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REGULATIONS ON THE FOREIGN
EXCHANGE SYSTEM OF THE PEOPLE'S REPUBLIC OF CHINA
(Issued on April 4, 1996, modified on January 14, 1997)
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
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 c
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 inthe 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 inconsideration 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 approve
d, 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 to500, 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,
000Yuan. 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 debts.
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 than3 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 to3000, 000 Yuan.
Article 48
In case that domestic entities forge, alter, rent, transferor 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 failto 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 of50, 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 then 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 provision
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.
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