Banking Law

The Administrative Regulations on Foreign Exchange Conversion, Sales and Payment in Experimental Regions
(The People's Bank of China, February 27, 1996)

Chapter I General Provisions
Article 1. These Regulations are formulated to standardize foreign exchange conversion, sale and payment and to promote RMB's convertibility under current account.

Article 2. Financial institutions dealing with foreign exchange business shall handle foreign exchange conversion, sale and payment and open foreign exchange accounts in accordance with these Regulations and in conformity with their respective business scope approved by the People's Bank of China and the State Administration of Exchange Control ("SAEC").

Article 3. Ally types of foreign exchange revenues by all domestic enterprises and government units, State agencies, social groups, army units and so on (hereinafter referred to as "domestic institutions") shall be transferred back to the country in a timely manner; and foreign exchange settlement, purchase, opening of foreign exchange account and external foreign exchange payment shall be handled in accordance with these Regulations.

Individual residents, foreign institutions in China and foreign individuals in China shall handle foreign exchange conversion, purchase, opening of foreign exchange account and external foreign exchange payment in accordance with these Regulations.

Article 4. When domestic institutions and individual residents handle external revenues and expenditures through domestic financial institutions, they shall report the balance of payments statistics in accordance with the stipulations of the "Measures Governing Balance of Payments Statistics Reporting".

Chapter II Foreign Exchange Conversion, Sales and Payment under Current Account

Article 5. Except for such scope and amounts set forth in Article 6, 7 and 9 in these Regulations, the following foreign exchange obtained by domestic institutions shall all be settled:

(1) foreign exchange revenues from export, transit goods on a payment-prior-to-revenue basis, and other transactions;

(2) exchange revenues from winning international bids with foreign loans;

(3) exchange revenues from duty-free commodities business operations domestically under the supervision of the Customs;

(4) exchange revenues of such trades as transportation (including all transportation means), ports (including sea ports and airports), postal telecommunications (excluding international remittance), tourism, advertising, consulting, exhibition, commission sales, reparation through the provision of commodities or services;

(5) exchange revenues of administrative or judicial departments from stipulated fees, fines or confiscations;

(6) exchange revenues from the transfer of such intangible assets as land use right, copy right, trademark license, patent right, non-patented technologies and goodwill;

(7) foreign currency profits remitted home by overseas investment enterprises, foreign exchange recovered from foreign economic aid projects, or exchange revenues from overseas assets;

(8) exchange revenues from overseas claims; foreign exchange guaranty money returned;

(9) exchange revenues from a lease of real estate or from other foreign exchange assets;

(10) exchange revenues of insurance companies from underwriting foreign exchange insurance;

(11) net revenues from foreign exchange business operations of financial institutions which have obtained the "License for Foreign Exchange Business Operations";

(12) exchange revenues from foreign donation, aid or assistance;

(13) Other foreign exchange revenues which are required to be settled by SAEC.

Article 6. With respect to foreign exchange revenues listed below, domestic institution (foreign investment enterprises excluded) may apply to SAEC or its branches (collectively, the "Exchange Bureaus") for opening foreign exchange accounts at the authorized foreign exchange banks and handle foreign exchange settlement in accordance with relevant regulations:

(1) foreign exchange received in the process of business by companies undertaking overseas contract projects, providing labor services, technological cooperation and other services to other countries;

(2) foreign exchange received or paid on behalf of their clients by institutions who act as agent for external or overseas business;

(3) foreign exchange from temporary receipts with obligation or unsettled temporary receipts, including bidding guaranty money or performance guaranty money remitted inward, foreign exchange receipts from transit trade on a payment-prior-to-revenue basis, foreign exchange remittance from handling int

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To speed up the process of the Renminbi's (RMB) convertibility under current account and to improve the operating environment of foreign investment enterprises, and after approval by the State Council, the People's Bank of China starts experiment in Jiangsu Province and the cities of Shanghai, Shenzhen and Dalian with conversion and sales through banks of foreign exchange required by foreign investment enterprises.

Such experimental work mainly include:

1. In regions where the experiment is undertaken, foreign investment enterprises may convert or sell foreign exchanges at the authorized foreign exchange banks, or they may continue to buy or sell foreign exchange through the foreign exchange regulation center.

2. Foreign investment enterprises in experimental regions may, depending on their needs, open a basic foreign exchange account for current account revenues and expenditures and a special-purpose foreign exchange account for capital funds at the authorized foreign exchange banks.

The People's Bank of China authorizes the State Administration of Exchange Control to determine the maximum amount of foreign currency that may be retained by a foreign investment enterprise in its basic foreign exchange account, based upon the actual investment of the foreign investment enterprise and the requirement of its foreign exchange turnover under current account, and in line with the currency policies stipulated by the People's Bank of China.

3. Foreign-owned banks in experimental regions may handle foreign exchange conversion and sales required by foreign investment enterprises and become authorized foreign exchange banks.

The "Administrative Regulations on Foreign Exchange Conversion, Sales and Payment in Experimental Regions" formulated by the People's Bank of China shall apply to foreign investment enterprises in experimental regions which convert and sell foreign exchange through banks. The experimental work shall be implemented as of March 1, 1996.

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