REGULATIONS ON THE
FOREIGN EXCHANGE SYSTEM OF THE PEOPLE'S REPUBLIC OF
CHINA
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 of domestic 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.
