What Does China’s Slowdown Mean for Expats and Companies That Employ Them?

Dan Harris of ChinaLawBlog writes in the Wall Street Journal that China’s economic slowdown may impact companies’ ability to companies’ ability to sponsor PRC business and work visas.

He forecasts that

China is going to get tougher on foreigners, just as it (and nearly every other country) has always done when times are tough. Everything foreign businesses do will be under heightened scrutiny, both from the government and from the public.

New immigration rules and visa requirements are one consequence of this protectionist attitude. A few months ago, a foreign male was caught on video assaulting a female Chinese citizen. China’s Internet was quickly abuzz and within weeks, the government enacted new immigration laws and very publicly announced that it would be cracking down on illegal foreigners—a step that will hit any foreign company that has been posting employees to China without dotting every “i” and crossing every “t” in the visa paperwork. If China’s economy had been zooming along at 10% growth, this incident would have blown over within a few days with no lasting impact. Not anymore.

Here’s my take. The outlook for foreigners may parallel that of China’s internal migrants. Beijing government statistics show that the city’s migrant population decreased by 600,000 to 8.3 million during 2011, according to the Economic Observer. The demand for migrant workers has fallen as the city’s economic growth has slowed. Various city policies have also had the design or impact of making life harder for migrants, such as restrictions on purchasing property and cars by non-permanent residents.

So foreigners and companies who employ them should prioritize compliance related to business and work visas.

And be prepared for tax, social security, and other changes in the regulatory environment that favor locals.

What do you think?

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