AdministrativeRules on Individual’s Foreign Exchange were approved in the 27th Governorsmeeting on November 30, 2006 and will take effect as of February 1, 2007.

                                             Governor Zhou Xiaochuan

                                                   December 25, 2006

Administrative Rules on Individual’s Foreign Exchange

 

Chapter One  General Principles

Article 1       The Ruleswere stipulated according to the By-Law of the People’s Republic ofChina on Foreign Exchange Administration and the Provisions on theAdministration of Foreign Exchange Purchase, Sale and Payment to facilitateindividuals’ receipt and payment of foreign exchange, streamline operationalprocedures and regulate foreign exchange administration.

Article 2       Individuals’foreign exchange business is classified as domestic and non-domestic individualforeign exchange business in terms of transaction entity, and individualforeign exchange business under the current account and capital account interms of transaction nature. Administration of individual foreign exchangebusiness shall be based on the above classification.

Article 3       Full convertibility principle shall applyto individuals’ foreign exchange business under the current account.Individuals’ foreign exchange business under the capital account shall bemanaged in line with progress in the convertible process.

Article 4       The State Administration of ForeignExchange and its branch offices (hereinafter referred to as the SAFE) shallregulate and manage individuals’ domestic and cross-border foreign exchangebusiness according to the Rules.

Article 5       An individual shall conduct foreignexchange business in accordance with the Rules. Commercial banks shallhandle individuals’ foreign exchange receipt, payment, purchase and sale, openforeign exchange accounts in accordance with the Rules, and verify thevalidity of individual client’s identity documents and authenticity of other relevantmaterials. Remittance institutions and currency exchanges (including currencyexchange agents) shall provide exchange services to individuals according tothe Rules.

Article 6       Commercial banks shall provide individualclients with foreign exchange purchase and sale services through the SAFEdesignated administration information system, record in the system relevantinformation truthfully and precisely, and keep relevant transaction informationmaterial for at least 5 years for possible future examination.

Article 7       Commercial banks and individuals shall abide by the Rulesin handling individuals’ foreign exchange business and must not evade limitadministration by splitting large amount into small batches or tamper with authenticityadministration by using fabricated commercial bills or vouchers.

Article 8       Anindividual’s cross-border receipt and payment of foreign exchange shall bereported in accordance with the relevant provisions on the balance of paymentsstatistics reporting.

 

Article 9       An individual’s foreign exchange sales anddomestic individual’s foreign exchange purchases shall be imposed an annuallimit. Within the annual limit, an individual can conduct a sale or purchasebusiness with a bank by presenting valid identity documents; beyond the annuallimit, an individual can conduct a current account business with a commercialbank by presenting valid identity documents and relevant materials proving thetransaction amount while a capital account business shall be conducted accordingto relevant provisions in Chapter Three.

Chapter Two  Administration of Individual’sForeign Exchange under the Current Account

Article 10     Trade-relatedforeign exchange receipt and payment of an individual who conducts cross-bordertrade of goods shall be managed as those of an institution once the aboveindividual has filed for record with a competent commercial authority the rightof conducting foreign trade.

Article 11     After completing industrial and commercialregistration or other business licensing procedures, an individual can entrust,with relevant documents, an enterprise with a foreign trade business license asa agent to conduct foreign exchange receipt and payment, transfer and saleunder import and export items and other items such as travel and shopping, smallvalue border trade.

Article 12     An individual can transfer foreign exchangeabroad to support current account payment at a bank by showing valid identitydocuments when a single transaction or accumulative amount within a single businessday is below the stipulated limit; he/she can conduct the business at a bank byshowing valid identity documents and relevant documents proving the transactionamount when a single transaction or accumulative amount within a single businessday is above the stipulated limit.

Article 13     A non-domestic individual can convertlegitimate renminbi income obtained in Chinaunder the current account into foreign exchange and remit abroad at a bank byshowing valid identity documents and relevant documents.

Article 14     A non-domestic individual can return unusedforeign exchange remitted from abroad through the original route at a bank byshowing valid identity documents.

Article 15     A non-domestic individual can convertunused purchased renminbi back into foreign currency cash in a small amount ata bank or a foreign currency exchange agency by showing valid identitydocuments; he/she needs to present the original exchange invoice when theamount is above the stipulated limit.

Chapter Three  Administration of Individual’s ForeignExchange Under the Current Account

Article 16     Where an outward direct investment intendedby a domestic individual is consistent with relevant regulations, the domestic individualcan remit abroad purchased or own foreign exchange after verification by theSAFE and shall conduct outward investment foreign exchange registration.

Article 17     Where a domestic individual purchases Bshare, invests in overseas equity, fixed-income and other financial instrumentsas approved by competent authorities, he/she shall follow relevant regulationsand conduct the business through a domestic financial institution with relevantbusiness qualification.

Article 18     A domestic individual can pay insurance premiums underforeign exchange life insurance items to a domestic insurance institution with purchasedor own foreign exchange.

Article 19     A domestic individual can convert legitimate incomeobtained abroad under the capital account into renminbi after verification bythe SAFE.

Article 20     A domestic individual can purchase foreign exchangefor the purpose of overseas donation and wealth transfer when such purchase isconsistent with relevant regulations and verified by the SAFE.

Article 21     A domestic individual’s lending and borrowing abroad, provisionof external guarantee and direct trade of commodity futures and financial derivativesat overseas market shall be consistent with relevant regulations and registeredwith the SAFE.

Article 22     A non-domestic individual’s purchase of commercial housingin China shall follow the own-use principle, andreceipts, payments and exchange of foreign exchange capital for the purchaseshall follow relevant regulations on foreign exchange administration of theSAFE. A non-domestic individual can convert renminbi proceeds from sale ofdomestic commercial housing into foreign exchange and remit it abroad. 

Article 23     A non-domestic individual is not allowed to purchasedomestic equity and fixed-income products unless other regulations permit. A domesticindividual shall purchase B-share in accordance with relevant regulations.

Article 24     A non-domestic individual’s foreignexchange deposit in China shall be included in short-term foreigndebt outstanding management of a depository financial institution.

Article 25     A non-domestic individual shall lend and provide guaranteeto domestic institutions in accordance with relevant regulations of foreigndebt management.

Article 26     A non-domestic individual shall transfer abroadlegitimate property in China in accordance with relevant regulations offoreign exchange administration on individual property’s overseas transfer.

Chapter Four  Administration of Individual’sForeign Exchange Account and Foreign Currency Cash

Article 27     Individual’s foreign exchange accounts aredivided into domestic individual’s foreign exchange accounts and non-domestic individual’sforeign exchange accounts in terms of account owner category and into foreignexchange settlement accounts, accounts under the capital account and foreignexchange savings accounts in terms of account nature.

Article 28     A bank shall define owner’s category of anindividual foreign exchange account based on documents such as identitydocuments provided when opening account, and the foreign exchange account shallbear the same name as on owner’s valid identity documents. Domestic fundtransfer between foreign exchange accounts of a domestic individual and anon-domestic individual shall be managed as a cross-border transaction.

Article 29     An individual canopen a foreign exchange settlement account after completing industrial and commercialregistration or other business licensing procedures.

Article 30     A domestic individual shall purchase or sell foreignexchange through a domestic financial institution with relevant business qualification.

Article 31    Anon-domestic individual who conducts direct investment in China may open an exclusive foreign exchange account forforeign investors after verification by the SAFE. The fund in this account canbe sold to a bank after verification by the SAFE. After a direct investmentproject intended by a non-domestic individual is approved by the competentauthority, the non-domestic individual may transfer foreign exchange fund inthe exclusive foreign exchange account for foreign investors into capitalaccount for foreign invested enterprise.

Article 32     An individual may open a foreign exchangesavings account in a bank by presenting valid identity documents. The foreignexchange savings account can be used for payment with and receiving foreignexchange for non-business purposes, fund transfer between foreign exchangesavings accounts of the opener and that of the account of opener’s next of kinin the same account category. A joint-name foreign exchange savings accountopened by a non-domestic and a domestic individual shall be managed as foreignexchange savings accounts of a domestic individual.

Article 33     An individual entering or leaving China carrying foreign exchange cash shall observe relevantregulations adopted by China.

Article 34     An individual may purchase foreign exchangecash or withdraw cash from a foreign exchange savings account in a bank when asingle transaction or accumulative amount within a single business day is belowthe limit of foreign exchange cash that an individual is allowed to carryacross border. An individual shall report to the local SAFE branch by showingvalid identity documents, certificates of cash withdrawal purpose and otherdocuments when a single transaction or accumulative amount within a single businessday is above the aforementioned limit.

Article 35     An individual candeposit foreign exchange cash into a foreign exchange savings account directlyat a bank when a single transaction or accumulative amount within a single businessday is below the declaration-free amount of foreign exchange cash allowed foran individual entering China. An individual shall deposit at a bank byshowing valid identity documents, declaration form of foreign exchange cash orforeign exchange cash withdrawal documents in the depository financialinstitution when a single transaction or accumulative amount of a single businessday is above the afore-mentioned amount limit.

Article 36     Banks shallrecord, analyze and report any large-value or suspicious foreign exchangetransaction in accordance with relevant anti-money laundering regulations.

Chapter Five Supplementary Regulations

Article 37     The definitions ofthe terminologies in the Rules are as follows:

(1)              A domestic individualrefers to a Chinese citizen with an identity certificate, serviceman identity certificateor police identity certificate of the People’s Republic of China.

(2)              A non-domestic individualrefers to a foreign citizen holding a non-Chinese passport, and compatriotsholding Mainland Travel Permit for Hong Kong, Macao and Taiwan residents, and persons with nonationality.

(3)              Non-business foreignexchange under the current account refers to foreign exchange under currentaccount items other than trade.

Article 38     An individual traveler’s cheque shall betreated in accordance with relevant regulations on foreign exchange cash; an individual’sforeign currency card business shall be conducted in accordance with relevantregulations on foreign currency card.

Article 39     Any violation of the Rules shall bepenalized by the SAFE in accordance with Administrative Rules of the People’sRepublic of China on Foreign Exchange and other relevant regulations. Anycase that constitutes a crime shall be transferred to judicial agencies forcriminal prosecution.

Article 40     The SAFE is responsible for formulatingrelevant implementation stipulations of the Rules, and specifying annualaggregate amount, amount limit and etc.

Article 41     The Rulesshall be interpreted by the SAFE.

Article 42    The Rules will enterinto force as of February 1, 2007. The Rules shallprevail over any stipulations not consistent with it. The administrativeregulations of foreign exchange in the attachment will be invalidated on theday the Rules take effect.

Attachment: Listof abolished rules and circulars

Listof Abolished Rules and Circulars

1.     Circular on Issuesof Resident and Non-Resident Individuals’ Large-value Foreign Currency CashDeposit and Withdrawal (SAFELetter [97] No. 123)

 

2.     Provisional Ruleson the Domestic Individuals’ Foreign Exchanges Administration (SAFE Document [1998] No.11)

3.     Circular on theRevision of the Provisional Rules on the Domestic Individuals’ Foreign ExchangeAdministration (SAFEDocument [1999] No.133)

4.     Circular onRevising the Circular on Issues of Domestic Individuals’ Foreign Exchange Usesfor Private Purposes andCircular on Releasing the Provisional Rules on Domestic Individuals’ ForeignExchange Administration(SAFE Document [1999] No.305)

5.     Circular onForeign Exchange Purchase and Payment with Prepaid RMB as Deposits forSelf-Sponsored Overseas Studies (SAFE Document [2000] No.82)

 

6.     Response on Issuesof Domestic Individuals’ Cross-border Remittance of Foreign Exchange and theRenaming of Foreign Exchange Savings Account (SAFE Document [2000] No.291)

 

7.     Circular of theSAFE on Issues of Policy Adjustment on Domestic Individuals’ Foreign ExchangePurchases and Payments for Self-Sponsored Overseas Studies (SAFE Document[2001] No.185)

 

8.     Circular of theSAFE on the Release of the Rules for Implementing the Administration ofDomestic Individuals’ Purchase of Foreign Exchange (SAFE Document [2002] No.68)

 

9.     Circular of theSAFE on Pilot Sale of Foreign Exchange to DomesticIndividuals for Travels in Border Areas of Neighboring Countries (SAFE Document [2002] No.121)

 

10. Circular of theSAFE on Policy Adjustment Concerning Foreign Exchange Purchase by DomesticIndividuals under Current Account (SAFE Document [2003] No.104)

 

11. Circular of theSAFE on Issues of Foreign Exchange Purchase by Foreign Students in China Upon Termination of Studies (SAFE Document [2003] No.62)

 

12.  Circular ofGeneral Affairs Department of the SAFE on Ceasing Report of Registration Formof Resident & Non-Resident Individuals’ Large-value Foreign Exchange CashDeposit and Withdrawal (Equivalent to the value of USD10, 000 and more) andForeign Exchange Transfer of Domestic Individuals (SAFE Letter [2003] No.14)

13. Circular of theSAFE on Adjusting Guiding Limits on Amount of Foreign Exchange Purchase forSelf-Sponsored Overseas Studies by Domestic Individuals (SAFE Document [2004] No.114)

14. Circular of theSAFE on Issues of Standardizing the Administration of Domestic Individuals’Foreign Exchange Sales (SAFEDocument [2004] No.18)

 

15. Circular of theSAFE on Issues of Standardizing the Administration of Non-Resident Individuals’Foreign Exchange (SAFEDocument [2004] No.6)

 

16. Circular of theSAFE on the Adjustment of Foreign Exchange Purchase Limits for Private Uses byDomestic Individuals and Streamlining Relevant Procedures (SAFE Document [2005]No.60)