Chinese people’s confidence in social insurance (social security) has long been on the verge of collapse, but the new regulations that came into effect in September are forcing people to pay higher fees. As the economy declines and people’s incomes shrink, social security rates are not decreasing but instead rising. For many Chinese, social insurance feels like a bottomless pit.
Chengdu blogger “Xikang” is a freelancer. On September 25, he stated that even though he knows social security is a bottomless pit, he now has to start paying for it. This is because he paid social security for over a decade at his previous workplace. If he doesn’t continue to pay for social security, all the years of contributions will be wasted. “This forces me to start paying for social security now, it’s a reluctant choice,” he said.
The Chinese social security system is divided into “Five Insurances and One Fund,” with the total contribution rate for companies and employees ranging from a minimum of 40% to over 60%, far exceeding developed countries like Germany with a 35% rate.
Each year from June to August, provinces in mainland China announce the local average wages (social average wage), which determines the payment base for social security contributions.
Social security sets a “payment base,” determined by an individual’s average monthly salary from the previous year. The upper and lower limits of the “payment base” are determined by the local social average wage. When the lower limit of the payment base increases, the social security costs paid by companies also increase.
In previous years, from mid-June to mid-August, provinces across the country have successively announced the upper and lower limits of the social security payment base for the year. The local human resources and social security departments use this information to determine the latest social security payment base for the year – the upper limit is usually 300% of the previous year’s social average wage, and the lower limit is usually 60% of the social average wage.
However, as of September 4 this year, many provinces, including Sichuan, have not yet announced the social security payment base. Recently, most provinces have only just released the 2025 social security payment base and 2024 average wage data.
On social media platforms, complaints from the public are increasing. Financial blogger “Tom” mentioned that the social average wage does not account for the millions of “flexible employees,” such as food delivery drivers, ride-hailing drivers, and freelancers, who are all excluded. This leads to a ridiculous situation where many people’s actual wages are not increasing and even decreasing, yet the social average wage is artificially inflated, resulting in higher social security payments year after year. The pressure is even greater for those “flexible employees” who have to pay for their own social security.
“Xikang” mentioned that the official announcement in Sichuan stated that the 2025 social average wage had increased to 7,518 yuan.
“Everyone knows that China’s economy has been declining in recent years, with people’s incomes generally shrinking every year. But the official social average wage level announced every year keeps rising significantly,” he said.
He pointed out that in 2023, the official average wage in Sichuan was 7,076 yuan, and this year it increased by about 500 yuan, a 7% to 8% increase. Consequently, the social security payment base also increased.
He said that from 2019 until now, the social average wage has been rising year after year. However, it is meaningless as the figures are manipulated by the authorities and only go up without any decrease. In 2023, employee social security contributions rose by 67.22 per month. In 2025, they have to pay an additional 115.18 per month. “It’s too much, the authorities are shameless.”
With the Chinese economy persistently sluggish, the increase in social security fees is deemed unaffordable for both companies and employees. “Tom” mentioned that for those in flexible employment who have to pay for their own social security, the additional monthly payment is truly burdensome.
“Xikang” pointed out, “With the rise in social security fees, many private enterprises may have to shut down, leading to a large number of closures. It’s tough for them.”
China’s current social security system is categorized into three main groups: civil servants, urban enterprise employees, and the bottom tier of society – rural migrant workers. After retirement, civil servants can receive monthly pensions and other benefits ranging from 10,000 to 20,000 yuan, while urban enterprise employees can receive two to three thousand yuan. On the other hand, hundreds of millions of rural migrant workers can only receive one to two hundred yuan, a difference of over a hundred times compared to retired officials, whose pensions can also be increased annually. “Xikang” believes this is a severe form of inequality.
In recent years, news of the imminent bankruptcy of the Chinese social security fund has been ongoing. Many local governments have misappropriated social security funds to plug fiscal gaps. A report from the Chinese State Council released in late June stated that over twenty provincial-level governments misappropriated 60.2 billion yuan of pension funds for debt repayment, salary payments, etc., further eroding the public’s trust in the already floundering social security fund.
According to a survey conducted by the Zhonghe Cloud Group on six thousand companies last year, only 28% of enterprises comply with social security contribution regulations. A research report from the Chinese Academy of Social Sciences in 2019 had already warned that the basic pension fund in China will be exhausted by 2035.
“Xikang” believes that the target year of 2035 could be brought forward due to worsening economic conditions, declining youth employment rates, and fertility rates. He said, “With the imminent bankruptcy of the social security fund, for young people retiring after 2035, paying for social security is almost a one-way street, more like a compulsory tax.”
At this time, the Chinese Communist government strictly enforces the mandatory payment of social security contributions, raising suspicions from the public that it’s simply a way to extract more money from workers to prevent the accelerated bankruptcy of the social security fund. According to official figures, the deficit in China’s social security system continues to expand, with the central government subsidizing the social security fund by over 2.4 trillion yuan in 2023 alone.
“Xikang” believes that the Communist government’s unfair and opaque system has made social security a heavy economic burden for the average person, shaking people’s confidence in its pension function.
“Tom” pointed out the paradox that as the social security payment base keeps rising, those with lower incomes, who need the protection the most, can’t afford to pay and end up withdrawing from the system. This results in people being pushed away the more the authorities try to collect social security payments.