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Going Back to China to Retire: A How-to Guide

By Jean Folger December 3, 2015 — 2:15 PM EST

If you or your parents were born in a foreign country, you may want to return there during your retirement years. If you are an American and that country is China, the normal questions – taxes, owning property, what happens to your American Social Security benefits – may be further complicated by the political relationship of the U.S. and China. This guide will help you get started navigating the process. (For a look at how affordable it can be, see This Is How You Could Live in China on $1,000 a Month.)

Your Social Security Benefits

As a U.S. citizen you can continue to receive  Social Security payments while living in China for as long as you are eligible. If you are eligible for those benefits and are a citizen of China but not of the U.S., “you have met an exception to the alien nonpayment provisions of the Social Security law,” according to the Social Security Administration, and your payments will continue while you are out of the U.S. for six consecutive calendar months, or more, depending on your situation. Use the Social Security Administration’s Payments Abroad Screening Tool to learn more.

You can have your benefits deposited directly into a bank account or other financial institution in the U.S. or China (or in any country that participates in the Social Security Administration’s International Direct Deposit program). Direct deposit has several advantages: You’ll get your money faster than if you rely on snail mail for your checks, plus you eliminate the risk that a check will be delayed, lost or stolen. If your benefits are deposited in a U.S. bank (most benefit recipients living in China choose this option), you can use your ATM card to access funds while abroad. Alternatively, you can elect to have your benefits mailed to your address in China.

The American Citizen Services office at the U.S. Embassy in Beijing provides basic information and forms regarding Social Security checks and acts as a distribution agency for benefit checks to eligible recipients living in China. Most federal benefit-related needs are handled through the Social Security Administration regional office in Manila, Philippines. The office can be reached at (63-2) 301-2000 ext. 9 from 8:00 a.m. to 3:00 p.m., Monday through Friday.  Or, email ([e-mail]) for more information.  (For more on your benefits, see Social Security’s Role in Your Retirement Planning.)

Keep in mind that Medicare does not cover any health services you receive outside the U.S. If you return to the States, Medicare benefits will be available, but you will pay a 10% higher premium for every 12-month period you could have been enrolled but were not. 

Land-Ownership Laws

In general, foreigners who have worked or studied in China for at least one year can buy property in the country. While specific requirements vary by region (in Shanghai, for example, foreigners can buy a house only if they are married and able to provide the local authorities with tax records for 12 of the previous 24 months), foreigners can only own one property, and it must be residential and owner-occupied – you can’t rent it out. Once you have lived in China for the requisite one year, you can visit the local Municipal Bureau of Public Security to obtain proof of your one-year residence. After that, you can buy directly from a developer/owner, or work with a real estate agent to guide you through the process. It's important to note that all foreigners must visit the local Foreign Office to have the purchase approved by the government; once approved, you can complete the transaction. 

Even though you can buy a house, foreigners and residents alike don't actually own the land a home is built on; the government does (urban land is owned by the state; rural land is owned by collectives). When you purchase a house, you end up with a 70-year lease/land-use rights for the land beneath it. When those 70 years are up, the lease may be extended, but at this point the process for doing so remains ambiguous.

Citizenship and Visas

China does not recognize dual nationality for its citizens. Chinese citizens who obtain foreign citizenship of their own free will automatically lose their Chinese citizenship. If you were born in China and neither of your parents was a Chinese citizen, you will be considered a foreigner. Similarly, if one or both of your parents are Chinese nationals but have settled abroad, and you acquired foreign nationality at birth (e.g., you were born in the U.S.), you are considered a foreigner. 

China does not offer a retirement visa scheme similar to nearby countries like Thailand, Malaysia and the Philippines, but there are several options if you are not a Chinese citizen and wish to remain in the country long-term. One way to live in China during retirement is to use back-to-back tourist visas (L) or a longer-term visa designed for workers and investors – a popular strategy is to work part-time as a teacher or English tutor, which  qualifies you for a work visa (Z). If you have immediate family living in China, another option is the Family Reunion Visa (Q1), which is issued to relatives of Chinese citizens seeking a family reunion. All Z (work), X1 (student), Q1 (Family Reunion), S1 (private visit) or D ("China Green Card") visa holders must apply for a Temporary Residence permit within 30 days of entry into China. 

Beginning in Nov. 2014, the U.S. and China enacted a reciprocal visa agreement which increases the time period during which short-term business and tourist visas issued to both countries’ citizens are valid. Most U.S. passport holders eligible for short-term business (M) and tourist (L) visas will be issued the new “10-year visa,” a multiple-entry visa that’s good for 10 years. It’s important to note that this visa does not allow you to stay in the country for 10 consecutive years; it just means you don’t have to keep reapplying for a visa each time you visit over the course of those 10 years. Your stay will still be limited by the type of visa: 60 days for both L and M visas. 

One other option: If you are married to a Chinese citizen, you can apply for a spousal visa. You must first enter the country on a business or tourism visa, and you’ll need to submit proof that you are healthy. China does have a Certificate of Permanent Residence of Aliens (those 18 and over can get one for 10 years), but these are very difficult to obtain. Those lacking family ties to Chinese citizens may be able to obtain them for certain levels of employment or investment.

Taxes

Your tax liability in China depends on how long you’ve been living in the country and the source of your income. In general, you will be taxed on any China-sourced income if you have been in the country for fewer than 183 days. If you stay more than 183 days, you will be taxed on any China-sourced and foreign-sourced income. The U.S. and China have a tax treaty in place, and even though you have to file in both countries, you’ll be able to avoid double taxation by using certain exclusions and tax credits. Tax laws are complicated and change frequently, so it’s advisable that you work with an experienced tax accountant to make sure you receive the most favorable tax treatment possible.  

The Bottom Line

In addition to figuring out the logistics of moving abroad, it’s important to think about the emotional impact of living in a foreign country. Anyone who has lived abroad knows that visiting and living in a foreign country are two very different things. If you weren't raised speaking the language, China can be more difficult than some countries - especially if you're not living in a major city with many expats. In addition to potential language barriers, your comfort zone may be frequently tested as you adapt to your new surroundings, customs and way of life.

While there are retirees who jump right in and embrace a new adventure, others may find it downright overwhelming. If that describes you, it may be more comfortable for you to live overseas only on a part-time basis so you can return periodically to the comforts of home. If your situation allows, try to consider your comfort level, friends, family and healthcare needs before making a decision to retire abroad. (See Retirement: U.S. vs. Abroad for additional insights.)

Note: The Department of State’s Smart Traveler Enrollment Program (STEP) provides security updates and makes it easier for a U.S. embassy or consulate to contact U.S. citizens nearby in the case of an emergency. If you are living or traveling abroad, it’s a good idea to enroll in STEP.

Read more: Going Back to China to Retire: A How-to Guide | Investopedia https://www.investopedia.com/articles/personal-finance/120315/going-back-china-retire-howto-guide.asp#ixzz50OhicPYl 
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