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CHINA FOREIGN INVESTMENTS POLICIES AND PREFERENCES
Finance and Foreign Exchange Management
Currently in China the finance organization is in a pattern
that state-owned commercial banks remaining dominate and diverse
financial organizations developing side by side. The government
is enforcing a system of individual administrations on individual
industries such as banks, securities, insurance and trusting.
The state is enforcing its financial supervision on the financial
market through the monetary controlling measures of the Central
Bank. RMB exchange rates are based on a fluctuation rate system
that goes with market demand and supply, is unified and put
under control. Strict management is still enforced upon RMB
free exchange under current account and foreign exchange under
capital account. A system of exchange, settlement and sales
shall be observed in foreign exchange payment and a system
of canceling after verification in payment of import and export.
Foreign Exchange Registration
Foreign invested enterprises shall take a copy of the Certificate
of Approval of Foreign Invested Company and that of the Business
License, within 30 days after the issue of the Business License,
to the foreign exchange administration to take the Foreign
Exchange Recording of Foreign Invested Enterprises and fill
the Form of Basic Information of the Foreign Invested Enterprise,
with which to open account in the designated bank for foreign
exchange. To open an account in a different place or abroad,
an approval should be acquired from local foreign exchange
administration first.
The System of Exchange, Settlement
and Sales of the Bank
The income of foreign exchange of an enterprise should open
an account in the designated foreign exchange bank or sell
to it; and the payment in foreign exchange by the enterprise
should, with valid proof or approval of the foreign exchange
administration, be paid with by its foreign exchange account
or transacted in the designated foreign exchanged bank. All
cases of purchase and sales of foreign exchange without authorization,
purchase and sales of foreign exchange in a disguised form
or purchase and sales of foreign exchange for speculative
purposes, are illegal.
Free Exchange of RMB under current
account
Institutions within the Chinese territory (including foreign
invested enterprises), when in need of foreign exchange under
current account, shall buy foreign exchange with RMB from
designated bank for foreign exchange or pay with their foreign
exchange accounts. Advance payment and commissions, when exceed
certain proportion or amount, can get converted into foreign
currencies at designated banks upon approval of the authenticity
by the administration.
Government's Management of Balance
of Payment of Foreign Exchanges Under Capital Account
foreign exchange income under current account must be transferred
back except for stipulations of the State Council otherwise;
foreign exchange income under capital account shall be kept
at foreign exchange account opened with designed banks; approval
of the foreign exchange administration is required if it is
sold to designated banks; Purchase or payment of foreign exchange
under capital account shall, with the approval of administration
of foreign exchange, get converted into foreign currencies
at designated banks upon presentation of the approval.
Foreign Debt Management
The Chinese Government adopts the system of registration upon
foreign debt. Foreign invested enterprises can directly foreign
capital form banks or enterprises outside the Chinese territory,
but the accumulated medium and long-term debt from abroad
shall not exceed the difference between the total investment
and registered capital as stipulated in the contract or agreement.
Enterprises should, after signing the contract of loan, keep
the record in the administration periodically or record-by-record.
The enterprises can use the foreign capital after approval
and give feedback to the administration when actually used.
All payment of the loan or the interest should get the approval
of the administration (except for the bank).
Report of Foreign Exchange Balance
The report is in a term of a half-year. The first half-year
report with remarks should be submitted before July 10th of
the year and the second half-year report before March 10th
of the next year.
Year-End Financial Report
The Year-End Financial Report of the previous year shall be
submitted to relevant departments before March 31 and an Audit
Report from public accountant registered in the People’s
Republic of China shall be attached. |
