(Promulgated by Decree No. 193 of the State Council of the People's Republic of China on January 29, 1996, and amended according to the Decision of the State Council on Amending the Regulations of the People's Republic of China on Foreign Exchange Control on January 14, 1997)

Chapter 1   General Provisions

Article 1  
These Regulations are formulated for the purpose of strengthening foreign exchange control, maintaining the balance of international payments and promoting the healthy development of the national economy.

Article 2  
The foreign exchange control department of the State Council and its branches (hereinafter uniformly referred to as foreign exchange control organs) shall perform the functions of foreign exchange control according to law and be responsible for the implementation of these Regulations.

Article 3  
Foreign exchange referred to in these Regulation means the following instruments of payment and assets denominated in foreign currencies and used in international settlement:

(1) foreign currencies, including paper currencies and coins;

(2) payment instruments denominated in foreign currencies, including negotiable instruments, bank deposit certificates and postal deposit certificates;

(3) valuable securities denominated in foreign currencies, including government bonds, corporate bonds, and stocks;

(4) special drawing rights and European currency units;

(5) other assets denominated in foreign currencies.

Article 4  
These Regulations shall be applicable to the receipts and payments of foreign exchange or foreign exchange operations of domestic institutions, individuals, foreign resident establishments and foreign nationals residing in China.

Article 5  
The State shall not restrict the payment in and transfer of foreign exchange for current international transactions.

Article 6  
The State shall practise a system for declaring statistics on internationals receipts and payments. All units and individuals that conduct international receipts and payments must declare their international receipts and payments.

Article 7  
The circulation of foreign currencies is prohibited, and foreign currencies shall not be used in price quotations or in settlements within the territory of the People's Republic of China.

Article 8  
Any unit or individual shall have the right to report or expose acts and activities in violation of foreign exchange controls.

Units and individuals that have rendered meritorious services by reporting, exposing and assisting in investigating and punishing the cases involving the violation of foreign exchange controls shall be rewarded by foreign exchange control organs, and the said organs shall be responsible for maintaining confidentiality.

Chapter 2   Foreign Exchange for current Account Transactions

Article 9  
All foreign exchange receipts of domestic institutions for current account transactions shall be repatriated and shall not be deposited abroad without authorization in violation of the relevant provisions of the State.

Article 10  
All foreign exchange receipts of domestic institutions for current account transactions shall be sold to the designated foreign exchange banks in accordance with the provisions of the State Council on administration of sale, purchase and payment of foreign exchange, or shall, upon approval, be deposited in a foreign exchange account opened in a designated foreign exchange bank.

Article 11  
Foreign exchange used for current account transactions by domestic institutions shall, in accordance with the provisions of the State Council on administration of sale, purchase and payment of foreign exchange, be purchased from a designated foreign exchange bank on the basis of valid documents and commercial bills.

Article 12  
Export proceeds and payments for imports in foreign exchange by domestic institutions shall undergo cancellation after verification procedures in accordance with the provisions of the State on cancellation after verification procedures in the cancellation of export proceeds and payments for import.

Article 13  
Foreign exchange owned by individuals may be held at their own direction, deposited in banks or sold to the designated foreign exchange banks.

With regard to foreign exchange savings deposit of individuals, the principles of voluntary deposit, unimpeded withdrawal, interest payment on deposit and confidentiality for the depositors shall be practised.

Article 14  
Foreign exchange needed for personal use shall be purchased within the specified limit. Individuals may apply to the foreign exchange control organs if the foreign exchange needed for personal use exceeds the limit, and the request for such purchase shall be approved if it is found to be bona fide.

Individuals carrying foreign exchange into or out China shall declare it to the Customs. Individuals shall present to the Customs valid documents for carrying foreign exchange exceeding the specified limits.

Article 15  
Individuals who have emigrated abroad may, on the strength of the stipulated certifying materials and valid vouchers, convert the income derived from their assets in China into foreign exchange at designated foreign exchange banks, and may either remit or take them out of China.

Article 16  
Such foreign exchange assets as payment instruments and valuable securities denominated in foreign currencies held by the Chinese citizens living in China shall not, without the approval of the foreign exchange control organs, be taken or sent abroad.

Article 17  
Those foreign resident establishments and foreign nationals residing in China that need to remit abroad their lawful earnings in RMB may, by presenting the relevant certifying materials and vouchers, have them converted into foreign currencies at designated foreign exchange banks.

Article 18  
Foreign exchange remitted from abroad or carried into China by foreign resident establishments and foreign nationals residing in China may be held at their own direction, deposited in banks, or sold to the designated foreign exchange banks, and also remitted or taken abroad by presenting valid vouchers.

Chapter 3   Foreign Exchange for Capital Account Transactions

Article 19  
All the foreign exchange receipts for capital account transactions of domestic institutions shall be repatriated, unless otherwise specified by the State Council.

Article 20  
All the foreign exchange receipts for capital account transactions of domestic institutions shall be in foreign exchange accounts at the designated foreign exchange banks in accordance with the relevant provisions of the State. Where the said receipts are sold to the designated foreign exchange banks, approval must be obtained from the foreign exchange control organs.

Article 21  
The source of foreign exchange for overseas investment by domestic institutions shall be examined by the foreign exchange control organs before the application is submitted to the competent approval department. Upon approval, the procedures for remitting the relevant funds shall be processed in accordance with the provisions of the State Council on the foreign exchange control over overseas investment.

Article 22  
Borrowing foreign loans shall, in accordance with the relevant provisions of the State, be conducted by the departments determined by the State Council, the financial institutions and enterprises approved by the foreign exchange control department of the State Council.

Where enterprises with foreign investment borrow foreign loans, reports thereof shall be made to the foreign exchange control organs for record.

Article 23  
Where financial institutions issue bonds in foreign currencies outside the territory, approvals must be obtained from the foreign exchange control department of the State Council, and the matter shall be conducted in accordance with the relevant provisions of the State.

Article 24  
An external guaranty shall be provided by a financial institution or enterprise only if it satisfies the requirements stipulated by the State, and is subject to the approval of the foreign exchange control organ.

Article 25  
The State shall adopt a registration system for external debts.

All domestic institutions shall register their external debts in accordance with the provisions of the State Council on the statistics and monitoring of external debts.

The foreign exchange control department of the State Council shall be responsible for statistics and monitoring of external debts and publish the circumstances concerning external debts on a regular basis.

Article 26  
After an enterprise with foreign investment that is terminated according to law undergoes liquidation and pays taxes in accordance with the relevant provisions of the State, the Reminbi owned by a foreign investor may be converted into foreign exchange at designated foreign exchange banks, and may either be remitted or taken out of China; all the foreign exchange owned by the Chinese investor shall be sold to the designated foreign exchange banks.

Chapter 4   The Foreign Exchange Operations of Financial Institutions

Article 27  
Financial institutions shall be approved by foreign exchange control organs for conducting foreign exchange operations, and shall obtain permits for foreign exchange operations.

No unit or individual may conduct foreign exchange operations without the approval by foreign exchange control organs. Financial institutions approved for conducting foreign exchange operations may not conduct foreign exchange operations beyond the approved business scope.

Article 28  
Financial institutions conducting foreign exchange operations shall, in accordance with the relevant provisions of the State, open foreign exchange accounts for their clients and handle relevant foreign exchange business.

Article 29  
Financial institutions conducting foreign exchange operations shall turn in and deposit required foreign exchange reserves in accordance with the relevant provisions of the State, observe the provisions on management of the ratio of foreign exchange liabilities and assets, and set up loan loss reserves.

Article 30  
The designated foreign exchange banks shall use their own funds in Renminbi for conducting foreign exchange settlement.

Foreign exchange revolving funds used by the designated foreign exchange banks for settlement shall be managed in proportional ranges, and the specific range shall be verified and determined by the People's Bank of China in light of the actual circumstances.

Article 31  
Financial institutions shall, in conducting foreign exchange operations, be subject to the inspection and supervision by foreign exchange control organs.

Financial institutions conducting foreign exchange operations shall submit to the foreign exchange control organs balance sheets, profit and loss statements, and other financial statements and materials concerning their foreign exchange operations.

Article 32  
Financial institutions shall apply to foreign exchange control organs for termination of foreign exchange operations. Upon approval of such termination, financial institutions shall liquidate foreign exchange claims and debts, and turn in their foreign exchange operating permits for cancellation.

Chapter 5   The Renminbi Exchange Rate and the Foreign Exchange Market

Article 33  
The exchange rate for Renminbi follows a single, managed floating exchange rate system based on market demand and supply.

The People's Bank of China shall announce the exchange rate of Renminbi against major foreign currencies on the basis of the prevailing exchange rates in the interbank foreign exchange market.

Article 34  
The trading of foreign exchange on the foreign exchange market shall accord with the principles of openness, equality, fairness and honesty and credibility.

Article 35  
The kinds and forms of currencies traded on the foreign exchange market shall be stipulated and adjusted by the foreign exchange control department of the State Council.

Article 36  
The designated foreign exchange banks and other financial institutions that conduct foreign exchange operations are dealers in the interbank foreign exchange market.

The designated foreign exchange banks and other financial institutions that conduct foreign exchange operations shall, according to the exchange rate published and the floating range stipulated by the People's Bank of China, determine the buying and selling prices of foreign exchange for their clients and handle the trading business of foreign exchange.

Article 37  
The foreign exchange control department of the State Council shall be responsible for supervising and administrating the nationwide foreign exchange market according to law.

Article 38  
The People's Bank of China shall, in light of the demands of the monetary policy and fluctuations in the foreign exchange market, regulate and adjust the foreign exchange market according to law.

Chapter 6   Legal Responsibilities

Article 39  
Anyone who commits one of the following acts of foreign exchange evasion shall be ordered by a certain date to repatriate the foreign exchange, with such foreign exchange compulsorily converted, and have imposed a fine of not less than thirty percent and not more than five times the amount of the foreign exchange evaded by the foreign exchange control organ; or shall be investigated for criminal responsibility according to law if a crime is constituted:

(1) depositing foreign exchange abroad without authorization in violation of the provisions of the State;

(2) paying in Renminbi for the expenses incurred by others in China and getting repaid in foreign exchange;

(3) investing in China on the part of overseas investors in Renminbi or with goods purchased in China without approval by the foreign exchange control organ;

(4) purchasing foreign exchange by cheating the designated foreign exchange banks with fake or invalid vouchers, contracts, and bills or the like;

(5) other acts of illegal purchase of foreign exchange.

Article 40  
Anyone who commits one of the following acts of illegal purchase of foreign exchange shall be given a warning, with the foreign exchange compulsorily converted, and have imposed a fine of not less than thirty percent of and not more than three times of the amount of foreign exchange illegally purchased by the foreign exchange control organ; or shall be investigated for criminal responsibility according to law if a crime is constituted:

(1) paying, in violation of the provisions of the State, in Renminbi, in kind for imports or other similar expenses that require payment in foreign exchange;

(2) paying in Renminbi for the expenses incurred by others in China and getting repaid in foreign exchange;

(3) investing in China on the part of overseas investors in Renminbi or with goods purchased in China without approval by the foreign exchange control organ;

(4) purchasing foreign exchange by cheating the designated foreign exchange banks with fake or invalid vouchers, contracts, and bills or the like;

(5) other acts of illegal purchase of foreign exchange.

Article 41  
Anyone who conducts foreign exchange operations without approval by the foreign exchange control organ shall have confiscated its illegal gains, and be banned by the foreign exchange control organ; or shall be investigated for criminal responsibility according to law if a crime is constituted.

Any financial institution conducting foreign exchange operations that operates without authorization beyond the approved business scope in conducting foreign exchange transactions shall be ordered to make corrections, have confiscated its illegal gains if any, and have imposed a fine of not less than one time and not more than five time the amount of the illegal gains; a fine of not less than 100,000 yuan and not more than 500,000 yuan by the foreign exchange control organ if there are no illegal gains; shall be ordered to make corrections or have revoked the foreign exchange operation permits by the foreign exchange control organ if the circumstances are serious or he fails to make corrections in the limited time; or shall be investigated for criminal responsibility according to law if a crime is constituted.

Article 42  
Any designated foreign exchange bank that conducts foreign exchange purchase and sale business in violation of the provisions of the State shall be ordered to make corrections, have circulated a notice of criticism, have illegal gains confiscated, and have imposed a fine of not less than 100,000 yuan and not more than 500,000 yuan by the foreign exchange control organ; its foreign exchange sale and purchase business shall be stopped if the circumstances are serious.

Article 43  
Any financial institution conducting foreign exchange operations that is in violation of the Reminbi exchange rate administration, the foreign exchange deposit and loan management or the foreign exchange market control shall be ordered to make corrections, have circulated a notice criticism, have confiscated the illegal gains if any, and have imposed a fine of not less than one time and not more than five times the amount of the illegal gains; or have imposed a fine of not less than 100,000 yuan and not more than 500,000 yuan by the foreign exchange control organ if there are no illegal gains; shall be ordered to make corrections or have revoked the foreign exchange operations permits by the foreign exchange control organ if the circumstances are serious.

Article 44  
Any domestic institution that commits one of the following acts in violation of foreign debt control shall be given a warning, have circulated a notice of criticism, have confiscated illegal gains, and have imposed a fine of not less than 100, 000yuan and not more than 500,000 yuan by the foreign exchange control organ; or shall be investigated for criminal responsibility according to law if a crime is constituted.

(1) raising external loans without authorization;

(2) issuing without authorization bonds denominated in foreign currencies abroad in violation of the provisions of the State;

(3) providing without authorization and external guaranty in violation of the provisions of the State;

(4) other acts in violation of the foreign debt control.

Article 45  
Any domestic institution that commits one of the following acts of illegal use of foreign exchange shall be ordered to make corrections, with such foreign exchange compulsorily converted, have confiscated illegal gains and have imposed a fine of not more than the equivalent amount of the unlawful foreign exchange by the foreign exchange control organ; or shall be investigated for criminal responsibility according to law if a crime is constituted:

(1) using foreign currencies in China for pricing or settlement;

(2) pledging foreign exchange as security without authorization;

(3) changing the designated use of the foreign exchange without authorization; and

(4) other acts of illegal use of foreign exchange.

Article 46  
Anyone who trades in private or in a disguised way, or merchants illicitly foreign exchange shall be given a warning, with the foreign exchange compulsorily converted, have confiscated illegal gains and have imposed a fine of not less than thirty percent of and not more than three times of the amount of the unlawful foreign exchange by the foreign exchange control organ; or shall be investigated for criminal responsibility according to law if a crime is constituted.

Article 47  
Any domestic institution that, in violation of the provisions on the foreign exchange control, opens without authorization a foreign exchange account in China or outside China, lends, serially accesses or transfers the foreign exchange account, or changes without authorization the use scope of the foreign exchange account, shall be ordered to make corrections, have revoked the foreign exchange account, have circulated a notice of criticism, and shall also have imposed a fine of not less than 50,000 yuan and mot more than 300,000 yuan by the foreign exchange control organ.

Article 48  
Any domestic institution that, in violation of the provisions on the cancellation after verification for the foreign exchange, forges, alters, lends, transfers or makes a repeated use of verification certificates for import payments and export proceeds, or handles the cancellation after verification procedures failing to observe the provisions, shall be given a warning, have circulated a notice of criticism, have confiscated illegal gains and shall also have imposed a fine of not less than 50,000 yuan and not more than 300,000 yuan by the foreign exchange control organ; or shall be investigated for criminal responsibility according to law if a crime is constituted.

Article 49  
Any financial institution conducting foreign exchange operations that is in violation of the provisions of Article 29 or Article 31 of these Regulations shall be ordered to make corrections, have circulated a notice of criticism, and shall also have imposed a fine of not less than 50,000 yuan and not more than 300,000 yuan by the foreign exchange control organ.

Article 50  
The party who is not subject to the penalty decision made by the foreign exchange control organ may, within 15 days from the date of receiving the notice of the penalty decision, apply for the reconsideration to the foreign exchange control organ at the next higher level; and the foreign exchange control organ at the next higher level shall make the reconsideration decision within two months from the day of receiving the reconsideration application. If the party is still not subject to the reconsideration decision, he may bring a suit to the people's court according to law.

Article 51  
In addition to any domestic institution in violation of the provisions on the foreign exchange control punished according to these Regulations, the persons in charge and the person directly responsible shall have imposed on them disciplinary sanctions; or they shall be investigated for criminal responsibility according to law if a crime is constituted.

Chapter 7   Supplementary Provisions

Article 52  
The meanings of the terms used in these Regulations are as follows:

(1) "Domestic institutions" means enterprises, institutions, State organs, social organizations, armed forces and other units, including the enterprises with foreign investment;

(2) "Designated foreign exchange banks" means the banks approved by foreign exchange control organs conducting the business of foreign exchange sale and purchase;

(3) "Individuals" means the Chinese citizens and the foreigners who reside in the territory of the People's Republic of China for one full year;

(4) "Foreign resident establishments in China" means foreign diplomatic missions, foreign consular institutions, resident representative offices of the international organizations, foreign resident commercial offices and the business offices of foreign non-governmental organizations and other organizations in China;

(5) "Foreign nationals residing in China" means resident staff members of foreign resident establishments, foreigners who have come to China for a short stay, foreigners employed working for domestic institutions in China, foreign overseas students and other foreigners;

(6) "Current account transactions" means the transactions that frequently occur in international balances of payments, including such items as foreign trade receipts and payments, service receipts and payments, and unilateral transfers;

(7) "Capital account transactions" means the increase and decrease in assets and liabilities in the international balance of payments as the result of inflow and outflow of capital, including direct investment, various kinds of loans, portfolio investment, etc.

Article 53  
The measures for the foreign exchange control in bonded areas shall be formulated separately by the foreign exchange control department of the State Council.

Article 54  
The measures for the foreign exchange control on border trade and mutual trade between border inhabitants shall be formulated separately by the foreign exchange control departments of the State Council according to the principles stipulated in these Regulations.

Article 55  
These Regulations shall come into force as of April 4, 1996. the Interim Regulations of the People's Republic of China on Foreign Exchange Control promulgated on December 18, 1980 by the State Council and its auxiliary detailed rules for the implementation shall be repealed simultaneously.