Finance and Foreign Exchange

Regulations of the People' Republic of China on the Management of Foreign Exchanges 

(Promulgated by Decree No.193 of the State Council on January 29,1996)

Chapter 1 General Rules

Article 1 These Regulations are hereby formulated to strengthen the management of foreign exchanges, maintain the balance of international payments, and promote the healthy development of the national economy.

Article 2 The foreign exchange administrations of the State Council and their branches(hereinafter referred to as the foreign exchange management administration)shall perform the duty of management of foreign exchanges in accordance with law and take charge of implementation of these Regulations.

Article 3 The foreign exchanges mentioned in these Regulations refer to the following instruments of payment and assets expressed in foreign currencies that can be used for international liquidation:

(1)Foreign currencies including paper money and coins.

(2)Foreign currency pay orders including bills, bank deposits, and postal savings deposits.

(3)Foreign currency negotiable securities including government bonds, company bonds, and stocks.

(4)Special drawing rights and European Currency Units.

(5)Other foreign currency assets.

Article 4 These Regulations are applicable to the foreign exchange receipt and disbursement and foreign exchange business activities of Chinese organizations and individuals, foreign representative offices in China, and foreigners coming into China.

Article 5 The State shall implement the system of compiling statistics and reports of international payments. All units and individuals involved in international payment activities shall compile statistics and reports of their international payments.

Article 6 Foreign currencies shall be banned from circulation in the People's Republic of China and form being used for pricing or account settlement.

Article 7 All units and individuals have the right to report and expose behaviors and activities violating rules on foreign exchange management.

The units and individuals that do meritorious deeds in reporting or exposing cases of violation against rules on foreign exchange management or in assisting relevant departments in handling such cases shall be awarded and kept in secret by the foreign exchange management administration.

Chapter 2 Foreign Exchanges on Current Accounts

Article 8 The current account incomes of foreign exchange of domestic enterprises shall be brought home instead of being deposited abroad without authorization in violation of relevant State regulations.

Article 9 The current account incomes of foreign exchanges of domestic enterprises shall be sold to designated banks in line with State council regulations on the management of their settlement, selling and payment, or deposited into the foreign exchange bank accounts these enterprises have opened, upon approval, with designated banks.

Article 10 The current expenditures of foreign exchanges of domestic enterprises shall be paid with foreign exchange bought from designated banks upon the strength of valid vouchers and commercial bills, as stipulated in State Council regulations on the management of the settlement, selling and payment of foreign exchanges.

Article 11 Check-off procedures shall be gone through, in accordance with State stipulations on the management of the check-off of foreign exchange earnings from exports and the management of the check-off of foreign exchange expenditures for imports, for the collection of foreign exchanges by domestic enterprises from exports and their payment of foreign exchanges for imports.

Article 12 Individual owners of foreign exchanges can hold these foreign exchanges on their own accord, deposit them in banks, or sell them to banks designated to handle foreign exchange businesses.

The principle of "voluntaries to deposit, freedom to withdraw, payment of interests to bank saving deposits, and keeping secret for depositors" shall be implemented for the depositing of foreign exchanges by individuals.

Article 13 Individuals who go abroad for personal businesses can purchase foreign exchanges in prescribed amounts. If they want to purchase more than the prescribed amounts, they can apply to the foreign exchange management administration.

Individuals carrying foreign exchanges with them when they come into or go out of China shall go declaration procedures with the Customs. Those going out of China who carry more than prescribed amounts of foreign exchanges shall also produce valid documents to the Customs.

Article 14 The foreign exchange pay orders, foreign exchange negotiable securities, and other forms of foreign exchange assets held by Chinese citizens residing in China shall not be carried or sent abroad without approval from the foreign exchange management administration.

Article 15 The certificate fees charged in Renminbi by foreign diplomatic and consular organizations in China can be exchanged at banks designated to handle foreign exchange businesses on the strength of relevant documents of verification if these fees should be remitted abroad.

The legitimate Renminbi incomes of other foreign organization in China than those specified in the preceding clause can be exchanged at banks designated to handle foreign exchange businesses on the strength of the notice on foreign exchange sale issued by the foreign exchange management administration after applying to the foreign exchange management administration on the strength of relevant documents of certification, if these incomes should be remitted abroad.

Article 16 Apart from cases described in the second clause of this article, the Renminbi salaries and other legitimate incomes of foreign experts engaged to work in domestic enterprises can be used to buy foreign exchanges from banks designated to handle foreign exchange businesses for being remitted or carried abroad after payment of taxes in accordance with law.

If the salaries and other legitimate incomes of foreigners working in foreign-funded enterprises are in foreign exchanges, these foreign exchanges can be remitted or carried abroad directly after payment of taxes in accordance with law. If they are in Renminbi, they can be exchanged, at banks designated to handle foreign exchange businesses and on the strength of valid vouchers stipulated by the foreign exchange management administration, into foreign exchanges for being remitted or carried abroad after payment of taxes in accordance with law.

Article 17 The foreign exchanges of foreign organizations and individuals residing in China received or taken from abroad can be kept by these organizations and individuals, deposited in banks, or sold to banks designated to handle foreign exchange businesses. They can also be remitted or carried abroad on the strength of valid vouchers.

Chapter 3 Foreign Exchanges on Capital Account

Article 18 The capital-account foreign exchange incomes of domestic enterprises shall be brought home unless otherwise stipulated by the State Council.

Article 19 The capital-account foreign exchange incomes of domestic enterprises shall be deposited, in line with relevant State regulations, into bank accounts opened with banks designated to handle foreign exchange businesses. If they are sold to banks designated to handle foreign exchange businesses, approval shall be won from the foreign exchange management administration.

Article 20 In case a domestic enterprise makes investment in a foreign country, its source of foreign exchange funds shall be examined by the foreign exchange management administration before it applies to its responsible department for examination and approval. After approval, relevant remitting procedures shall be gone through in line with stipulations of the State Council on the management of foreign exchanges used for investment in foreign countries.

Article 21 The borrowing of foreign loans shall be handled in accordance with relevant State regulations by the government departments approved by the State Council or the financial institutions and enterprises approved by the foreign exchange management administration.

The borrowing of foreign loans by foreign-funded enterprises shall be reported to the foreign exchange management administration for registration.

Article 22 The issuing of foreign exchange bonds in foreign countries by financial institutions shall be approved by the foreign exchange administration under the State Council and handled in accordance with relevant State regulations.

Article 23 Foreign-oriented guarantees can be provided only by financial institutions and enterprises meeting conditions stipulated by State regulation and with approval from the foreign exchange management administration.

Article 24 The State shall implement a foreign debt registration system.

Domestic enterprises shall carry out registration of foreign debts in line with State Council rules on the statistics compiling and monitoring of foreign debts.

Foreign exchange administrations under the State Council shall take charge o f statistics compiling and monitoring of the country's foreign debts, and publicizing the country's situation in term of foreign debts.

Article 25 Foreign-funded enterprises terminated in accordance with law shall be liquidated according to relevant State regulations. The Renminbi left to the foreign investor after payment of taxes can be used to buy foreign exchanges from banks designated to handle foreign exchange businesses for being remitted or carried abroad. The foreign exchanges belonging to the Chinese partner shall be sold entirely to banks designated to handle foreign exchange businesses.

Chapter 4 Financial Institutions and Their Foreign Exchange Businesses

Article 26 Financial institutions can handle foreign exchange businesses only with approval from the foreign exchange management administration, and obtain licenses for handling foreign exchange businesses.

No units or individuals shall be allowed to handle foreign exchange businesses without approval from the foreign exchange management administration. The financial institutions approved to handle foreign exchange businesses shall not go beyond their approved scope of businesses.

Article 27 Financial institutions handling foreign exchange businesses shall open foreign exchange accounts for their clients in line with relevant State regulations and handle relevant foreign exchange businesses.

Article 28 Financial institutions handling foreign exchange businesses shall pay reserve funds for foreign exchange bank savings deposits in line with relevant State regulations, abide by stipulations on the management of foreign exchange asset-liability ratios, and establish bad debts reserves.

Article 29 Banks designated to handle foreign exchange businesses shall use their own funds to meet the need of Renminbi in the settlement of foreign exchange accounts.

Proportional management shall be exercised over the foreign exchanges used by banks designated to handle foreign exchanges as working capital, with specific proportions to be verified by the People's Bank of China according to actual conditions.

Article 30 Financial institutions handling foreign exchange businesses shall subject themselves to the examination and supervision by the foreign exchange management administration.

Financial institutions handling foreign exchange businesses shall report balance sheets, statements of losses and gains, and other financial statements and data to the foreign exchange management administration.

Article 31 Financial institutions terminating foreign exchange businesses shall apply to the foreign exchange management administration. Those approved to stop their foreign exchange businesses shall carry out liquidation of their foreign exchange claims and obligations in accordance with law and hand in their licenses for handling foreign exchange businesses.

Article 32 A unitary and well-managed floating exchange rate system based on market supply and demand will be implemented for the exchange rates of Renminbi.

The People's Bank of China shall publish the exchange rates of Renminbi against major foreign currencies according to the prices fixed at interbrain foreign exchange swap centers.

Article 33 Transactions at foreign exchange swap centers shall be governed by the principle of being open, fair, impartial, and honest.

Article 34 The currencies and forms of transaction at foreign exchange swap centers shall be stipulated and readjusted by foreign exchange administrations under the State Council.

Article 35 Banks designated to handle foreign exchanges and other financial institutions designated to handle foreign exchange businesses shall be the dealers at inter-bank foreign exchange swap centers.

Banks designated to handle foreign exchanges and other financial institutions designated to handle foreign exchange businesses shall fix the prices of the foreign exchanges traded between their clients and handle foreign exchange transactions according to the exchange rates published by the People's Bank of China and the floating range specified by this bank.

Article 36 The foreign exchange administrations under the State Council shall exercise supervision and management of foreign exchange swap centers across the whole country in accordance with law.

Article 37 The People's Bank of China shall exercise regulation, in accordance with law, of foreign exchange swap centers according to the requirements of the country's monetary policies and changes at the foreign exchange swap centers.

Article 38 Those who commit one of the following acts of foreign exchange evasion shall be ordered by foreign exchange administrations to recall their foreign exchanges within specified periods of time, forced to exchange the money, and asked to pay fines amounting to more than 30 per cent and below five times the foreign exchange they have evaded, or affixed with legal responsibilities if they commit crimes:

(1)Deposition of foreign exchanges abroad without authorization and in violation of State regulations.

(2)Failure to sell foreign exchanges to banks designated to handle foreign exchanges, as required by State regulations.

(3)Remittance or carrying of foreign exchanges out of the country in violation of State regulations.

(4)Unauthorized carrying or mailing of foreign exchange deposit certificates and foreign exchange negotiable securities out of the country without permission from foreign exchange administrations.

(5)Other acts of foreign exchange evasion.

Article 39 Those who commit one of the following acts of illegal foreign exchange arbitrage shall be given a warning by foreign exchange administrations, forced to exchange the money, and asked to pay fines amounting to more than 30 per cent and below three times the foreign exchanges arbitraged, or affixed with legal responsibilities if they commit crimes:

(1)Payment for imports that should be paid with foreign exchanges in Renminbi, in kind, or in other similar means in violation of State regulations.

(2)Payment in Renminbi of the expenditures of a third party spent in China for repayment from this party in foreign exchanges.

(3)Investment in China by overseas investors in Renminbi or with materials bought in China without approval from foreign exchange administrations.

(4)Purchase of foreign exchanges with faked or invalid certificates, contracts, bills or other deceptive means from banks designated to handle foreign exchanges.

(5)Other acts of illegal foreign exchange arbitrage.

Article 40 Those that handle foreign exchange businesses without approval from foreign exchange administrations shall have their illegal incomes confiscated by foreign exchange administrations and be outlawed, or be affixed with legal responsibilities if they commit crimes.

Financial institutions handling foreign exchange businesses shall be ordered by foreign exchange administrations to make corrections if they handle foreign exchange businesses beyond their scope of businesses, have their illegal incomes if any confiscated and be asked to pay fines amounting to one to five times the illegal incomes, be imposed with fines between RMB100,000 Yuan and RMB500,000 Yuan if they do not reap any illegal incomes, be ordered by foreign exchange administrations to make rectification and consolidation efforts or have their business licenses revoked if they involve in serious cases or fail to make corrections within specified periods periods of time, or be affixed with legal responsibilities if they commit crimes.

Article 41 Banks designated to handle foreign exchanges shall, if they fail to handle foreign exchange settlement and sales in line with State regulations, be ordered by foreign exchange administrations to make corrections, criticized, have their illegal incomes confiscated, fined between RMB100,000 Yuan and RMB 500,000 Yuan, or banned from handling foreign exchange settlement and sale businesses if they involve in serious cases.

Article 42 Financial institutions handling foreign exchange businesses shall, if they go against management of the exchange rates of Renminbi, management of interest rates of foreign exchange deposits, or management of foreign exchange swap centers, be ordered by foreign exchange administrations to make corrections, criticized, have their illegal incomes confiscated if any and fined at between one and five times their illegal incomes, fined at between RMB 100,000 Yuan and RMB500,000 Yuan if they do not reap any illegal incomes, ordered by foreign exchange administrations to make rectification and consolidation efforts or have their foreign exchange business licenses revoked if they involve in serious cases.

Article 43 Domestic organizations with one of the following acts of violation against the management of foreign debts shall be warned and criticized by foreign exchange administrations, fined between RMB 100,000 Yuan and RMB 500,000 Yuan, or be affixed with legal responsibilities if they commit crimes:

(1)Unauthorized borrowing of foreign loans.

(2)Unauthorized issuance of foreign exchange bonds in foreign countries in violation of State regulations.

(3)Unauthorized providing of foreign-oriented guarantees in violation of relevant State regulations.

(4)Other acts of violation against the management of foreign debts.

Article 44 Domestic organizations committing one of the following acts of illegal of foreign exchange shall be ordered by foreign exchange administrations to make corrections, forced to sell their foreign exchanges, have their illegal incomes confiscated, fined at the amount equal to the amount of foreign exchanges illegally used, or be affixed with legal responsibilities if they commit crimes:

(1)Pricing and settlement of accounts at home in foreign currency(currencies).

(2)Unauthorized use of foreign exchanges as mortgages.

(3)Unauthorized alteration of the purpose of the use of foreign exchanges.

(4)Other acts of illegal use of foreign exchanges.

Article 45 Those who buy or sell foreign exchanges privately, under disguise, or for profiteering purpose shall be warned by foreign exchange administrations, forced to sell their foreign exchanges, have their illegal incomes confiscated and fined at above 30 per cent and below three times their illegally traded foreign exchanges, or be affixed with legal responsibilities if they commit crimes.

Article 46 Domestic organizations that open foreign exchange bank accounts at home or abroad without authorization and in violation of stipulations on the management of foreign exchange bank accounts; lend, collusively use or transfer their foreign exchange bank accounts; or change without authorization the scope of use of their foreign exchange bank accounts shall be ordered by foreign exchange administrations to make corrections, have their foreign exchange bank accounts revoked, criticized, and fined between RMB 50,000 Yuan and RMB 300,000 Yuan.

Article 47 Domestic organizations that fabricate, alter, lend, transfer, or repeated use import and export check-off sheets in violation of stipulations on the management of foreign exchange check-offs, or fail to go through check-off procedures shall be warned and criticized by foreign exchange administrations, have their illegal incomes confiscated, fined between RMB 50,000 Yuan and RMB 300,000 Yuan, or be affixed with legal responsibilities if they commit crimes.

Article 48 Financial institutions handling foreign exchange businesses shall, if they violate stipulations in articles 28 and 30 of these Regulations, be ordered by foreign exchange administrations to make corrections, criticized, and fined between RMB 50,000 Yuan and RMB 300,000 Yuan.

Article 49 The party that has objections against the decision of punishment made by foreign exchange administrations can apply to a foreign exchange administration at a higher level for re-discussion within 15 days after receiving the notice on the decision of punishment. This foreign exchange administration shall make a decision of re-discussion within two months after receiving an application for re-discussion. The party that has objections against the decision of re-discussion can lodge a lawsuit with a people's court in accordance with law.

Article 50 Apart from being death with punishments specified in these Regulations, domestic organizations that violate stipulations on the management of foreign exchanges shall have their members in immediate charge and persons immediately responsible disciplined, or affixed with legal responsibilities if crimes are committed.

Chapter 7 Supplementary Rules

Article 51 The connotations of the following terms as used in these Regulations:

(1)"Domestic organizations" refers to the enterprise and institutional units, State organs, social groups, and armed units inside the People's Republic of China. They include foreign-funded enterprises.

(2)"Banks designated to handle foreign exchange" refers to banks approved by foreign exchange administrations to handle businesses of foreign exchange settlement and sale.

(3)"Individuals" refers to Chinese citizens and foreigners who have resided inside the People's Republic of China for one full year.

(4)"Foreign representative offices in China" refers to foreign diplomatic and consulate organizations stationed in China, China offices of international organizations, representative offices of foreign businesses in China, and business organs set up in China by foreign non-governmental organizations.

(5)"Foreigners coming into China" refers to the permanent residents of foreign representative offices in China, foreigners coming to China for shout stays, foreigners employed in China, and foreign students studying in China.

(6)"Capital account" refers to items of transactions taking place frequently in international payments. They include trade incomes and expenditures, incomes from and expenditures on labor services, and unitary transfers.

(7)"Capital account" refers to the increase and decrease of the assets and liabilities arising from the inflow and outflow of capital in international payments. They include direct investment, various loans, and securities investment.

Article 52 Rules on the management of foreign exchanges in bonded zones shall be separately formulated by the foreign exchange administrations under the State Council.

Article 53 Rules on the management of foreign exchanges in border trade and border free markets shall be formulated separately by the foreign exchange administrations under the State Council in line with the principles of these Regulations.

Article 54 These Regulations shall take force on April 1,1996.The Provisional Regulations of the People' Republic of China on the Management of Foreign Exchanges promulgated by the State Council on December 18,1980 and their rules shall be nullified at the same time.