Transfer money to and from China
Can a Chinese citizens take / transfer money overseas?
Chinese citizen has a limitation on the amount of monies they can transfer overseas. It is approximately $40,000 per year per person: this was at the time of writing October 2017.
A Chinese person can take monies in cash or hold monies in overseas currencies in bank Chinese account and credit cards. This enables a Chinese citizen to make overseas purchases on Chinese credit cards when overseas. Normally using as credit card processed by Union Pay; not Master Card or Visa.
Using these credit cards also enables Chinese citizens to purchase goods from overseas websites provided they can process a Union Pay transaction.
This arrangement enables Chinese people to travel world-wide or put their child through overseas education, etc.
Chinese citizen do need to register any overseas interest, monies, property, etc. This is same for most countries where overseas interests need to be declared for taxation, etc.
In general, it stops large sums of monies been moved overseas form China without local Chinese authorities’ agreement.
Business transferring monies to / from China.
Businesses, in the main, can freely trade with Chinese business. A main part of China success story over the last 50 years is China world-wide trading. To that end, if the rules and regulations are followed then the transfer of monies in and out of China will be successful.
- Purchasing of goods from China.
When purchasing goods from China the agreement is arranged and processed in China by a Chinese export agent. Therefore, you often see two businesses involved on a Chinese trade show stand; the supplier / manufacture and the Chinese export agent.
Payment terms will always be in overseas currency; normally $us. If the payment is made in Chinese RMB the Chinese export agent will not be able to claim back the sales tax from the government.
The Chinese export agent will raise the papers with authorities which includes submitting the sales agreement to the bank. The bank will then be able to accept overseas payment and pass it on to the Chinese business in Chinese RMB.
- Purchasing goods from overseas counties.
This in the main is the same process as purchasing goods from China. A Chinese export agent is appointed by the Chinese business making the purchase.
The Chinese export agent will raise the necessary papers to enable the import which includes registration of the purchase agreement with the Chinese bank. Once the bank has accepted the agreement overseas payments can be made provided the terms of the agreement have been met with supporting papers.
When trading goods to / from China all counties involved have an audit trail of the transaction through customers and therefore monitoring and controls are straight forward.
This becomes more complex with trading in services where no goods physically move.
- Purchasing of service from China.
This is most underdeveloped market currently. Most examples of services purchases from China will be relating to travel or Chinese information technology services.
Most of the purchases from China is for goods and therefore any service fee e.g. export agents, shipping insurance, etc. are charge as part of the cost of purchase.
If services are purchased from China the Chinese business will register the agreement with the Chinese bank. The payment can them be received by the Chinese bank / Chinese business.
- Purchasing of services from overseas.
The purchasing of services from overseas between businesses is straight forward.
The service agreement is registered with the Chinese bank. If the agreement is accepted by the Chinese bank payments can be made on confirmation that the services have been provided and the invoices are summited to the bank for payment.
If large sums of monies are involved we recommend taking advice from a large Chinese export agent and local Chinese legal business. Make a local legal appointment to look after your Chinese interests.
The purchase of overseas services by a Chinese citizen e.g. school fees, is again straight forward provided the purchase value for the year stays within their $40,000 pa. By using their credit card to pay the transaction is straight forward provided the overseas business can process Union Pay.
Transferring monies between businesses that owned / partly owned by overseas company
You can transfer monies in and out for China provided that the correct papers have been created and agreed by authorities and bank at outset of your Chinese business.
Our recommendation when setup an investment in a Chinese business that you appoint someone you trust with good local Chinese trading knowledge and experience. Keeping up with the rules and regulations takes time and money.
Most of the problems is transferring monies between companies is due to papers not been correct or misunderstanding in the rules and regulations.
Some overseas banks will hold Chinese RMB currency account. While there may be a currency conversion reason for doing this, it has limited commercial use as you can only spend Chinese RMB in China and the Chinese export agent do not like trading in Chine RMB.
The RMB exchange rate is fixed by the China authorities to $us. This rate is changed from time to time normally only by few percent. Therefore, the amount of monies you receive in your local currency will depend on the Sus exchange rate.
Web page last modified: September 2018