In the news: Expats avoid social insurance and KPMG turns over audit documents
December 18, 2013 | BY
clpstaff &clp articles &Expats in China are avoiding paying their social insurance, while KPMG has finally started giving US regulators their audit documents for Chinese companies
China Daily ran a story that only 200,000 expatriates or 20% of foreigners working in China participate in the social security programmes. It has been two and half years since the PRC Social Insurance Law became effective and extended social insurance to foreigners. Pension, medical, unemployment, work injury and maternity are the five programmes foreigners are expected to participate in. Hu Xiaoyi, vice minister of human resources and social security, admitted that the 20% was a small number.
This comes as no surprise. Foreigners have been resisting social insurance contributions since the Law came out. Many feel that they will not be in China long enough to enjoy the benefits of paying into these schemes. In addition, only a handful of countries have signed social security agreements with China. This means that some foreigners who participate end up paying double in contributions. Foreigners have also experienced great difficulty using their health contributions at hospitals. This makes social insurance undesirable for most expatriates in China.
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The Wall Street Journal reported that KPMG has handed over audit documents of Chinese companies to US regulators. The move is part of a deal reached between the two nations, allowing access to certain documents. Before this deal, tensions were high between the US and China. It is expected that the US regulators will use the documents to investigate potential accounting irregularities by US listed Chinese firms. KPMG's Hong Kong-based chairman confirmed the company had granted control access, in cases where the governments agree.
This is believed to be the second transfer of documents since the agreement was signed. KPMG's chairman also noted that they had provided documents on very few companies to the US regulators. It will be interesting to see if this controlled access, which is allowed under the agreement, is enough to satisfy the US regulators. Commentators had noted previously that the US wanted full access to any documents, but China was not willing to cave in.
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