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 thebalance of payments and promoting sound economic growth.
Article 2
The government agencies of the State Council in charge of theadministration of the exchange system and their local offices (hereafterthe exchange administration agencies for both) shall exercise exchangemanagement in accordance with the law and assume the responsibility forthe implementation of the regulations.
Article 3
Foreign exchange as referred to in the regulations includes means ofpayments and assets denominated in foreign currency for internationalsettlement as the following:1. foreign currencies, including bank notes and coins;2. payment instruments denominated in foreign currency, includingbills, bank certificate of deposit and certificate of postal deposit etc.3. securities denominated in foreign currency, including governmentbonds, corporate debentures and stocks etc.;4. Special Drawing Rights and European Currency Units; and5. other assets denominated in foreign currency.
Article 4
The payment in and transfer of foreign exchange for currentinternational transactions shall not be subject to the government controlor restriction.
Article 5
The regulations shall govern all activities related to the receiptsand payments of foreign exchange as well as foreign exchange operations ofdomestic entities, individuals, foreign establishments, and foreignnationals in China.
Article 6
The government adopts a reporting system for balance of paymentsstatistics. All entities and individuals involved in balance of paymentstransactions shall fulfill their obligations for reporting balance ofpayments statistics.
Article 7
Foreign currency is prohibited for circulation and shall not be quotedfor pricing or settlement in the territory of the People's Republic ofChina.
Article 8
All entities and individuals shall have the right to reveal or exposeany activities in violation of the regulations on exchange management.All entities and individuals who reveal, expose or assist in stoppingvarious activities in violation of exchange regulations on exchangemanagement shall be rewarded and the confidentiality of their identityshall be ensured.
Chapter II Foreign exchange for current account transactions
Article 9
All foreign exchange receipts of domestic entities for current accounttransactions shall be repatriated and shall not be deposited abroad inviolation of the relevant government regulations without authorization.
Article 10
All foreign exchange receipts for current account transactions shallbe sold to the designated foreign exchange banks in accordance with theregulations issued by the State Council on the sale and purchase offoreign exchange and making payments in foreign exchange, and suchreceipts may also be upon approval, deposited in the foreign exchangeaccount at the designated banks for foreign exchange operations.
Article 11
Purchase of foreign exchange for current account transactions shall beconducted with the designated foreign exchange banks, in accordance withthe regulations issued by the State Council on the sale and purchase offoreign exchange and making payments in foreign exchange, upon thepresentation of valid documents and commercial bills.
Article 12
The collection of export proceeds and the payments for imports inforeign exchange by domestic entities shall be processed in accordancewith the relevant government regulations governing the verificationprocedures for export proceeds and import payments.
Article 13
Foreign exchange owned by individuals can be held at their owndiscretion, deposited in banks or sold to the designated foreign exchangebanks.Individuals' foreign exchange savings deposit shall be placed withbanks on a voluntary basis, withdrawn freely and bear interest withconfidentiality for depositors' identity ensured.
Article 14
The purchase of foreign exchange for personal travel abroad and othermiscellaneous expenses shall be granted within the specified limit.Individuals may apply for the purchase of foreign exchange over and abovethe limit at the government agencies in charge of foreign exchange. Andthe request for such purchase shall be approved if it proves to be forbona fide transactions.Individuals carrying foreign exchange into or out of China shalldeclare their foreign exchange in the customs office. Individuals shallpresent to the customs office valid documents for carrying a large sum offoreign exchange exceeding the specified limit.
Article 15
The remittance and/or carrying of foreign exchange abroad for suchincome derived from the possession of assets in China shall be grantedupon the presentation of the specific certifying documents at thedesignated foreign exchange banks.
Article 16
Foreign assets held by Chinese citizens residing in China in the formof payment instruments and securities denominated in foreign currency etc.shall not be taken or sent abroad without authorization of the exchangeadministration agencies.
Article 17
The purchase of and payment in foreign exchange abroad for thelegitimate income in Renminbi for foreign establishments and foreignnationals in China shall be granted upon the presentation of thesupporting documents and statement of charges at the designated foreignexchange banks.
Article 18
Foreign exchange sent or carried in by foreign establishments andforeign nationals in China can be held at their own discretion, depositedin designated banks or sold to the designated foreign exchange banks. Suchforeign exchange can also be remitted or taken abroad upon thepresentation of valid documents.
Chapter III Foreign exchange for capital account transactions
Article 19
Unless otherwise specified by the State Council, all foreign exchangereceipts for capital account transactions shall be repatriated.
Article 20
All foreign exchange receipts for capital account transactions shallbe placed in the foreign exchange account at the designated foreignexchange banks in accordance with the relevant government regulations;such receipts can be also sold to the designated foreign exchange banksupon the approval by the exchange administration agencies.
Article 21
The source of foreign exchange for overseas investment by domesticentities shall be reviewed by the exchange administration agencies beforethe application for such investments is filed for approval by the relevantgovernment agencies. If approval is granted, remittance of funds shallthen take place in accordance with the regulations on overseas investmentissued by the State Council.
Article 22
External borrowing in loans shall be undertaken in accordance with therelevant regulations by the government agencies designated by the StateCouncil, financial institutions and other enterprises duly authorized bygovernment agencies of the State Council in charge of exchangeadministration.External borrowing in loans by foreign-funded enterprises shall befiled with the exchange administration agencies for records.
Article 23
The issue of bonds abroad denominated in foreign currency by financialinstitutions requires the approval by the government agencies of the StateCouncil in charge of exchange administration before the issue proceeds inaccordance with the relevant government regulations.
Article 24
External guarantee shall only be offered by qualified financialinstitutions and enterprises meeting the government requirements andsubject to the approval by the exchange administration agencies.
Article 25
The government adopts a registration system for external debt. Alldomestic entities shall register external debt in accordance with theregulations formulated by the State Council on monitoring statistics ofexternal debt.The government agencies of the State Council in charge of exchangeadministration shall take the responsibility for collecting and monitoringstatistics of external debt and publish these statistics on a regularbasis.
Article 26
The currency holding denominated in Renminbi belonging to the foreigncounterparts of foreign-funded enterprises, having been terminated inaccordance with the law, can be converted into foreign exchange at thedesignated foreign exchange banks and then sent or taken abroad after theliquidation and tax payments. All the foreign exchange belonging to theChinese counterpart investors shall be sold to the designated foreignexchange banks.
Chapter IV Foreign exchange operations for financial institutions
Article 27
Financial institutions shall have the approval by the exchangeadministration agencies for conducting foreign exchange transactions, anda license for such operations is also required.No entities or individuals are allowed to undertake foreign exchangeoperations without the approval by the exchange administration agencies.Financial institutions duly authorized for foreign exchange operationsshall never operate beyond the approved business scope.
Article 28
Financial institutions duly authorized for foreign exchange operationsshall open foreign exchange accounts for their clients and conductbusiness operations in accordance with the relevant governmentregulations.
Article 29
Financial institutions undertaking foreign exchange operations shallbe subject to the reserve requirement for foreign exchange in accordancewith the relevant government regulations, comply with the regulations onasset and liability ratios concerning their foreign exchange operationsand set aside provisioning reserves.
Article 30
Designated foreign exchange banks shall use their own-funds inRenminbi to purchase foreign exchange.The foreign exchange revolving funds used by designated foreignexchange banks for settlement shall be within a specified limit, themagnitude 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 subjectto inspection and supervision by the exchange administration agencies.Financial institutions undertaking foreign exchange operations shallsubmit to the exchange administration agencies the balance sheet, incomestatement, other financial reports and information for foreign exchangeoperations.
Article 32
Financial institutions shall file with the exchange administrationagencies for the termination of foreign exchange operations. Once thetermination of foreign exchange operations is approved, these financialinstitutions shall settle their claims and liabilities in foreigncurrencies 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 exchangerate based on market demand and supply.The People's Bank of China announces the exchange rate of Renminbiagainst major currencies on the basis of the prevailing exchange rates inthe inter-bank foreign exchange market.
Article 34
The trading of foreign exchange in the market shall comply with theprinciple that advocates transparency, openness, fairness, and honesty.
Article 35
The number of currencies traded in the market and the trading methodsare decided upon and reviewed by the government agencies of the StateCouncil in charge of the administration of the exchange system.
Article 36
Designated foreign exchange banks and other financial institutionsinvolved in foreign exchange operations are dealers in the inter-bankforeign exchange market.Based on the exchange rates announced by the Peoples Bank of China andthe specified margins, designated foreign exchange banks and otherfinancial institutions undertaking foreign exchange operations can quotethe buying rate and selling rate for their clients and conduct the tradingof foreign exchange accordingly.
Article 37
The government the agencies of the State Council in charge of theadministration of exchange system shall supervise the foreign exchangemarket cross the country in accordance with the law.
Article 38
In light of the orientation of monetary policy and the developments inforeign exchange market, the People's Bank of China shall regulate foreignexchange market in accordance with the law.
Chapter VI Legal responsibilities
Article 39
To penalize the evasion scheme listed as follows, the exchangeadministration agencies shall order the foreign exchange in question to berepatriated, impose its conversion and place a penalty fine in the rangeof more than 30 percent and less then 5 times the amount of foreignexchange under the evasion scheme. In case of criminal offense, a criminalsuit shall proceed:1. to place foreign exchange deposit abroad without authorization andin violation of government regulations;2. to act in defiance of the government regulations on the sale offoreign exchange to the designated foreign exchange banks;3. to remit or take foreign exchange abroad in violation of thegovernment regulations;4. to take or mail abroad through postal services certificates offoreign exchange deposit and securities denominated in foreign currencieswithout authorization of the exchange administration agencies; and5. other types of exchange evasion scheme.
Article 40
to penalize the illegal exchange arbitrage listed as follows, theexchange administration agencies shall serve a warning, impose theconversion of foreign exchange and place a penalty fine in the range ofmore than 30 percent and less then 5 times the amount of foreign exchangeunder the arbitrage scheme. In case of criminal offense, a criminal suitshall proceed:1. to pay, in violation of the government regulations, in Renminbi orin kind for imports that require payment in foreign exchange or for othersimilar types of expenses;2. to pay in Renminbi for local expenses on behalf others and get paidback in turn in foreign exchange;3. to invest in China on the part of overseas investors in Renminbi orwith goods purchased locally without authorization of the exchangeadministration agencies;4. to purchase foreign exchange from designated foreign exchange bankswith invalid documents, contracts and bills; and5. other types of illegal arbitrage activities.
Article 41
The exchange administration agencies shall confiscate the illegalincome generated from unauthorized foreign exchange operations undertakingwithout approval by the exchange administration agencies and order thestop of such operations. In case of criminal offense, a criminal suitshall proceed.The exchange administration agencies shall order the financialinstitutions that conduct any activities without authorization beyond theprescribed business scope for foreign exchange operations to redress thecase, confiscate the illegal income, if any, and impose a penalty fine inthe range of one to five times the amount of the illegal foreign exchangeincome; 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 torectify their business or revoke their license for foreign exchangeoperations. In case of criminal offense, a criminal suit shall proceed.
Article 42
In case that designated foreign exchange banks fail to comply with thegovernment regulations on the sale and purchase of foreign exchange, theexchange administration agencies shall order the banks to redress thecase, issue a public reprimand, confiscate the illegal income and imposea penalty fine in the range of 100, 000 to 500, 000 Yuan. In case ofserious offense, operations for the sale and purchase of foreign exchangeshall be suspended.
Article 43
In case that financial institutions act in violation of theregulations governing exchange rate, deposit and lending rates for foreignexchange and operations in foreign exchange market, the exchangeadministration agencies shall order the institutions to redress the case,issue a public reprimand, confiscate the illegal income and impose apenalty fine in range of one to five times the amount of the illegalincome in question. If no illegal income is involved, a penalty fine inthe range of 100, 000 to 500, 000 Yuan shall be imposed. In case ofserious offense, the exchange administration agencies shall order theinstitutions to rectify their business or revoke their license for foreignexchange operations.
Article 44
To penalized any activity listed as follows undertaken by domesticentities in violation of the regulations governing external debt, theexchange administration agencies shall serve a warning, issue a publicreprimand 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 withoutauthorization and in violation of the relevant government regulations;3. to provide guarantee for external obligations without authorizationand in violation of the relevant government regulations; and4. other activities in violation of the regulations on external debt.
Article 45
In case that the domestic entities undertake any activity involvingillicit use of foreign exchange listed as follows, the exchangeadministration agencies shall order these entities to redress the case,impose the conversion of foreign exchange, confiscate the illegal incomeand impose a penalty fine no more than the equivalent amount of foreignexchange in question. In case of criminal offense, a criminal suit shallproceed:1. to use foreign exchange in China for pricing or settlement;2. to pledge foreign exchange in lien without authorization; and3. to change the designated use of foreign exchange withoutauthorization; and4. other types of illicit use of foreign exchange.
Article 46
To penalize unauthorized trading, disguised trading and illicitmerchanting of foreign exchange, the exchange administration agenciesshall serve a warning, impose the conversion of foreign exchange, andplace 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 ofcriminal offense, a criminal suit shall proceed.
Article 47
In case that domestic entities open foreign exchange accounts in Chinaor abroad without authorization, rent, transfer of arbitrage foreignexchange accounts in violation or the regulations governing foreignexchange account or use the foreign exchange beyond the designated purposewithout authorization, the exchange administration agencies shall orderthese 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, transfer or make amultiple use of the verification certificate for import payment and exportproceeds in violation of the regulations governing the verificationprocedures for foreign exchange, or fail to comply with verificationprocedures prescribed by the relevant regulations, the exchangeadministration 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 suitshall proceed.
Article 49
In case that financial institutions, duly authorized to undertakeforeign exchange operations, act in violation of the
Article 29 and 31,the exchange administration agencies shall order these institutions toredress the case, issue a public reprimand and impose a penalty fine inthe range of 50, 000 to 300, 000 Yuan.
Article 50
If the party penalized for violation contests the verdict and thepenalty imposed by the exchange administration agencies, the party mayappeal to the exchange administration agencies at the immediate higherlevel to review the case within 15 days after receiving the penaltynotice; the exchange administration agencies at the immediate higher levelshall decide on the review within two months after receiving the appealfor review. If the party contests the review decision, the party mayappeal to the People's Court in accordance with the law.
Article 51
Domestic entities acting in violation of the regulations on exchangemanagement shall be penalized in accordance with these regulations; andthe management and those directly responsible for the violation shall bedisciplined. In case of criminal offense, a criminal suit shall proceed.
Chapter VII Ancillary provisions
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., includingforeign-funded enterprises.2. "designated foreign exchange banks" refer to banks duly authorizedby the exchange administration agencies to undertake the sale and purchaseof foreign exchange.3. "individuals" refer to Chinese citizens and foreign nationalsstaying in China for more than one year.4. "foreign establishments" in China refer to foreign diplomaticagencies in China, consulates, resident representative offices in Chinaand offices of foreign non-government organizations in China etc..5. "foreign nationals" in China refer to resident staff members offoreign establishments in China, foreigners working for domestic entitiesin China and overseas foreign students etc. .6. "current account transactions" refer to those components in thecurrent account of the balance of payments, such as goods, services and unilateral transference..7. "capital account transactions" refer to the increase and decreaseof assets and liabilities in the balance of payments as a result of theinflow and outflow of capital, including direct investment, loans andportfolio investment' etc..
Article 53
The exchange regulations governing bonded areas shall be formulatedseparately by the exchange administration agencies of the State Council.
Article 54
The exchange regulations governing border trade and counter-trade ofborder residents shall be formulated separately by the exchangeadministration agencies of the State Council on the basis of theseregulations.
Article 55
These regulations shall take effect April 1, 1996. The Regulations onthe Exchange System of the People's Republic of China issued by the StateCouncil on December 18, 1980 and the related detailed rules shall berepealed at the same time.
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