China Foreign Exchange Rules Explained

China maintains strict foreign exchange controls. Understanding these rules is essential for foreigners living in China and companies doing cross-border business.

The Regulatory Framework

SAFE (State Administration of Foreign Exchange) oversees:

• Currency conversion
• Cross-border payments
• Foreign debt
• Capital account transactions

Individual Foreign Exchange

Annual Quota

• $50,000 equivalent per person per year
• Applies to both purchase and sale
• Cumulative across all banks

Salary Remittance

Foreigners can remit after-tax salary with:

• Tax payment certificates
• Employment contract
• ID documents
• No annual limit for legitimate salary

Corporate Foreign Exchange

Current Account

Trade-related transactions are relatively free:

• Payment for imports
• Receipt of export proceeds
• Service fees
• Requires supporting documents

Capital Account

Investment-related transactions are controlled:

• Foreign investment inflows
• Profit repatriation
• Loan repayments
• Requires SAFE approval or registration

Profit Repatriation

Foreign companies can remit profits with:

• Board resolution on dividend distribution
• Audited financial statements
• Tax clearance certificate
• Bank verification

Common Issues

• Insufficient documentation
• Exceeding annual quotas
• Improper transaction classification
• Delayed approvals
• Bank compliance requirements

Penalties for Violations

• Fines up to 30% of violation amount
• Confiscation of illegal gains
• Restriction on future transactions
• Criminal liability for serious cases

Best Practices

• Maintain complete documentation
• Plan transactions in advance
• Work with experienced banks
• Understand applicable rules
• Seek professional advice for large transactions