Drawbacks of the "Chinese Green Card"
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In previously published articles on various WeChat public accounts, we listed the requirements for obtaining a Chinese permanent residency card, also known as a "Green Card" through marriage, as high talent, and as an investor.
Stay in touch with us if you are in need of these articles or any related information.
While at the end of the articles, we pointed out some of the common drawbacks, we thought it would be essential to remind people that this status is not appropriate for everyone and expand on the most common reasons (in no particular order).
We hope that this article will get foreign nationals thinking about what is best for their specific circumstance, and therefore make a more informed decision before deciding to pursue a Chinese Green Card or not.
Validity period:
The validity period for a "Chinese Green Card" is for only ten years, so effectively, it could be considered a long term visa rather than identification. Since China issued the first green card in 2004, relatively few people have renewed it. Some people we know have been able to renew with just providing their current Green Card, passport, appropriately sized photos, police registration, and application form. In contrast, others got their renewal requests declined due to change of status (e.g., no longer in the investment they made or divorced, etc.). This issue may have something to do with the city regulations where they applied.
Permanent Residency Status:
If accepted, the individual is considered a permanent resident of China. This status could affect life back home, such as regarding loans, access to credit, credit cards, and much more. For many people, it is much easier for access to such things back home than in China due partly to the laws and regulations of your home country.
Chinese Tax Residents:
Foreign nationals are considered Chinese tax residents and get taxed on worldwide income and assets with no way to get around it legally (e.g., with the time out of China).
As noted in other articles about changes in the Chinese individual income tax regulations, China is checking the tax status of its foreign residents through agreements such as CRS, so it is getting increasingly difficult for such to be under the radar. For people that do business around the world, for example, this makes this Chinese legal status an expensive option, at best.
Double Taxation:
As we just mentioned, Green Card holders are considered Chinese tax residents. Other countries may also still require their citizens to pay taxes in their home country, resulting in a potential double taxation scenario. In some instances, this may be avoidable; however, if this is not the case, it may be an essential consideration. For those that not only work in China but also in another country or may have a foreign inheritance, foreign property, or other investments, etc., this may be a particular issue.
Forfeit of Benefits Back Home:
Since this card is not a visa, but a permanent residency in China, citizens of some countries may lose specific benefits back home (such as regarding access to credit, credit cards, voting, banking, etc.). In some cases, there may or may not be other additional requirements, such as maintaining an address back home.
For example, regarding Australian citizens' right to vote or rather their compulsory voting responsibility, if a citizen does not intend to return to the country within six years of registering as an overseas voter, they will lose the ability to vote in elections.
Each country has its laws regarding its individual citizen's status in another country. Therefore, foreign nationals must research their home country's laws to ensure they will not lose any benefits they wish to maintain.
Lack of Social Acceptance/Awareness in China:
Keep in mind that at many railway stations, trains, airports, airlines, and hotels for domestic travel in China, often, the "Chinese Green Card" is not accepted, and one may still require a passport. Then, the questioning may continue regarding the lack of a visa or those who may question if the Green Card is real or what it is as they may not have experienced someone using this form of identification.
Some people reported not being able to use it at the automatic ticketing machines at railway stations, on the train, at the ticketing window, or even swipe at the platform gate without a printed ticket. These days with the second generation Chinese identification card, Chinese nationals can swipe at the platform gate without a physical ticket and show their identification to the ticket check employee on the train. Others reported difficulty in using it to check-in for flights or at airport security in airports and to check into hotels.
Ironically, some even reported a problem with entering China at the Chinese Immigration inspection from overseas with the card. Others said that many banks would not be able to update their accounts with this type of identification or process transactions. Furthermore, having the "Chinese Green Card" allows one legally to work with no work permit and residence permit, but many people reported companies unwilling to accept this identification. We think this is because it is not in the firm's best interest because then the only legal relationship between employer and employee is a contract. Also, firms do not know how to process applicants with such documents.
While legally, it may be allowed to be used as the same as a Chinese national's identification, in practice, many reported not being able to use this type of personal identification.
Combine that to the fact that the systems are not designed to accept the card number, a foreigner's name, or even have an option for selecting it as a form of identification. Keep in mind that China issued several thousand of green cards, mostly in recent years.
For Returning Chinese, we heard some people not being able to prepare all of the required documentation to apply, especially relating to their status when they were a Chinese citizen.
Complying with the Residency Requirement:
A Green Card holder is required to "maintain it" by spending enough time in China per year to demonstrate that their permanent residency is indeed China. If someone does not intend to make their permanent residence in China, then a Green Card may not be the appropriate option for the, or it cannot be renewed.
All Green Card holders are subject to the basic residency requirements. Those determined to be in non-compliance can be charged with "abandonment" of their status. Although all of the elements that the Government may use to determine if someone had abandoned their permanent residence status are beyond the scope of this article, the simplest way to think about it is that the majority of someone's time must be spent in China.
Best Likely Scenario:
We do think that the quintessential type of person that would benefit from the Chinese Green Card is someone that is working in China, and the majority of his or her income is made in China with relatively few assets overseas. The reason is that on a simple level, successful business people who do business around the world or those with significant assets overseas would consider the Green Card an expensive option compared to visas, work permits, residence permits, etc.
People’s perception:
Some people have the perception that the Government is starting to improve on the above drawbacks, whereas others disagree. We need to review the facts that are often discussed. Foreigners make up a relatively small percentage of the population in China, and in addition, naturally, as with any country, services will be geared toward their citizens. Of the number of foreigners in China, a relatively small number have this status.
Overall, it is important for foreign nationals to weigh the pros and cons of obtaining a Chinese Green Card. Each person is different and has a different situation. We hope that this article will get foreign nationals thinking about what is best for their specific circumstance, and therefore make a more informed decision before deciding to pursue a Chinese Green Card or not.
Authors:
Are you looking for more useful tips for your life in China? Get in touch with contributors for a consultation and follow us in our WeChat Group to receive the latest news.
Julian (WeChat: julian_beijing) is based in Shanghai but often travels for work and runs a company that works with individuals and organizations doing business between the US, China, and Africa. He has been based in China for a number of years.
Ikky (WeChat: ikky888) is an R&D Manager working in Shanghai. He has been living in China for over 11 years.
Jatin (known by the nickname "Prince Jatin") (WeChat: jatinsoni) is a Multicloud DevOps Engineer working in Shanghai. He has been living in China for over eight years and owns three Indian community WeChat groups known for "Helping Indians" with their specific inquiries.
Disclaimer:
We have written his article based on the gathering and interpretation of laws and regulations, government official websites, and Internet-related knowledge. If you are in a similar situation, please consult government officials or lawyers for a consultation.
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