Key Takeaways
1. If you’re living in the Mainland, opening a bank account in China is essential for daily life. Each bank account in China is linked to common payment methods including WeChat and Alipay, which are used for purchases at shops, supermarkets, and online.
2. The process of setting up a bank account in China can be somewhat overwhelming. Being prepared with all necessary documents will make the process much more smooth.
3. Oftentimes, bank branches in China will have at least 1-2 English-speaking staff. They will guide you through the process and tell you what additional documentation may be needed.
4. For those wanting to set up multiple bank accounts, this is possible; however, you cannot open two accounts with the same bank. If your require a second account, you will need to open your second account at a different bank.
Introduction to Chinese banking for foreigners
Like many areas, China has many restrictions related to the establishment of a bank account for a foreigner. Many foreigners find this process time-consuming and cumbersome. This process often entails having to provide detailed documentation to local banks and proof of the source of funds.
Unlike the relatively simple process in other countries where people can easily open a bank account, Chinese law requires applicants to pass many steps in order to open a bank account in China for foreigners, including allowing the bank to investigate their background.
Even if the foreigner is able to open a bank account in China, he or she may not have all of the features of the account that he or she desired.
Below, we discuss some of the most common types of bank accounts in China for foreigners. You can use this information to make an informed decision about which account best suits your needs.
RMB Accounts
RMB accounts are the standard accounts that local Chinese residents use. However, not all foreigners are permitted to open an RMB account. This depends on a variety of factors, including the foreigner’s nationality, location and the bank.
Opening a bank account in China may be cumbersome, but you can be prepared. When you go to open your bank account, make sure the following items are prepared:
- Original passport; if you passport is with a Chinese government agency, they would have issued a receipt with your photo on it as a “temporary passport”. In some cases, this may be sufficient for opening a personal bank account in China
- Working permit card; this is the card that was issued to you by
- Police registration form; this is the form you had to fill out online or at the police station to register your address with the Chinese police
- Original housing contract; this is not always necessary, and in some cases may substitute for the police registration form. However, it’s better to have both
- Cash (RMB); take around 100 RMB cash to be safe. Some banks require a small (40 – 50 RMB) minimum deposit, while others require no deposit.
- A Chinese phone number; you must have a “bonded SIM card”, meaning the phone number needs to be attached to your real identity, in most cases your passport.
- Patience; be prepared to wait a little longer than you might expect for your bank card. Because of bank regulations and high foreigner demand for bank accounts, you may wait as long as 3 weeks before your card is issued.
Foreign Exchange Accounts
Foreign exchange accounts are available for use by foreign entities or individuals. Below, are some options that may be available to you:
Non-Resident Account
The China State Administration of Foreign Exchange issued regulations that allowed banks starting in 2009 to open foreign currency accounts for foreign entities.
Domestic and foreign banks were allowed to open these special accounts, called non-resident accounts.
The funds in these banks are commonly used for the bank’s operating positions. Deposit reserves are paid according to Chinese rules. Current regulations stated that deposits in this account do not occupy the full-scale quota on domestic banks any longer.
If funds are exchanged between a domestic account and non-resident account, this is considered a cross-border exchange. The domestic agency must have the corresponding transaction permit and must provide the bank with proof of the authenticity of the transaction.
Additionally, the bank is responsible for reporting the international balance of payments.
Offshore Account
Overseas institutions can open offshore accounts. There are only four offshore commercial banks in China that they can use to open an offshore account:
- Bank of Communications
- China Merchant’s Bank
- Ping An Bank
- Shanghai Pudong Development Bank
These banks have independent departments that handle these types of accounts only and separately from the domestic bank accounts. The account must be managed according to the offshore banking business department’s regulations for the department that obtained the qualification to manage offshore accounts.
These accounts are not authorized to provide RMB settlements and sales transactions.
Additionally, they must implement a strict separation management so that funds received from overseas accounts cannot be comingled with funds from domestic accounts.
Offshore accounts handle a variety of transactions, including deposits, financing, loans and settlements. The interest rates on these accounts can be priced in an independent nature and do not have to rely on the rates for corresponding domestic accounts.
There are four primary advantages to using an offshore account, including:
- Confidentiality – The identify of the bank account owners is kept private, along with their shareholder status in the foreign business. The share of capital is also kept confidential and cannot be publicly checked.
- Greater independence – The business can be registered in an offshore company; it does not need to be based in China. Transactions can be carried out anywhere.
- Savings advantage – Offshore accounts are not subject to interest income tax or a deposit reserve.
- Ability to transfer funds – Many offshore account owners enjoy the flexibility of this type of account, which mirrors overseas accounts. Account owners can transfer funds without domestic exchange controls.
Hong Kong Bank Account
Hong Kong has historically been at the center of the financial sector in China.
Many businesses had entities set up in Mainland China and opened bank accounts in Hong Kong so that they would be able to transfer money overseas more easily. They were often able to avoid the strict restrictions imposed on exchange currencies in Mainland China.
However, Hong Kong bank accounts today are more heavily regulated than they were before.
The Hong Kong Monetary Authority is responsible for the oversight of these accounts and has taken a hardline approach for this responsibility. The current regulations mirror the OECD Tax Cooperation and FATF blacklist, which were established to limit money laundering and tax evasion committed around the world.
Hong Kong is still a booming tourist city where many people hold jobs, own property and open bank accounts. It has learned how to effectively manage bank accounts that non-residents own.
Individuals with certain nationalities benefit from a simpler account opening process, including those from the European Union, America or Australia.
Overseas Bank Account
Overseas bank accounts are opened in one country while the account owner is registered or residing in another country.
By opening this type of account, the account owner gains the right to open another account in other countries. Banks that provide this type of account may not require the physical presence of the applicant when he or she is signing up for a new account.
These accounts provide account owners with unlimited international transactions.
Differences in Bank Accounts in China for foreigners
Each bank account in China for foreigners has its own unique system of regulations, advantages and processes.
Some of the distinct differences between offshore accounts and non-resident accounts include:
- Qualification – Offshore accounts can only be opened at one of the four banks listed above while non-resident accounts are available for foreigners in all Mainland China banks.
- Scope – Offshore accounts can be opened for overseas institutions, as well as for individuals in China. Non-resident accounts can only be opened by overseas institutions.
- Supervision – The China Banking Regulatory Commission administers offshore accounts while non-resident accounts are supervised by SAFE.
- Control – There are fewer restrictions regarding the exchange and government controls with offshore accounts. Non-resident accounts are subject to more stringent government control.
- Financial security – Offshore bank accounts are generally considered safe. Non-resident accounts are strictly regulated.
Other differences between foreign exchange accounts include:
- Where account is opened – Non-resident accounts can be opened at any domestic bank. A Hong Kong Bank account must be opened at a local bank in Hong Kong. An offshore bank account must be opened at one of the four banks approved by the government. Overseas accounts are opened at overseas banks.
- Who can open the account – Overseas institutions and individuals can open offshore bank accounts, a Hong Kong bank account or an overseas account. However, only overseas institutions can open a non-resident account.
- Regulatory agency – SAFE regulates non-resident accounts while the CBRC regulates offshore accounts. Hong Kong and overseas banks accounts are not subject to domestic regulations.
- Certificates required – A non-resident account requires showing a Mainland identification card. A passport or exit-entry permit is required for any other type of bank account in China for foreigners.
There are more differences than those listed above, but this can give you a good idea of some of the most important differences.
Get Help Opening a Bank Account in China for Foreigners
At Horizons, we assist foreign businesses who are hoping to register their company in China. Our professionals are used to the strict regulatory schemes in the country and have developed strong relationships with regulatory agencies.
We can explain your responsibilities and options when opening a bank account in China as a foreigner. We can provide you with information on the requirements and functions of each account, as well as advice on which account type will best serve your needs. This information is only part of our China strategic consulting services.
The regulations in each city and province often vary, so it is important to contact an expert who is experienced in these matters. Contact our team for a consultation and learn about how we can assist your business with its launch into the Asian market.
Read: CRS in China – What Foreign Businesses and Individuals Need to Know
