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Chinese enterprises see relieved financial burdens with social insurance contribution cut

Updated: Jul 19,2019 09:56 PM    Xinhua

BEIJING — Chinese enterprises, especially medium- and small-sized firms, have seen less financial burdens as the implementation of a social insurance contribution cut makes headway.

In the first half of this year, reduced contributions in aged-care insurance, unemployment insurance and work injury compensation insurance premiums topped 128 billion yuan ($18.59 billion), according to You Jun, vice-minister of human resources and social security, at a news briefing on July 19.

In March, China approved measures to cut the social insurance contribution of businesses as part of its efforts to reduce the burden of companies and boost market vitality.

The policy dividends are shifting to the growth engine of the real economy, You said.

“Some companies repurposed the reduced contributions to develop their businesses and expand employee benefits, which stabilized employment and spurred the growth,” You said.

Meanwhile, lower contribution rates of enterprises and lower thresholds of individual contributions are conducive to enterprises including more employees in the basic aged-care insurance system and forming a virtuous cycle of corporate and pension system development, You added.

To ensure that basic pensions are paid on time and in full, China decided to replenish social security funds through the injection of State capital this year.

A total of 10 percent of the State-owned equity from 59 State-owned companies and financial institutions with an expected value of 660 billion yuan will be transferred to the National Council for Social Security Fund (NCSSF) and relevant local entities.

However, the decision will not interfere with companies’ daily management, said Lu Qingping, head of the asset management department of the Ministry of Finance.

“The NCSSF and other long-term financial investors will receive dividend payment but will not be involved in the daily operations of the companies,” Lu said.

Emphasizing that the pension system is running smoothly, You said the country is able to ensure punctual payment of basic pensions.

The total balance of aged-care insurance exceeded 5 trillion yuan as of the end of last month, which is enough to fund 18 months of pensions, You added.