BEIJING - In July, China's Social Insurance Law will be amended to include foreign workers in China in the social security system. Within the new law, the terms "compulsory insurance" and "citizens' treatment" are the main principals.

As the Chinese economy grows, more and more foreigners have come to China in the hopes of finding a job. With more jobs available and China's global competitiveness on the rise, the demand for a social net has been heightened. It was therefore a good decision to cover foreigners through an insurance system.

First, the law is in line with international practices. In terms of labor rights, treating foreign employees on equal footing as national citizens is a reflection of China connecting to the globe. Foreign employees who work in China have the right and obligation to be covered by the national social insurance system.

Foreign employees with legal permits to work in China will be covered by the new law but the group of legally permitted foreign employees include two sub-groups. One group will include employees from foreign enterprises, institutions, social organizations, foundations, law firms, accounting firms and other organizations established in China. The other group will include employees who have contracts with their employers overseas and have been sent to work in China. The former will be provided social insurance by their employers in China and the latter will be covered in the local employment insurance policy that will be based on his or her place of residence in China.

The new law follows the rule of "national treatment". When foreign employees are covered by the social insurance system and have most of the same basic rights as Chinese citizens, it will be a strong signal to the world that China is treating foreigners equally. This treatment is meaningful in an era of globalization. The introduction of the "citizen treatment" not only protects foreign employees in China, but it paves the way for a bilateral agreement to do away with any double payments of social insurance fees and dues. If dual but separate payments for social security are avoided, it will aid in the future protection of Chinese employees when they work in other countries.

The new law meets China's demand for talent. Although the new law may add a financial burden to companies, it is the enterprises' obligation to cover an employee's insurance. Most importantly, when foreigners are covered by China's national social insurance system, it will increase the country's allure to overseas talents.

There is a growing population of elderly people in China and there is also a shortage of young labor. These will in the end bring negative impacts to every field the economy covers. But as foreigners come to work in China and receive coverage in the national social insurance system, the working population in China will grow. This could help solve the shortage of social insurance capital.

But there is much reform that needs to be done to the social security system. China should also improve the social welfare of migrant workers as well as disadvantaged groups to make sure both foreigners and Chinese are treated equally in the national social insurance system.

The author is an independent economics commentator.

For China Daily