Laws of the People's Republic of China

Whole document

Chapter I General provisions

   Article 1

These regulations are formulated with a view to improving the

management of the exchange system, maintaining an equilibrium in the

balance of payments and promoting sound economic growth.

   Article 2

The government agencies of the State Council in charge of the

administration of the exchange system and their local offices (hereafter

the exchange administration agencies for both) shall exercise exchange

management in accordance with the law and assume the responsibility for

the implementation of the regulations.

   Article 3

Foreign exchange as referred to in the regulations includes means of

payments and assets denominated in foreign currency for international

settlement as the following:

1. foreign currencies, including bank notes and coins;

2. payment instruments denominated in foreign currency, including

bills, bank certificate of deposit and certificate of postal deposit etc.

3. securities denominated in foreign currency, including government

bonds, corporate debentures and stocks etc.;

4. Special Drawing Rights and European Currency Units; and

5. other assets denominated in foreign currency.

   Article 4

The payment in and transfer of foreign exchange for current

international transactions shall not be subject to the government control or restriction.

   Article 5

The regulations shall govern all activities related to the receipts

and payments of foreign exchange as well as foreign exchange operations ofdomestic entities, individuals, foreign establishments, and foreign

nationals in China.

   Article 6

The government adopts a reporting system for balance of payments

statistics. All entities and individuals involved in balance of payments

transactions shall fulfill their obligations for reporting balance of

payments statistics.

   Article 7

Foreign currency is prohibited for circulation and shall not be quoted

for pricing or settlement in the territory of the People's Republic of

China.

   Article 8

All entities and individuals shall have the right to reveal or expose

any activities in violation of the regulations on exchange management.

All entities and individuals who reveal, expose or assist in stopping

various activities in violation of exchange regulations on exchange

management shall be rewarded and the confidentiality of their identity

shall be ensured.

Chapter II Foreign exchange for current account transactions

   Article 9

All foreign exchange receipts of domestic entities for current account

transactions shall be repatriated and shall not be deposited abroad in

violation of the relevant government regulations without authorization.

   Article 10

All foreign exchange receipts for current account transactions shall

be sold to the designated foreign exchange banks in accordance with the

regulations issued by the State Council on the sale and purchase of

foreign exchange and making payments in foreign exchange, and such

receipts may also be upon approval, deposited in the foreign exchange

account at the designated banks for foreign exchange operations.

   Article 11

Purchase of foreign exchange for current account transactions shall be

conducted with the designated foreign exchange banks, in accordance with

the regulations issued by the State Council on the sale and purchase of

foreign exchange and making payments in foreign exchange, upon the

presentation of valid documents and commercial bills.

   Article 12

The collection of export proceeds and the payments for imports in

foreign exchange by domestic entities shall be processed in accordance

with the relevant government regulations governing the verification

procedures for export proceeds and import payments.

   Article 13

Foreign exchange owned by individuals can be held at their own

discretion, deposited in banks or sold to the designated foreign exchange

banks.

Individuals' foreign exchange savings deposit shall be placed with

banks on a voluntary basis, withdrawn freely and bear interest with

confidentiality for depositors' identity ensured.

   Article 14

The purchase of foreign exchange for personal travel abroad and other

miscellaneous expenses shall be granted within the specified limit.

Individuals may apply for the purchase of foreign exchange over and above the limit at the government agencies in charge of foreign exchange. And the request for such purchase shall be approved if it proves to be for bona fide transactions.

Individuals carrying foreign exchange into or out of China shall

declare their foreign exchange in the customs office. Individuals shall

present to the customs office valid documents for carrying a large sum of foreign exchange exceeding the specified limit.

   Article 15

The remittance and/or carrying of foreign exchange abroad for such

income derived from the possession of assets in China shall be granted

upon the presentation of the specific certifying documents at the

designated foreign exchange banks.

   Article 16

Foreign assets held by Chinese citizens residing in China in the form

of payment instruments and securities denominated in foreign currency etc.

shall not be taken or sent abroad without authorization of the exchange

administration agencies.

   Article 17

The purchase of and payment in foreign exchange abroad for the

legitimate income in Renminbi for foreign establishments and foreign

nationals in China shall be granted upon the presentation of the

supporting documents and statement of charges at the designated foreign

exchange banks.

   Article 18

Foreign exchange sent or carried in by foreign establishments and

foreign nationals in China can be held at their own discretion, deposited

in designated banks or sold to the designated foreign exchange banks. Such

foreign exchange can also be remitted or taken abroad upon the

presentation of valid documents.

Chapter III Foreign exchange for capital account transactions

   Article 19

Unless otherwise specified by the State Council, all foreign exchange

receipts for capital account transactions shall be repatriated.

   Article 20

All foreign exchange receipts for capital account transactions shall

be placed in the foreign exchange account at the designated foreign

exchange banks in accordance with the relevant government regulations;

such receipts can be also sold to the designated foreign exchange banks

upon the approval by the exchange administration agencies.

   Article 21

The source of foreign exchange for overseas investment by domestic

entities shall be reviewed by the exchange administration agencies before

the application for such investments is filed for approval by the relevant

government agencies. If approval is granted, remittance of funds shall

then take place in accordance with the regulations on overseas investment

issued by the State Council.

   Article 22

External borrowing in loans shall be undertaken in accordance with the

relevant regulations by the government agencies designated by the State

Council, financial institutions and other enterprises duly authorized by

government agencies of the State Council in charge of exchange

administration.

External borrowing in loans by foreign-funded enterprises shall be

filed with the exchange administration agencies for records.

   Article 23

The issue of bonds abroad denominated in foreign currency by financial

institutions requires the approval by the government agencies of the State

Council in charge of exchange administration before the issue proceeds in

accordance with the relevant government regulations.

   Article 24

External guarantee shall only be offered by qualified financial

institutions and enterprises meeting the government requirements and

subject to the approval by the exchange administration agencies.

   Article 25

The government adopts a registration system for external debt. All

domestic entities shall register external debt in accordance with the

regulations formulated by the State Council on monitoring statistics of

external debt.

The government agencies of the State Council in charge of exchange

administration shall take the responsibility for collecting and monitoring

statistics of external debt and publish these statistics on a regular

basis.

   Article 26

The currency holding denominated in Renminbi belonging to the foreign

counterparts of foreign-funded enterprises, having been terminated in

accordance with the law, can be converted into foreign exchange at the

designated foreign exchange banks and then sent or taken abroad after the

liquidation and tax payments. All the foreign exchange belonging to the

Chinese counterpart investors shall be sold to the designated foreign

exchange banks.

Chapter IV Foreign exchange operations for financial institutions

   Article 27

Financial institutions shall have the approval by the exchange

administration agencies for conducting foreign exchange transactions, and

a license for such operations is also required.

No entities or individuals are allowed to undertake foreign exchange

operations without the approval by the exchange administration agencies.

Financial institutions duly authorized for foreign exchange operations

shall never operate beyond the approved business scope.

   Article 28

Financial institutions duly authorized for foreign exchange operations

shall open foreign exchange accounts for their clients and conduct

business operations in accordance with the relevant government

regulations.

   Article 29

Financial institutions undertaking foreign exchange operations shall

be subject to the reserve requirement for foreign exchange in accordance

with the relevant government regulations, comply with the regulations on asset and liability ratios concerning their foreign exchange operations

and set aside provisioning reserves.

   Article 30

Designated foreign exchange banks shall use their own-funds in

Renminbi to purchase foreign exchange.

The foreign exchange revolving funds used by designated foreign

exchange banks for settlement shall be within a specified limit, the

magnitude of which shall be decided upon by the People's Bank of China in consideration of the actual circumstances.

   Article 31

The foreign exchange operations by financial institutions are subject

to inspection and supervision by the exchange administration agencies.

Financial institutions undertaking foreign exchange operations shall

submit to the exchange administration agencies the balance sheet, income

statement, other financial reports and information for foreign exchange

operations.

   Article 32

Financial institutions shall file with the exchange administration

agencies for the termination of foreign exchange operations. Once the

termination of foreign exchange operations is approved, these financial

institutions shall settle their claims and liabilities in foreign

currencies and have their license for foreign exchange operations revoked.

Chapter V Renminbi exchange rate and foreign exchange market

   Article 33

The exchange rate for Renminbi is a single, managed floating exchange

rate based on market demand and supply.

The People's Bank of China announces the exchange rate of Renminbi

against major currencies on the basis of the prevailing exchange rates in

the inter-bank foreign exchange market.

   Article 34

The trading of foreign exchange in the market shall comply with the

principle that advocates transparency, openness, fairness, and honesty.

   Article 35

The number of currencies traded in the market and the trading methods

are decided upon and reviewed by the government agencies of the State

Council in charge of the administration of the exchange system.

   Article 36

Designated foreign exchange banks and other financial institutions

involved in foreign exchange operations are dealers in the inter-bank

foreign exchange market.

Based on the exchange rates announced by the Peoples Bank of China and

the specified margins, designated foreign exchange banks and other

financial institutions undertaking foreign exchange operations can quote

the buying rate and selling rate for their clients and conduct the trading of foreign exchange accordingly.

   Article 37

The government the agencies of the State Council in charge of the

administration of exchange system shall supervise the foreign exchange

market cross the country in accordance with the law.

   Article 38

In light of the orientation of monetary policy and the developments in

foreign exchange market, the People's Bank of China shall regulate foreign exchange market in accordance with the law.

Chapter VI Legal responsibilities

   Article 39

To penalize the evasion scheme listed as follows, the exchange

administration agencies shall order the foreign exchange in question to be repatriated, impose its conversion and place a penalty fine in the range of more than 30 percent and less then 5 times the amount of foreign exchange under the evasion scheme. In case of criminal offense, a criminal suit shall proceed:

1. to place foreign exchange deposit abroad without authorization and

in violation of government regulations;

2. to act in defiance of the government regulations on the sale of

foreign exchange to the designated foreign exchange banks;

3. to remit or take foreign exchange abroad in violation of the

government regulations;

4. to take or mail abroad through postal services certificates of

foreign exchange deposit and securities denominated in foreign currencies

without authorization of the exchange administration agencies; and

5. other types of exchange evasion scheme.

   Article 40

to penalize the illegal exchange arbitrage listed as follows, the

exchange administration agencies shall serve a warning, impose the

conversion of foreign exchange and place a penalty fine in the range of

more than 30 percent and less then 5 times the amount of foreign exchange

under the arbitrage scheme. In case of criminal offense, a criminal suit

shall proceed:

1. to pay, in violation of the government regulations, in Renminbi or

in kind for imports that require payment in foreign exchange or for other

similar types of expenses;

2. to pay in Renminbi for local expenses on behalf others and get paid

back in turn in foreign exchange;

3. to invest in China on the part of overseas investors in Renminbi or

with goods purchased locally without authorization of the exchange

administration agencies;

4. to purchase foreign exchange from designated foreign exchange banks

with invalid documents, contracts and bills; and

5. other types of illegal arbitrage activities.

   Article 41

The exchange administration agencies shall confiscate the illegal

income generated from unauthorized foreign exchange operations undertaking without approval by the exchange administration agencies and order the stop of such operations. In case of criminal offense, a criminal suit shall proceed.

The exchange administration agencies shall order the financial

institutions that conduct any activities without authorization beyond the prescribed business scope for foreign exchange operations to redress the case, confiscate the illegal income, if any, and impose a penalty fine in the range of one to five times the amount of the illegal foreign exchange income; if no illegal income is involved, a penalty fine of 100, 000 to 500, 000 Yuan shall be imposed.

In case of serious offense or failure to redress the case in time,

the exchange administration agencies shall order these institutions to

rectify their business or revoke their license for foreign exchange

operations. In case of criminal offense, a criminal suit shall proceed.

   Article 42

In case that designated foreign exchange banks fail to comply with the

government regulations on the sale and purchase of foreign exchange, the

exchange administration agencies shall order the banks to redress the

case, issue a public reprimand, confiscate the illegal income and impose a penalty fine in the range of 100, 000 to 500, 000 Yuan. In case of serious offense, operations for the sale and purchase of foreign exchange

shall be suspended.

   Article 43

In case that financial institutions act in violation of the

regulations governing exchange rate, deposit and lending rates for foreign

exchange and operations in foreign exchange market, the exchange

administration agencies shall order the institutions to redress the case,

issue a public reprimand, confiscate the illegal income and impose a

penalty fine in range of one to five times the amount of the illegal

income in question. If no illegal income is involved, a penalty fine in

the range of 100, 000 to 500, 000 Yuan shall be imposed. In case of

serious offense, the exchange administration agencies shall order the

institutions to rectify their business or revoke their license for foreign

exchange operations.

   Article 44

To penalized any activity listed as follows undertaken by domestic

entities in violation of the regulations governing external debt, the

exchange administration agencies shall serve a warning, issue a public

reprimand and impose a penalty fine in the range of 100, 000 to 500, 000

Yuan. In case of criminal offense, a criminal suit shall proceed:

1. to process external borrowing without authorization;

2. to issue bonds denominated in foreign currency abroad without

authorization and in violation of the relevant government regulations;

3. to provide guarantee for external obligations without authorization

and in violation of the relevant government regulations; and

4. other activities in violation of the regulations on external debt.

   Article 45

In case that the domestic entities undertake any activity involving

illicit use of foreign exchange listed as follows, the exchange

administration agencies shall order these entities to redress the case,

impose the conversion of foreign exchange, confiscate the illegal income

and impose a penalty fine no more than the equivalent amount of foreign

exchange in question. In case of criminal offense, a criminal suit shall

proceed:

1. to use foreign exchange in China for pricing or settlement;

2. to pledge foreign exchange in lien without authorization; and

3. to change the designated use of foreign exchange without

authorization; and

4. other types of illicit use of foreign exchange.

   Article 46

To penalize unauthorized trading, disguised trading and illicit

merchanting of foreign exchange, the exchange administration agencies

shall serve a warning, impose the conversion of foreign exchange, and

place a penalty fine in the range of more than 30 percent of and less than

3 times the amount of the foreign exchange in question. In case of

criminal offense, a criminal suit shall proceed.

   Article 47

In case that domestic entities open foreign exchange accounts in China

or abroad without authorization, rent, transfer of arbitrage foreign

exchange accounts in violation or the regulations governing foreign

exchange account or use the foreign exchange beyond the designated purpose

without authorization, the exchange administration agencies shall order

these entities to redress the case, close the foreign exchange accounts,

issue a public reprimand and impose a penalty fine in range of 50, 000 to

3000, 000 Yuan.

   Article 48

In case that domestic entities forge, alter, rent, transfer or make a

multiple use of the verification certificate for import payment and export

proceeds in violation of the regulations governing the verification

procedures for foreign exchange, or fail to comply with verification

procedures prescribed by the relevant regulations, the exchange

administration agencies shall serve a warning, issue a public reprimand,

confiscate the illegal income and impose a penalty fine in the range of

50, 000 to 300, 000 Yuan. In case of criminal offense, a criminal suit

shall proceed.

   Article 49

In case that financial institutions, duly authorized to undertake

foreign exchange operations, act in violation of the Article 29 and 31,

the exchange administration agencies shall order these institutions to

redress the case, issue a public reprimand and impose a penalty fine in

the range of 50, 000 to 300, 000 Yuan.

   Article 50

If the party penalized for violation contests the verdict and the

penalty imposed by the exchange administration agencies, the party may

appeal to the exchange administration agencies at the immediate higher

level to review the case within 15 days after receiving the penalty

notice; the exchange administration agencies at the immediate higher level

shall decide on the review within two months after receiving the appeal

for review. If the party contests the review decision, the party may

appeal to the People's Court in accordance with the law.

   Article 51

Domestic entities acting in violation of the regulations on exchange

management shall be penalized in accordance with these regulations; and

the management and those directly responsible for the violation shall be

disciplined. In case of criminal offense, a criminal suit shall proceed.

Chapter VII Ancillary provisions

   Article 52

The definitions of the terms in these regulations are as follows:

1. "domestic entities" refer to enterprises and pubic institutions,

government agencies, social organizations and armed forces etc., including

foreign-funded enterprises.

2. "designated foreign exchange banks" refer to banks duly authorized

by the exchange administration agencies to undertake the sale and purchase

of foreign exchange.

3. "individuals" refer to Chinese citizens and foreign nationals

staying in China for more than one year.

4. "foreign establishments" in China refer to foreign diplomatic

agencies in China, consulates, resident representative offices in China

and offices of foreign non-government organizations in China etc..

5. "foreign nationals" in China refer to resident staff members of

foreign establishments in China, foreigners working for domestic entities

in China and overseas foreign students etc. .

6. "current account transactions" refer to those components in the

current account of the balance of payments, such as goods, services and

unilateral transference..

7. "capital account transactions" refer to the increase and decrease

of assets and liabilities in the balance of payments as a result of the

inflow and outflow of capital, including direct investment, loans and

portfolio investment' etc..

   Article 53

The exchange regulations governing bonded areas shall be formulated

separately by the exchange administration agencies of the State Council.

   Article 54

The exchange regulations governing border trade and counter-trade of

border residents shall be formulated separately by the exchange

administration agencies of the State Council on the basis of these

regulations.

   Article 55

These regulations shall take effect April 1, 1996. The Regulations on

the Exchange System of the People's Republic of China issued by the State

Council on December 18, 1980 and the related detailed rules shall be

repealed at the same time.