This is a topic which is regularly discussed amongst the expat groups in China. China has currency regulations which stop the free movement of renminbi around the world. These kinds of regulations are designed to control a countries capital markets and to a certain extent stop the rich elite making their millions and leaving the country. For us expats who work here and do not fall into the category of being a rich native or a foreign speculator, then why should we fall victim of these rules?

For those of us who work here legally and pay the correct taxes the answer is “we don’t”. Contrary to popular belief, there are no daily or annual limits on the amount of money that can be transferred out of China. In order to facilitate this transaction you will need to go to your bank and prove to them that this money was earned legally and that the correct taxes have been paid. For most of us this will be satisfied by producing the following documents:

1. Valid identification documents
2. Work Permit
3. Valid employment contract
4. Payroll
5. Tax bills

These are all relatively simple documents to obtain and you should be able to get your HR department to assist you with collecting them. Your bank will then make an application to the government regulator, known as S.A.F.E (The State Administration of Foreign Exchange) and if they feel that everything is in order then they will release your funds for foreign transfer.

Furthermore, all foreign nationals living in China are allowed to remove USD 500 per day without needing to provide any documentation, proof of ownership or records of taxes being paid.

The real problems with the removal of funds from China are for the people who work in the grey areas of the Chinese economy, which is still a considerable amount of expats. There are solutions available for people in this category but they are at best risqué and at worst illegal.

The simplest and most common way is to send your bank card/s home and have a friend or loved one withdraw the money from an ATM in your native currency. You are also allowed to leave China with cash in your pockets at the exit border points and this has been reported to be up to USD 10,000.

There are a multitude of other ways that people try to circumvent the regulations. Some people buy a resaleable asset to take back home, such as a piece of art. Others will ask their friends to transfer money for them. This is very common for those with Chinese friends as they are able to transfer up to USD 50,000 without any supporting documentation.

All of the methods detailed in the above paragraph are not advisable and skirt the laws of legality, or outright break them. Through simple planning with a tax accountant or financial advisor all of them can be avoided and dealt with in a far more effective manner.

The Solution
There are foreign investment companies that will accept China UnionPay as a form of payment. The products are generally savings plans and investment platforms, which give the investor access to a broad range of mutual funds and ETF’s (Exchange Traded Funds – low cost investment vehicles). These accounts are very cost effective and remove much of the hassle with foreign currency transfers. In the eight years I have lived in China, these have to be by far the most convenient vehicle I have seen for expats to transfer money and grow their assets for the future. It is important to note that these accounts cannot just be used to remove the money from China one day and then withdrawn the following day outside of China. There are restrictions and time frames which need to be understood, and professional advice should be sought.

Why should I transfer my money and what do I do with it?
As a financial planner there are usually two questions whichI am asked regarding the topic of removing money from China.

1. Why should I send my money home? I can invest it in the Chinese stock market and make millions.
2. What should I do with my money when I have sent it home?

Let me tackle question 1 first. We have all come across stories of Chinese people making millions on the stock exchange. We see rich kids driving Lamborghinis who can barely see over the steering wheel and many of us have thought to ourselves “I would like a piece of the Chinese dream”. However, as expats we are only allowed to invest in B class shares in China. A class are reserved for Chinese and institutional investors.

Secondly, if you are worried about removing money from China then why would you attempt to grow this money and increase the size of your problem? The Chinese stock market is incredibly volatile and for every story you hear of someone making lots of money, there is someone losing the same amount but doing it in a far quieter fashion.

Can you honestly pick stocks and shares successfully and if you can why don’t you quit your day job and work for yourself or knock on the door of Goldman Sachs or JP Morgan and ask for a six-figure salary.

As for question 2, I will answer in my next blog.

Please note that beijingkids does not necessarily endorse the views presented in this article.

About William Frisby
William originally arrived in Beijing as a finance guy on a bicycle and will probably leave as a finance guy on a bicycle. He works for Premium Finance Group (PFG), a financial consultancy that has been established in China for over ten years. PFG offers clients no-nonsense, personalized advice and serves the whole of China from their Beijing and Shanghai offices. Services include international property, investment, insurance and financial planning. To contact William, email william.frisby@premiumfinance-group.com.

Photo: Got credit (flickr)

When my dad was based in Shanghai, it was a simple matter to top up my Canadian bank account. He was paid partly in dollars, so he would transfer money directly to my foreign account and I’d repay him in renminbi. But now that he’s relocated for work, I had to find another way to send money to my Canadian account. After asking around, I was told that the most straightforward way was to go to the bank with a Chinese national and have them help me transfer the money. Here’s how it went.

I’d investigated a couple of other options before deciding on this course of action, but they were too mafan for my purposes. I only need to top up my Canadian account very occasionally, usually after I pay for flights with my credit card.

Western Union
The first option was Western Union, which an American friend told me she used regularly to pay off her student loans. However, Western Union only allows money to be sent in USD or EUR, neither of which was convenient for me. However, this could be a good option for US and EU citizens. The upside is that you can send a money transfer to a recipient or direct to bank without a Chinese intermediary. I’m not sure how much commission fees are, though they depend on how the transfer amount. You’ll find a list of Western Union branches on their website.

Sending Money from Your Chinese Bank Account
The same friend mentioned that you can also send money from your own Chinese bank account, but that requires a raft of documents. I asked the Finance department at my company and they got back to me with this big laundry list:

• An employment letter
• A copy of the employment contract
• A copy of your passport
• A 12-month salary history with tax deductions
• A certificate from the Tax Bureau

In addition, you have to be have been employed full-time with the same company for at least a year. Clearly, this wasn’t going to work for me.

Withdrawing Money from UnionPay-Compatible ATMs Back Home
A Filipino friend told me he used a simple solution. He created a spare Bank of China account (though it can be any bank) and gave the debit card to his mom in the Philippines. To top up the account, he can transfer money directly to it online, by phone, or through a Bank of China ATM machine. His mom can then withdraw money from any UnionPay-compatible ATM machine in the Philippines.

He says charges are very minimal – RMB 10 per withdrawal for Bank of China, then PHP 200 (about RMB 30) for the local bank in the Philippines. Maximum withdrawal is around RMB 3,000 each time. The last time he went home, my friend was also pleasantly surprised to find that some stores accept UnionPay debit cards, so he didn’t have to pay any charges.

Having traveled to Canada before, my friend said that many Canadian banks also accept UnionPay cards for withdrawals (including BMO Bank of Montreal, CIBC, and Scotiabank). He didn’t remember what the fees were.

This was good to know, but it still didn’t resolve the issue of my needing to pay off my Canadian credit card fairly soon. So I decided to go with the quickest option.

Having a Chinese National Transfer Money for You
In the end, I asked someone from Finance to accompany me to the bank. With a shenfenzheng, Chinese nationals can transfer up to USD 50,000 per year overseas. Make sure you have the following:

• Your foreign bank account number
• Your foreign bank’s SWIFT code, an international identifier code made up of letters (this should be listed on your bank’s website; ask a rep if you’re unsure)
• The address of your local bank branch
• The home address linked to that bank account

We went to China Merchants Bank, but the process should be fairly similar in all banks. Here’s how we did it, step-by-step:

1. The transfer has to be done from the Chinese national’s bank account, so I took out the amount I wanted to send in RMB and my colleague deposited it into her account.
2. The bank converted the amount into CAD using the daily exchange rate.
3. We filled out a form on a computer with the information listed above. When my colleague called ahead, the bank didn’t mention the need for a SWIFT code and my bank branch’s address, so I had to look those up on the spot. The SWIFT code is actually optional, but the bank employee explained that not having it would delay the transfer since they’d have to manually look up it up.
4. Once the form was filled out, we took a number and waited to be processed.
5. The clerk at the window printed out a physical form with the information we filled in earlier and had us check it. There was a mistake with the bank branch address, which my colleague had to correct herself because it was her bank account we were sending the money from; I wasn’t even allowed to help her by writing it myself, so I ended up typing it out on my phone and my colleague copied the correct address on a new piece of paper.
6. It took around 30 minutes for all the forms and papers to be corrected and signed. At the end, the clerk gave us a copy of the form, the address correction, and a summary of the commission fees (which came out to RMB 250).

Even with the minor delays, the whole process went pretty smoothly. My colleague said that Bank of China has the lowest basic commission charges (RMB 80 instead of RMB 100), so we should try there next time. I’m not sure how the RMB 250 commission charges I paid break down, so I’ll clarify that with her after the holidays. I’m not sure how long it normally takes the money to reach my foreign account since we sent the money just before the Chinese New Year break, so that’s also something I’ll find out for the future.

Have you tried any of the methods above? Do you have an alternative way of getting money out of the country? Let us know in the comments.

Photo: Duckie Monster (Flickr)