and to significantly increase the number of high-end talent workers receiving permits. The hope of both Chinese employers and foreign nationals in the highly skilled occupations is that the net result will be greater availability of work permits for highly skilled employees and a more transparent and efficient process for application. 

How these changes affect you

The changes to China’s employment immigration scheme represent a major overhaul of the work permits process. This is a fundamental shift away from the current regionalised system to a more national standardised system. The new system should make the process for bringing highly skilled foreign labour to China more convenient and predictable for employers and allow for more strategic workforce planning.For highly skilled foreign nationals, especially those in the high technology sector, it should present more opportunities for employment in China, and the new electronic applications process should ease and speed the issuance of new work permits. However, for foreign nationals in what are considered “lesser skilled” positions, the new points-based system may lead to reduced employment opportunities in China.With 1 November starting date in the initial eight provinces fast approaching, Pro-Link GLOBAL is concerned that SAFEA has yet to issue specific guidelines and procedures for work permit applicants to follow. While this is not necessarily unusual in the governmental process in China, it does present obvious uncertainty for employers anticipating employee assignments in the coming months. At Pro-Link GLOBAL, we believe the changes as currently announced by SAFEA are a major positive step for immigration in China. That being said, employers and employees will need to be prepared for some “growing pains” as the new system is implemented.Pro-Link GLOBAL’s teams in our Shanghai and Tianjin offices continue to closely monitor the official announcements regarding the new system and proactively reach out to our contacts within the government for more clarification of the upcoming processes. We expect to be able to give our clients more concrete details on the new system and the procedures going forward within the upcoming weeks. For our clients with immediate needs in China, please contact your Pro-Link GLOBAL advisor as soon as possible so that we may address your needs and prepare for the changing environment.

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