A Complete Guideline How to Transfer Money Out of China

Getting money out of China can be quite tough. For those legitimately employed in China and paying their taxes, this will not be a problem. However, many foreign companies or individuals sometimes by design or default, fall into grey areas of Chinese law where they couldn’t manage to get their hard-earned money out of this country. While China’s attempts at capital controls are the most substantial of any in the world and a significant barrier to companies attempting to do international business in and out of China there is a valid reason for their existence.

However, there are many ways you can take money out of China and the best possible way to navigate this complex field of extracting money is to seek help from the expert China lawyers. These are the things you need to consider while taking money out of China.

  • The nature of the transaction. Real estate purchases tend to be the worst of all because Chinese citizens must expressly state that they are not asking to send money out of China to purchase real estate.
  • The parties on both sides.
  • The relationship and the history between the parties.
  • The location of the parties.
  • The nationalities and even the ethnicities of the parties (especially the receiving party).

China is especially targeting so-called “asset transfers,” or purchases of foreign assets with little to no potential economic returns. Such purchases, regulators believe, are purely used to shift or launder funds abroad. Chinese citizens are allowed to convert the equivalent of only $50,000 of yuan per year to other currencies. When they travel abroad, including to Hong Kong, many of their transactions using China’s UnionPay credit and debit cards aren’t subject to the limit. It is important to keep in mind that WFOE owned by a Western company that cannot get its money out of China.

You aren’t allowed to send RMB out of China, you must buy a currency that the bank is able to sell to you and send that money out. It’s this money exchange that’s the difficult part. To convince your authorized branch to sell you an approved currency you must present the following documents-

  • Your Passport
  • Your working permit
  • A filled-out application
  • Your work contract with your company
  • A statement from your company providing your salary information
  • A statement from your company proving how much tax you’ve paid up until this point to the Chinese government.

Chen Long, a China economist at Gavekal Dragonomics, said: “China still saw net yuan outflow in recent months, although the size abated from that of late 2016, based on figures released by the foreign exchange authority. Future policies will depend on how capital flow changes over time.”

Chinese regulators introduced stricter restrictions to limit capital outflow. Some examples of such outflow controls are strict limits on the amount of money that can be transferred to overseas accounts; higher scrutiny of Chinese companies that wish to acquire assets overseas etc. Outflow control measures are introduced to ensure that capital flows are either balanced or that more capital flows into the country than leaves it.

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New Provisions in the Second E-Commerce Draft of China

Last year in the month of November, the Standing Committee of the National People’s Congress of China published the second draft of the e-commerce law in China. The Second Draft is formulated with the view to promoting the continuous and sound development of e-commerce, regulating market order, and safeguarding the legitimate rights and interests of the people.

What’s new in China’s e-commerce law-

E-commerce has exploded in China over the last decade and it is a big business in this country as the Chinese consumers spend more online than their counterparts anywhere else in the world. Keeping the enormous importance in mind the standing committee of the national people’s congress of China is given the task to draft and make changes in the e-commerce law. The Ecommerce law shall not repeat the contents already mentioned in prevailing laws and regulations such as the electronic signature law of 2004.

In the field of consumer protection the Ecommerce law will only be used in addition to the law on protection of consumers’ rights and interests. There are so many provisions that appeared in the first one are dropped in the second draft. Let’s take a look at the things mentioned in the new e-commerce draft.

  • According to the second draft e-commerce operators must comply with the country’s cybersecurity law. That signifies Amazon.com Inc. and other e-commerce companies would have to abide by the law’s requirements to store personal data on servers inside China, restrict exporting data overseas, and set personal information security standards.
  • E-commerce businesses require to register with local administrators, according to the draft, making it easier for consumers to acquire information about and report or sue a vendor in a dispute.
  • Foreign-owned operators of e-commerce platforms will be excluded from operating in the Chinese market. Sales of foreign products will be forced to come into China through Chinese owned or controlled platforms.
  • According to the Draft, e-commerce platform operators must provide takedown procedures, allowing IP owners to request the takedown of infringing links or even the closure of the web shop, if the IP owner can provide prima facie evidence of infringement.
  • E-commerce Law (the “Second Draft”) provides many regulations about data and information: Thus, it is laid out in detail under which circumstances data collection is allowed. Moreover, before using the private data, the use of that amount of data has to be approved by the user. However, the security of private data must be guaranteed.

The foreign e-commerce companies need to comply with this newly regulated e-commerce law of China.

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