(Promulgated by Decree No 193 of the State Council of the People's Republic of China on January 29, 1996, amended according to the Decision of the State Council on Revising the Regulation of the People's Republic of China on Foreign Exchange Control endorsed on January 14, 1997, re-promulgated by Decree No 211 of the State Council of the People's Republic of China on January 14, 1997, and effective on the date of its promulgation)
Contents
Chapter I General Provisions
Chapter II Foreign Exchange on Current Account
Chapter III Foreign Exchange on Capital Account
Chapter IV Foreign Exchange Operations of Financial Institutions
Chapter V Renminbi Exchange Rate and Foreign Exchange Market
Chapter VI Legal Responsibility
Chapter VII Supplementary Provisions
Chapter I General Provisions
Article 1
For the purposes of strengthening control over foreign exchange, maintaining a balance of payments and promoting a sound development of the national economy, this Regulation is enacted.
Article 2
The department of the State Council for foreign exchange control and its branch offices (hereinafter collectively referred to as the "foreign exchange control authority") shall perform the functions relating to foreign exchange control according to law and be responsible for implementation of this Regulation.
Article 3
For the purposes of this Regulation, the term "foreign exchange" shall mean the following payment instruments and assets, which are denominated in foreign currency and may be used as international liquidation:
1. foreign currencies, including bank notes and coins;
2. instruments payable in foreign currency, including bills, bank certificates of deposit and postal savings certificates, etc.
3. securities denominated in foreign currency, including government bonds, corporate bonds and debentures and stocks, etc.
4. Special Drawing Right and European Currency Unit; and
5. such other foreign exchange assets.
Article 4
This Regulation shall apply to all activities related to the receipts and payments and operations in terms of foreign exchange of all organizations in the territory and individuals and of foreign organizations and foreign nationals in China.
Article 5
The State imposes no restrictions on international payments and transfers under current account.
Article 6
The State adopts a statistical reporting system for balance of payments. All units and individuals must make the statistical reporting for their payments made to and received from overseas.
Article 7
In the territory of the People's Republic of China, the circulation of foreign currency is prohibited and no foreign currency may be used for valuation and settlement.
Article 8
All units and individuals shall be entitled to report any violation of the foreign exchange control.
The foreign exchange control authority shall give awards to, and be responsible to keep confidential for, the unit or individual which or who has made an outstanding performance in reporting or assisting in investigation of such violation.
Chapter II Foreign Exchange on Current Account
Article 9
An organization in the territory must transfer its earnings in foreign exchange on current account back to China and may not, in violation of the relevant regulations of the State, place its foreign exchange outside China.
Article 10
An organization in the territory shall sell its earnings in foreign exchange on current account to an authorized foreign exchange bank in accordance with the State Council's regulations on foreign exchange clearance, sale and purchase or, after approval, open a foreign exchange account in such a bank.
Article 11
An organization in the territory shall, by presenting valid evidences and commercial documents, purchase foreign exchange on current account it requires from an authorized foreign exchange bank in accordance with the State Council's regulations on foreign exchange clearance, sale and purchase.
Article 12
The collection of export proceeds and the payment for imports in foreign exchange of all organizations in the territory shall be subject to the procedures for the verification and writing-off in accordance with the State's regulations on the administration of the collection, verification and writing-off of export proceeds or of the payment, verification and writing-off for imports in foreign exchange.
Article 13
Foreign exchange belonging to individuals may be kept in their own possession or may also be deposited in the banks or sold to the authorized foreign exchange banks.
Individuals' foreign exchange savings deposits shall be governed by the principles of voluntary deposit, free withdrawing, interest-bearing deposit and keeping confidential for the depositors.
Article 14
An individual leaving China for private business may buy foreign exchange he requires within the prescribed limit. Foreign exchange needed for private business in access of the prescribed limit may be bought after having submitted an application to the foreign exchange control authority which has verified such an application as factual..
An individual intending to bring foreign exchange into or out of China shall go through due formalities for declaration at the customs office. An individual leaving China with an amount of foreign exchange which exceeds the prescribed limit shall present to the customs office valid evidences.
Article 15
When an individual is to emigrate, his or her proceeds accruing from domestic assets may, on strength of the specified documentary materials and valid evidences, remit his or her foreign exchange out of the country through an authorized foreign exchange bank or carry it out of the territory.
Article 16
Without approval of the foreign exchange control authority, no foreign exchange assets such as payment instruments and securities denominated in foreign currency belonging to Chinese citizens residing within the territory may be brought or sent by post out of China.
Article 17
Foreign organizations in China and foreign nationals in China, if desiring to remit out of China their legitimate earnings in Renminbi, may convert them into foreign exchange at an authorized foreign exchange bank upon the presentation of the relevant documentary materials and evidences.
Article 18
Foreign exchange remitted or brought into China by foreign organizations in China or by foreign nationals in China may be kept in their own possession or deposited in the banks or sold to the authorized foreign exchange banks or, by presenting the valid evidences, may also be remitted or brought out of China.
Chapter III Foreign Exchange on Capital Account
Article 19
Unless the State Council otherwise provides, all organizations in the territory must transfer their earnings in foreign exchange on capital account back to China.
Article 20
An organization in the territory shall, in accordance with relevant regulations of the State, open an account for its earnings in foreign exchange on capital account in an authorized foreign exchange bank; if it desires to sell such earnings to an authorized foreign exchange bank, it must be subject to approval of the foreign exchange control authority.
Article 21
In a case where an organization in the territory desires to make investment outside China, the source of its foreign exchange shall be examined by the foreign exchange control authority prior to filing an application to the competent department of approval; after approval, it shall, in accordance with the State Council's regulations on foreign exchange control for overseas investment, go through the procedures for remitting out such foreign exchange.
Article 22
External borrowings shall be undertaken only by the government departments designated by the State Council and financial institutions and enterprises authorized by the department of the State Council for foreign exchange control and shall be governed by relevant regulations of the State.
An enterprise with foreign investment shall report its external borrowings to the foreign exchange control authority for the record.
Article 23
The issuance of bonds in foreign currency outside China by the financial institution must be subject to approval of the department of the State Council for foreign exchange control and shall be governed by relevant regulations of the State.
Article 24
External guarantees shall be offered only by qualified financial institutions and enterprises meeting the requirements laid down by the State and must be subject to approval of the foreign exchange control authority.
Article 25
The State adopts a registration system for external debts.
All organizations in the territory shall, in accordance with the State Council's regulations on statistics and supervision of external debts, complete such registration.
The department of the State Council for foreign exchange control shall be responsible for the statistics and supervision of external debts throughout the country and publish the situation of external debts periodically..
Article 26
After liquidation and payment of taxes in accordance with relevant regulations of the State, the currency in Renminbi belonging to the foreign investor in an enterprise with foreign investment which is terminated according to law may be converted into foreign exchange in the authorized foreign exchange bank for remitting or bringing out of China, and the foreign exchange belonging to the Chinese investor in such enterprise shall be sold to the authorized foreign exchange bank.
Chapter IV Foreign Exchange Operations of Financial Institutions
Article 27
If a financial institution desires to engage in the operation of foreign exchange, it must be subject to approval of the foreign exchange control authority and obtain a license for foreign exchange operations.
Without approval of the foreign exchange control authority, no unit or individual may engage in any operation of foreign exchange. A financial institution which is, upon approval, engaged in the operation of foreign exchange, may not operate outside the approved scope.
Article 28
Financial institutions engaging in foreign exchange operations shall, in accordance with relevant regulations of the State, open foreign exchange accounts for their customers and handle their operations relating to foreign exchange.
Article 29
Every financial institution desiring to engage in the operation of foreign exchange shall follow the reserve requirement for foreign exchange deposits in accordance with relevant regulations of the State, abide by the regulations on asset/liability ratios concerning the foreign exchange and set up the reserve fund for bad debts.
Article 30
All authorized foreign exchange banks must use their own-funds for purchasing foreign exchange in settlement business.
The foreign exchange revolving fund used by the authorized foreign exchange bank for settlement shall be within a prescribed limit, the magnitude of which is to be decided upon by the People's Bank of China in accordance with the actual situation.
Article 31
If a financial institution engages in the operation of foreign exchange, it shall be subject to inspection and supervision of the foreign exchange control authority.
Every financial institution engaging in the operation of foreign exchange shall submit to the foreign exchange control authority its balance sheet, income statement, other financial accounting statements and information relating to foreign exchange.
Article 32
A financial institution which is to terminate its foreign exchange operations shall file an application with the foreign exchange control authority. A financial institution which is approved to terminate its foreign exchange operations shall, in accordance with laws, be subject to the liquidation connected with foreign exchange claims and liabilities and has its license for foreign exchange operations revoked.
Chapter V Renminbi Exchange Rate and Foreign Exchange Market
Article 33
In respect to the exchange rate for Renminbi, a single and market-based system of managed fluctuating exchange rate shall be implemented.
The People's Bank of China shall announce the exchange rate for Renminbi against major currencies pursuant to the prices for foreign currencies prevailing in the inter-banks foreign exchange market.
Article 34
Dealings in foreign exchange markets shall be in conformity with the principles of openness, fairness, impartiality and good faith.
Article 35
The number of currencies traded in foreign exchange markets and the trading methods shall be prescribed and adjusted by the department of the State Council for foreign exchange control.
Article 36
Authorized foreign exchange banks and other financial institutions engaging in foreign exchange operations shall be the dealers in the inter-banks foreign exchange market.
All authorized foreign exchange banks and the financial institutions engaging in foreign exchange operations shall, in pursuance of the exchange rates and the fluctuation range announced by the People's Bank of China, determine the buying and selling prices for their customers and conduct the trading of foreign exchange.
Article 37
The department of the State Council for foreign exchange control shall, according to law, supervise and control foreign exchange markets throughout the country.
Article 38
The People's Bank of China shall, in light of the orientation of monetary policy and the development in foreign exchange markets and in accordance with laws, regulate and control foreign exchange markets.
Chapter VI Legal Responsibility
Article 39
Anyone who has one of the following acts of evasion of foreign exchange control shall, by the foreign exchange control authority, be ordered to transfer the foreign exchange back to China within the prescribed time limit for compulsory sale to the State, and concurrently be imposed a fine not less than 30 per cent and not exceeding 5 times of the amount of the foreign exchange evaded; if a crime is committed, criminal responsibility shall be investigated according to law:
1. to place, in violation of the State's regulations, foreign exchange outside China without approval;
2. to fail to sell foreign exchange to the authorized foreign exchange bank in accordance with the State's regulations;
3. to remit or bring, in violation of the State's regulations, foreign exchange out of China;
4. to bring or mail through postal services any certificate of foreign exchange deposit or security in foreign currency out of China without prior approval of the foreign exchange control authority; or
5. any other act of evasion of foreign exchange control.
Article 40
Anyone who has one of the following acts of unlawful procurement of foreign exchange shall, by the foreign exchange control authority, be imposed a warning with its foreign exchange being compulsorily sold to the State and concurrently be imposed a fine not less than 30 per cent and not exceeding 3 times of the amount of foreign exchange procured; if a crime is committed, criminal responsibility shall be investigated according to law:
1. to pay, in violation of the State's regulations, in Renminbi or in kind for imports that ought to be paid in foreign exchange or other similar types of payments;
2. to pay in Renminbi for the expenses inside China on behalf of others and get paid back in turn in foreign exchange;
3. to invest in China by the overseas investors in Renminbi or with goods purchased in China without approval of the foreign exchange control authority;
4. to purchase foreign exchange from the authorized foreign exchange bank with a false or invalid document, contract or bill; or
5. any other act of unlawful procurement.
Article 41
Anyone who, without approval of the foreign exchange control authority, engages in the operation of foreign exchange, shall be confiscated its illegal gains and banned by the foreign exchange control authority; if a crime is committed, criminal responsibility shall be investigated according to law.
A financial institution engaging in the operation of foreign exchange which, without approval, operates outside the approved scope of business, shall, by the foreign exchange control authority, be ordered to make correction, with its illegal gains, if any, confiscated, and concurrently be imposed a fine not less than one time and not exceeding 5 times of the amount of such gains; and in the absence of such gains, be imposed a fine not less than 100,000 and not exceeding 500,000 yuan concurrently; if the case is serious or failing to make correction within the prescribed time limit, the foreign exchange control authority shall order the institution to consolidate, or revoke the institution's license for foreign exchange operations; if a crime is committed, criminal responsibility shall be investigated according to law.
Article 42
An authorized foreign exchange bank which fails to conduct settlement or sale of foreign exchange in accordance with the State's regulations shall, by the foreign exchange control authority, be ordered to make correction, be imposed a circulation of notice of criticism, with its illegal gains therefrom confiscated, and concurrently be imposed a fine not less than 100,000 and not exceeding 500,000 yuan; if the case is serious, its operations in settlement or sale of foreign exchange must be prohibited.
Article 43
In a case where a financial institution engaging in foreign exchange operations violates a provision governing exchange rate for Renminbi, or savings or loans interest rate for foreign exchange, or foreign exchange market, shall, by the foreign exchange control authority, be ordered to make correction, be imposed a circulation of notice of criticism, with its illegal gains, if any, confiscated, and concurrently be imposed a fine not less than 1 time and not exceeding 5 times of the amount of the illegal gains therefrom; and in the absence of such gains, be imposed a fine not less than 100,000 and not exceeding 500,000 yuan concurrently; if the case is serious, the foreign exchange control authority shall order the institution to consolidate, or revoke the institution's license for foreign exchange operations.
Article 44
An organization in territory which has one of the following acts which is contrary with external debts control shall, by the foreign exchange control authority, be imposed a warning, circulation of notice of criticism and a fine not less than 100,000 and not exceeding 500,000 yuan concurrently; if a crime is committed, criminal responsibility shall be investigated according to law:
1. to process external borrowing without approval;
2. to issue, in violation of relevant regulations of the State, bonds in foreign currency outside China without approval;
3. to provide, in violation of relevant regulations of the State, guarantee for external obligations without approval; or
4. any other act which is contrary with external debts control.
Article 45
An organization in the territory which has one of the following acts involving illegal use of foreign exchange shall, by the foreign exchange control authority, be ordered to make correction with such foreign exchange being sold compulsorily and its illegal gains confiscated, and concurrently be imposed a fine not exceeding the amount equivalent to such foreign exchange; if a crime is committed, criminal responsibility shall be investigated according to law:
1. to use foreign currency in China for valuation and clearing;
2. to use foreign exchange in lien or as collateral without approval;
3. to change the approved use of foreign exchange without approval; or
4. any other act of illegal use of foreign exchange.
Article 46
Anyone who purchases or sells foreign exchange without authorization or in any disguised form or in any profiteering form shall, by the foreign exchange control authority, be imposed a warning with such foreign exchange being sold to the State compulsorily and its illegal gains confiscated, and concurrently be imposed a fine not less than 30 per cent and not exceeding 3 times of the amount of the illegal foreign exchange; if a crime is committed, criminal responsibility shall be investigated according to law.
Article 47
An organization in the territory which, in violation of a provision governing foreign exchange accounts, opens a foreign exchange account at home or abroad without approval, or lends or rents or transfers a foreign exchange account, or alters the scope of use of the foreign exchange account without approval, shall, by the foreign exchange control authority, be ordered to make correction, with its foreign exchange account revoked, be imposed a circulation of notice of criticism, and concurrently be imposed a fine not less than 50,000 and not exceeding 300,000 yuan.
Article 48
An organization in the territory which, in violation of a provision governing verification and writing-off of foreign exchange, forges, alters, lends, transfers or makes a multiple use of the cancellation certificate for imports and exports, or fails to complete procedures of verification and writing-off as required, shall, by the foreign exchange control authority, be imposed a warning and a circulation of notice of criticism, with its illegal gains therefrom confiscated, and concurrently be imposed a fine not less than 50,000 and not exceeding 300,000 yuan; if a crime is committed, criminal responsibility shall be investigated according to law.
Article 49
A financial institution engaging in foreign exchange operations which violates a provision of Article 28 or 30 of this Regulation shall, by the foreign exchange control authority, be ordered to make correction, be imposed a circulation of notice of criticism and a fine not less than 50,000 and not exceeding 300,000 yuan concurrently.
Article 50
Any party concerned who disagrees with the decision of penalty imposed by the foreign exchange control authority may, within 15 days following receipt of such notification, apply to the foreign exchange control authority at the next higher level for reconsideration; the latter shall, within two months following receipt of the application for reconsideration, make a reconsideration decision. If the party concerned still disagrees with the reconsideration decision, he may bring the matter before a people's court according to law.
Article 51
If an organization in the territory violates a provision in respect to foreign exchange control, it shall be penalized in accordance with this Regulation, and the person in direct charge of it and the person(s) held direct responsible shall be disciplined concurrently; if a crime is committed, criminal responsibility shall be investigated according to law.
Chapter VII Supplementary Provisions
Article 52
The definitions of the terms for the purposes of this Regulation shall be the following:
1. "Organization in the territory" means any enterprise or institution, government organ, social organization or unit of the armed forces, including any enterprise with foreign investment, which is situated in the territory of the People's Republic of China.
2. "Authorized foreign exchange bank" means any bank which, with the authorization of the foreign exchange control authority, may be engaged in settlement and sale of foreign exchange.
3. "Individual" means any Chinese citizen or any foreign national residing in China for one year or more.
4. "Foreign organization in China" means any foreign diplomatic mission, consular post, representative office of the international organization, foreign commercial office or office of the foreign non-government organization, which is stationed in China.
5. "Foreign nationals in China" means resident staff members of the foreign organizations in China, foreigners staying in China for a short period of time, foreigners working in the organizations in the territory and foreign students.
6. "Current account" means any component in the current account of the balance of payments, including payments for goods and services and unilateral transfers, etc.
7. "Capital account" means the increase or decrease of assets and liabilities in the balance of payments, including direct investment, loans and securities investment, etc., as a result of the inflow or outflow of capital.
Article 53
The measures on foreign exchange control for bonded areas shall be formulated separately by the department of the State Council for foreign exchange control.
Article 54
The measures on foreign exchange control for frontier trade and for personal dealings between inhabitants across the border shall be formulated separately by the department of the State Council for foreign exchange control in accordance with the principles set out by this Regulation.
Article 55
This Regulation shall enter into force on April 1, 1996. The Interim Regulations on Foreign Exchange Control of the People's Republic of China promulgated by the State Council on December 18, 1980 and its detailed rules shall be repealed on the same date.
