Key Takeaways
• China’s workforce totals 774 million in 2024 with foreign nationals dropping from 845,000 in 2020 to 711,000 in 2023.
• Foreign workers now mostly low-skilled from developing Asian countries, comprising over 52% of foreign labor in China.
• Hiring Chinese labor is faster and cheaper; foreign nationals require permits and face higher costs and delays.
When considering the makeup of China’s workforce in 2025, two main groups stand out: the overwhelming majority of Chinese labor and a much smaller, shifting population of Foreign Nationals. Over the past few years, the balance between these groups has changed in important ways, affecting employers, foreign workers, and the broader Chinese economy. This comparison will help readers understand the key differences between relying on Chinese labor and hiring foreign nationals, including requirements, costs, timelines, and the pros and cons for different situations. By the end, you’ll have a clear framework to help decide which option best fits your needs in China’s changing labor market.
Overview: Chinese Labor vs. Foreign Nationals in China’s Workforce
China’s workforce is one of the largest in the world, with about 774 million people in 2024 (World Bank). The vast majority are Chinese citizens, but a small group of foreign nationals also work in the country. However, the number of foreign nationals has dropped sharply in recent years, especially among high-skilled workers from developed countries. At the same time, there’s been a big increase in low-skilled foreign labor from nearby developing Asian countries.
Let’s break down the main features of each group before comparing them side by side.
Chinese Labor: The Backbone of the Workforce
- Makes up almost all of China’s workforce
- Includes both high-skilled and low-skilled workers
- Supported by government policies that favor local hiring
- Benefits from recent labor law reforms, including better social security and retirement options
Foreign Nationals: A Shrinking and Changing Group
- Numbers have dropped from about 845,000 in 2020 to 711,000 in 2023
- Fewer high-skilled workers from developed countries (Germany, France, Italy, South Korea, Japan, Singapore)
- More low-skilled workers from developing Asian countries (Myanmar, Vietnam, Laos, Cambodia), now over 52% of the foreign workforce
- Foreign labor is moving away from big cities (Shanghai, Beijing, Guangzhou) to provinces like Yunnan
Now, let’s compare these two groups in detail.
Side-by-Side Analysis: Requirements, Timelines, and Costs
1. Hiring Requirements
Chinese Labor:
– No special permits needed for most jobs
– Employers must follow Chinese labor laws, including contracts, social security, and retirement rules
– Recent reforms have increased retirement ages and improved worker protections
Foreign Nationals:
– Work permits and residence permits are required
– Employers must prove the job cannot be filled by a Chinese worker (especially for high-skilled roles)
– Must comply with strict labor laws, including social security contributions and pension payments
– Extra paperwork for cross-border HR data transfers and compliance checks
Key Documents for Foreign Nationals:
– Foreigner’s Work Permit (issued by the Ministry of Human Resources and Social Security)
– Residence Permit (issued by local Public Security Bureau)
– Employers must register foreign workers with authorities and keep records up to date
For more details on work permits and official requirements, visit the Ministry of Human Resources and Social Security website.
2. Timelines
Chinese Labor:
– Hiring process is fast—no need for extra government approvals
– Onboarding can happen as soon as a contract is signed
Foreign Nationals:
– Longer process due to paperwork and approvals
– Getting a work permit can take several weeks to months, depending on the worker’s background and the employer’s readiness
– Delays are common if documents are missing or rules change
3. Costs
Chinese Labor:
– Lower direct costs for most roles, especially low-skilled jobs
– Employers pay social security and pension contributions, which have increased slightly with recent reforms
– No extra fees for permits or legal compliance beyond standard labor laws
Foreign Nationals:
– Higher costs overall
– Application fees for work and residence permits
– Legal and translation fees for documents
– Higher social security and pension contributions (sometimes at rates above those for Chinese workers)
– Possible relocation and housing allowances for high-skilled expatriates
– Costs have risen due to new labor law reforms and stricter enforcement
Pros and Cons for Different Situations
Chinese Labor
Pros:
– Easy to hire with minimal paperwork
– Lower costs for most positions
– Familiarity with local culture, language, and business practices
– Supported by government policies and reforms
– No risk of visa or permit issues
Cons:
– Shortage of certain high-skilled talent in some industries (though this gap is shrinking)
– May lack international experience or foreign language skills for some global roles
Foreign Nationals
Pros:
– Bring unique skills or knowledge not always available locally (especially in specialized industries)
– Can help multinational companies bridge cultural or technical gaps
– Low-skilled foreign labor from developing countries can fill jobs that are hard to staff locally
Cons:
– Complex and time-consuming hiring process
– Higher costs due to permits, legal compliance, and social security
– Uncertainty due to changing laws and policies
– Fewer opportunities for high-skilled workers from developed countries
– Risk of delays or legal issues if rules are not followed exactly
Geographic Shifts: Where Are Foreign Nationals Working?
A major change in recent years is the movement of foreign labor away from big cities like Shanghai, Beijing, and Guangzhou. These cities have seen a 40% drop in foreign populations since 2020. Instead, more foreign nationals—especially low-skilled workers from Myanmar, Vietnam, Laos, and Cambodia—are working in provinces like Yunnan, which borders several Southeast Asian countries.
Why the shift?
– Lower costs and easier access for workers from neighboring countries
– Local demand for low-skilled labor in border provinces
– Government focus on local talent in major cities, making it harder for foreign nationals to get jobs there
Policy and Legal Context: What’s Changed?
China’s government has made several important changes to labor laws and policies in 2024-2025:
- Phased increase in retirement age (men from 60 to 63, women from 50/55 to 55/58)
- Expanded social security and pension benefits for all workers
- Stricter rules for hiring foreign nationals, including proof that no local worker can fill the job
- Relaxed rules for cross-border HR data transfers, but with more oversight
- Stronger worker protections and easier ways to resolve labor disputes
These changes mean that employers face higher costs and more paperwork when hiring foreign nationals. At the same time, local Chinese labor is becoming more attractive due to better benefits and easier hiring.
Recommendations for Specific Circumstances
When to Choose Chinese Labor:
– For most jobs, especially low- and mid-skilled roles, Chinese labor is the best choice. It’s easier, cheaper, and supported by government policy.
– If you need workers who understand local business practices, language, and culture, local talent is the clear winner.
– For companies looking to avoid legal risks and extra costs, hiring Chinese labor is the safest option.
When to Consider Foreign Nationals:
– If your company needs specialized skills or experience that are hard to find in China, hiring a foreign national may still make sense.
– For roles that require deep knowledge of international markets or foreign languages, a foreign worker can add value.
– In border provinces like Yunnan, where there is strong demand for low-skilled labor, hiring workers from neighboring countries can help fill gaps.
Special Note: The number of high-skilled foreign nationals from developed countries is shrinking fast. If you plan to hire from this group, expect more challenges and higher costs.
Decision-Making Framework
To decide between Chinese labor and foreign nationals, consider these steps:
- Define the Job Requirements
- Is the job low-skilled, mid-skilled, or high-skilled?
- Does it require special technical knowledge or language skills?
- Check Local Talent Availability
- Can you find qualified Chinese workers for the role?
- Are there shortages in your industry?
- Assess Costs and Timelines
- Compare the costs of hiring local vs. foreign workers (including all legal and permit fees)
- Consider how long it will take to hire and onboard each type of worker
- Review Legal and Compliance Risks
- Are you prepared to handle the extra paperwork and legal requirements for foreign nationals?
- Can you keep up with changing labor laws and social security rules?
- Consider Long-Term Business Needs
- Will your company benefit more from local knowledge or international experience?
- Are you planning to expand in regions where foreign labor is more common (like Yunnan)?
- Stay Updated
- Labor laws and policies in China are changing quickly. Check official sources like the Ministry of Human Resources and Social Security for the latest updates.
Practical Guidance for Employers and Workers
For Employers:
– Focus on local recruitment whenever possible to save time and money
– If you must hire foreign nationals, start the process early and prepare for extra paperwork
– Monitor policy changes closely to avoid legal trouble
– Consider expanding recruitment to provinces where foreign labor is growing, like Yunnan
For Foreign Nationals:
– Opportunities are shrinking for high-skilled workers from developed countries—be prepared for more competition and stricter rules
– Low-skilled workers from neighboring Asian countries may find more openings, especially in border regions
– Make sure all documents are complete and up to date to avoid delays or legal issues
Looking Ahead: The Future of China’s Workforce
Experts agree that Chinese labor will continue to dominate the workforce. The number of foreign nationals—especially from developed countries—will likely keep dropping. At the same time, more low-skilled workers from developing Asian countries will come to China, mainly to work in provinces near the border.
This trend is driven by:
– Government policies that favor local talent
– Demographic changes (an aging population and a need to keep more people working longer)
– Stricter labor laws that make it harder and more expensive to hire foreign nationals
– Competition from other countries (like Singapore and Vietnam) that attract high-skilled expatriates
As reported by VisaVerge.com, these changes mean that both employers and foreign workers must adapt quickly to stay successful in China’s labor market.
Conclusion
Choosing between Chinese labor and foreign nationals in China’s workforce depends on your company’s needs, the type of job, and your ability to handle legal and compliance requirements. For most roles, Chinese labor is the easier, cheaper, and safer choice. Foreign nationals can still add value in special cases, but hiring them is now more complex and costly than ever before.
Stay informed by checking official sources like the Ministry of Human Resources and Social Security for the latest rules and updates. By carefully weighing the pros and cons, you can make the best decision for your business or career in China’s changing workforce.
Learn Today
Foreign Nationals → Non-Chinese workers employed in China, requiring special permits and compliance with immigration and labor laws.
Work Permit → Official authorization issued by the Ministry of Human Resources allowing foreigners to work legally in China.
Residence Permit → Local government-issued document permitting foreign nationals to reside in China during their employment period.
Social Security Contributions → Mandatory payments by employers for worker benefits, including pensions and healthcare, covering local and foreign employees.
Labor Law Reforms → Recent legal changes in China enhancing worker protections, increasing retirement age, and tightening foreign worker regulations.
This Article in a Nutshell
China’s workforce is shifting: local labor dominates with easier hiring and lower costs, while foreign nationals, mostly low-skilled, face stricter permits, higher expenses, and geographic shifts from big cities to border provinces like Yunnan. Employers must weigh these changes to optimize hiring amid evolving labor laws and policies.
— By VisaVerge.com
