About China

China, the world's second largest economy, continues on its path to internationalising its markets with foreign companies. While capital flows in and out of China are controlled, China has launched a number of Free Trade Zones, including in Shanghai, which offers less controlled open foreign currency exchange and tax breaks to certain industries.

Despite capital controls, China has the 12th largest foreign exchange market in the world, and its bond market is the third largest in the world, with a diverse range of public and private debt. Foreigners can invest in it through the Qualified Foreign Institutional Investor Program and the RMB Qualified Foreign Institutional Investor Program.

China is more popular as a location for Shared Service Centres rather than Regional Treasury Centres. Currency controls in and out of China make it advantageous for companies with significant operations in China to also have a treasury operations base in the country. The setting up of the Cross-border Interbank Payment System (CIPS), which connects with SWIFT, has made cross-border payments in renminbi faster and easier for businesses.

China's banking sector is dominated by four large state-owned commercial banks. Foreign banks have a growing presence in the country, but they account for only a small percentage of the sector's assets.



What solutions are available in China?

Solution Description
Interest Optimisation Maximise your interest yield from for your balances held with the bank.

Corporate Treasury in China

China, the world's second largest economy, continues on its path to internationalising its markets to foreign companies. Here, we highlight some of the key benefits relevant to treasury and cash management in China.


Financial Market Development

  • The World Economic Forum ranks China 54th in the world for financial market development in The Global Competitiveness Report 2015-2016.

  • The report ranks China 78th for the soundness of its banks and also highlights structural issues in China's financial sector.

  • The banking sector is dominated by large state-owned banks, and access to finance can be challenging.

  • While capital flows in and out of China are controlled, China has launched a number of Free Trade Zones, including in Shanghai, which permit less controlled foreign-currency exchange and offer tax breaks to certain industries.

  • China is internationalising the renminbi, which was recently added to the IMF's Special Drawing Rights basket in October 2016.


Sophistication of Banking Systems

  • China's banking sector is dominated by four large state-owned commercial banks. In addition there are more than 1,000 rural and city commercial banks. Foreign banks have a growing presence in the country but they account for only a small percentage of the sector's assets.

  • Despite capital controls, China has the 12th largest foreign exchange market in the world, accounting for 1.1% of global turnover (Bank for International Settlements triennial global survey 2016).

  • China's bond market is the third-largest in the world, and it has a diverse range of public and private debt. Foreigners can invest in it through the Qualified Foreign Institutional Investor Program and the RMB Qualified Foreign Institutional Investor Program.

  • The setting up of the Cross-border Interbank Payment System (CIPS), which connects with SWIFT, has made cross-border payments in renminbi faster and easier.


Regulatory Bodies

  • Banks in China are regulated by the China Banking Regulatory Commission (CBRC). The central bank, the People's Bank of China (PBOC), also has regulatory power over financial institutions in order to maintain financial market stability.

  • The State Administration of Foreign Exchange (SAFE) regulates foreign-exchange activity and manages the state foreign-exchange reserves.

  • Regulations differ in the Free Trade Zones, and may also vary from city to city.



  • Tax-resident enterprises pay corporate income tax on their worldwide income at a standard rate of 25%. A non-tax resident enterprise is taxed only on its China-sourced income. Withholding tax is charged at 10%. Rates range from 5% to 15% for countries with which China has tax treaties.

  • Interest income and capital gains are treated as ordinary income. Interest on loans is generally tax-deductible.

  • VAT has been introduced at 17%, replacing business tax. Lower rates are applicable to some industries, with financial services and consumer services charged VAT at 6%.

  • Unrealised exchange gains are generally taxable.

  • Stamp tax of between 0.005% and 0.1% is charged on 11 types of contract, including entrusted loans. VAT is also charged on entrusted loan interest income, leading to a wide variety of different types of domestic liquidity structures unique to China being created to minimise the value of entrusted loans.

  • China has tax treaties with more than 100 countries and territories.

  • China is a signatory to the Organisation for Economic Co-operation and Development's Multilateral Competent Authority Agreement, through which information is exchanged between tax administrations, to provide a single, global picture on some key indicators of economic activity within multinational enterprises.


Benefits for Regional Treasury Operations in China

China is more popular as a location for shared service centres (SSCs), rather than regional treasury centres (RTCs). Companies with a strong China focus are more likely to base their treasury centre in Hong Kong or Singapore.

  • Currency controls in and out of China have made it advantageous for companies with significant operations in China to have a treasury operations base in the country.

  • The People's Bank of China and State Administration of Foreign Exchange have introduced a number of pilot schemes that relax foreign exchange rules for foreign-owned companies, including allowing cross-border RMB lending and cross-border sweeping of RMB and foreign currencies.

  • China has stated that it wants Shanghai to be an international financial centre by 2020; market infrastructure and access to treasury professionals in the city is improving.

  • Domestic payments require Chinese characters in some fields, so treasurers must ensure their enterprise resource planning (ERP) systems can support this.


Regulatory Considerations for Payments

  • Intercompany lending must be done through entrustment loans, although direct lending is allowed under certain circumstances.

  • Chinese entities cannot participate in notional pooling due to uncertainty of the enforceability of cross-guarantees.

  • Netting is closely monitored and companies must provide monthly balance of payments reporting on an original transactions basis. Netting reports must also be submitted to local tax bureaus.

  • A number of schemes exist for cross-border sweeping, including RMB outbound lending and a scheme enabling companies to link their onshore and offshore cash pools, subject to controls on inflow and outflow of funds.

  • Different regulations affect payments and collections, with supporting documentation requirements differing for payments for services and trade, and for current accounts and capital accounts.




Banking System

  • There are five main commercial banks in China: Industrial & Commercial Bank of China, China Construction Bank, Bank of China, Agricultural Bank of China and Bank of Communications. These banks are state controlled, and they have majority government ownership and lead China's banking sector.

  • In addition, there are 1,000 rural commercial banks and 133 city commercial banks, among other provincial financial institutions.

  • The China Banking Regulatory Commission launched a pilot programme to introduce private banks to its banking sector, and in 2014 and 2015, ten applications were approved. These banks have a focus on providing lending facilities to small and medium-sized enterprises.

  • Foreign banks (137) are active, although they only make up a small percentage of banking sector assets. In terms of regulation, they are treated as domestic banks. They may offer renminbi-denominated products and branches of foreign banks may offer time deposits for residents with RMB 1 million or more per transaction.

  • Second-tier joint stock banks were originally wholly government owned, but these are now jointly owned by the government and commercial entities, with the government holding majority ownership.

  • Due to the depreciation of the domestic currency and drop in foreign currency reserves, the PBOC has imposed tight restrictions on the outflow of capital and currency.


Bank Accounts

  • Residents may hold foreign exchange and RMB accounts domestically. However, residents are required to gain State Administration for Foreign Exchange (SAFE) approval to open foreign exchange accounts overseas, excluding export enterprises using foreign exchange accounts for export transactions whereby only registration with SAFE is required.

  • Non-residents may hold foreign exchange and RMB currency accounts domestically and RMB accounts overseas. To open a bank account, strict local regulations require it to be carried out in person with extensive supporting documentation, the company's financial chop and the chop of the legal representative; SAFE approval is required to open foreign exchange accounts overseas. A special account is required in order to receive foreign currency from overseas for the purpose of clearing cross-border loans.


Onshore CNY 

Onshore Foreign Currency 

Offshore CNY 

Offshore Foreign Currency





(Note 1)


Foreign entities

(no permanent establishment)




(Note 3)


1. Only Shanghai registered companies can apply for foreign entity RMB accounts for their overseas investments subject to Ministry of Commerce and PBOC approval. 

2. Chinese resident companies may open a foreign currency account offshore for specific trading or project investment purposes subject to SAFE approval.

3. Foreign entities can open NRA CNY accounts with Chinese banks or open NRA CNH accounts with overseas banks, with no PBOC approval required. 

4. Foreign entities can open RMB denominated accounts outside China, such as CNH accounts in Hong Kong. RMB can also be held in other locations such as Singapore or London.


  • There are several types of domestic currency (RMB) accounts. The two main ones where transactions can be readily used are:

  • Basic account: Used specifically for payroll and cash withdrawals; one account per legal entity.

  • General account: Used for payments and receipts (cannot be used for payroll or cash withdrawals); unlimited number of accounts per legal.  

Account type




The primary account maintained by a company used for funds transfer, settlement, payroll, and cash deposits/withdrawals. The opening of a basic account is subject to PBOC approval where the company is registered.

A company is allowed to maintain only one basic account and it shold be opened witha bank located in the same city where the entity is registered. This is an important account and care should be taken in selecting a quality bank near the company's offices.


The company can maintain any number of general accounts with multiple banks to meet additional business needs or for special purposes set out in the rules and regulations in China. May not be used for cash withdrawals or payroll. Tax accounts are a type of a general account used to pay local and provincial taxes. 

Can be used for the same type of payments and receipts as basic accounts, but not for payroll or cash withdrawals. There is no restriction in the location and number of general accounts. Tax accounts can only be opened with those banks that have an established link with the local tax bureau, and may not require the opening of an additional account. 


  • There are foreign currency accounts available in most of the major currencies including USD, EUR, HKD, JPY, SGD, AUD, GBP, NZD, and CHF, and they fall into three broad categories of use: 
Account type Purpose Remarks

This account is established by the company to receive and disburse the foreign currency that is injected into China as capital for the enterprise.

Chinese entities are permitted to have this account in the RMB

Registration with SAFE is required and expenditure from this account is subject to SAFE approval. Additional accounts may be opened thereafer without SAFE pre-approval. Holding multiple accounts is possible.

This is an important account and care should be taken in selecting a quality bank. Proximity to the company's offices is not required. 

Companies can choose to establish a RMB capital account instead of a USD capital account if they want to manage their FX exposure directly. 


This account is used for day-to-day operational needs that are transacted in foreign currencies, such as import and export transactions. It can also be used to pay and receive funds for services rendered under a service contract agreement. 

There is no restriction in terms of the number of settlement accounts, aggregate balances, and the location where the settlement account is maintained. Supporting the documentation is required for third party payments. 

Loan This account is used for any foreign currency borrowing from both banks and overseas shareholders.  Pre-registration with SAFE is required for each foreign debt contract. After registration, accounts may be opened without pre-approval.


Legal and Regulatory

  • The People's Bank of China is China's central bank and it is controlled by the State Council.

  • The banking sector is monitored by the China Banking Regulatory Commission.

  • Definitions for resident and non-resident status, and for enterprises incorporated in China and those managed or controlled in China, are in the Enterprise Income Tax Law (EITL).

  • SAFE is responsible for all foreign exchange activity of residents and non-residents.

  • China has anti-money laundering legislation in place, is a member of various international anti-money laundering groups and has a financial intelligence unit at the PBOC.

  • Repatriating funds from China is subject to a strict process of accountability with SAFE, whereby relevant transaction documents and a detailed audit must be carried out and filed before the funds can be released.

  • The Renminbi Qualified Foreign Institutional Investor (RQFII) scheme allows overseas investors to access offshore renminbi deposits to invest in China's securities markets through selected Chinese financial institutions based in Hong Kong.

  • Free Trade Zones are specially designated areas that are free from customs intervention and where goods can be manufactured, re-exported and traded. The first FTZs were Shanghai, Tianjin, Shenzhen and Fujian, however, more have been added.




Payment Systems


(China National Advanced Payment System)


Divided into 2 types:



  • Operated by PBOC.
  • To use CNAPS, participant must have settlement account with PBOC.





CNAPS–HVPS (High Value Payment System)

For high value (more than RMB 50,000) and urgent interbank transfers 

  • Available in 800 cities in China.
  • Possible for payments to be settled in real time (sending and recipient banks must be direct clearing CNAPS members); intercity transfers can take 48 hours.


CNAPS–BEPS (Bulk Entry Payment System)

For low value (less than RMB 50,000) electronic credits or debits

  • Effects final settlement of net balances originating from the Cheque Imaging System (CIS).
  • Payments settled on T+1; dated debits on T+2.


(City Clearing Processing Center)

In-city clearing system

  • Operated by the PBOC.
  • Operates through the National Processing Center (NPC) network and in selected major cities such as Shenzhen and Shanghai.
  • In-city transactions are cleared through participant institutions.
  • Payments are cleared in respective CCPCs and settled and forwarded to NPC.


(China Domestic Foreign Currency Payment System)


Processes foreign domestic currency payments

  • Operated by PBOC.
  • Processes electronic transfers in AUD, CAD, CHF, EUR, GBP, HKD, JPY and USD.
  • Payments are settled on T+0.


(Cheque Imaging System)


National electronic cheque clearing house

  • Operated by PBOC via 2,500 nationwide local clearing houses (LCHs).
  • Cheques are truncated and cleared electronically.
  • Intracity transfers take 24 hours and intercity transfers take 48 hours.
  • Final settlement done via CNAPS–BEPS.


(China International Payment System)



  • Operated by Cross-border Interbank Payment and Clearing (Shanghai) Corporation Limited.
  • Transactions are processed in real time.


(Internet Banking Payment System)

Interbank credit and debit transfer system

  • Operated by PBOC.
  • An online payment facility available 24/7 and transactions are processed in real time.
  • Debit and credit limit of RMB50,000.


(Treasury Information Processing System)

Electronic tax payment system

  • Operated by PBOC.
  • National electronic tax payment system that is connected to network of participant banks, where payment can be over the counter or online.
  • Connects to a nationwide tax management system at state and local provincial level bureaus.



Payment Instruments


Credit Transfers

  • Transactions are settled via CNAPS–HVPS or CNAPS–BEPS, depending on the value and urgency of the payment.

  • Domestic payments require Chinese characters to be used in specific fields, therefore, the corporate ERP systems must be able to support this qualification.


Direct Debits

  • Transactions are settled via CNAPS–BEPS, whereby dated debits are cleared the next day and pre-authorised debits are cleared the same day.



  • Cheques are a mode of payment used for retail and commercial payments. Cheques have to be validated with the company stamp and a handwritten signature; this medium of payment is not often used for personal use.

  • Valid only for 10 days and limited to a written maximum value of RMB 500,000.

  • Inter-city cheques are converted into electronic form and then cleared through CIS, with final settlement done via CNAPS–BEPS. Payments are usually cleared within 48 hours. Local cheques are cleared by local clearing houses.


Card Payments

  • A common form of payment.

  • China UnionPay (CUP) is the most common card used in China, although Visa-branded cards are being increasingly adopted by local banks.

  • Transactions are processed and cleared via CNAPS–BEPS same day or next day.

  • ATM and EFTPOS networks are operated by CUP.


Mobile Banking

  • A rapidly increasing mode of banking by the big banks, which offer a wide variety of banking services online, and third-party payment companies.

  • WeBank and MyBank are two of the main private online-only banks that offer payment and loan facilities, among others, and they target small and medium-sized enterprises.





Recent Developments


New Internet Payments Clearing House

A nationwide clearing house for online payments is being set up by the China National Clearing Centre, the settlements and clearing arm of the People’s Bank of China, and 44 financial firms, including Alibaba’s Ant Financial, Tencent Holdings and China UnionPay. All third-party payment companies will have to use the new clearing house, known as the Online Settlement Platform for Non-Bank Payment Institutions, for online payments by the end of June 2018. The new clearing house will aid data sharing.

Read more about the developments here


Cashless Society

China looks set to become the world’s first cashless society following rapid take up of mobile payments. Mobile payments reached USD5.5 trillion in 2016, accounting for 40% of all retail transactions. Take up has continued to grow since then, with mobile payments soaring by 113% in the first quarter of 2017, according to iResearch Consulting Group. Consumers are now able to use their mobile phone for payments ranging from paying their utility bills to buying street food to giving money to a busker or beggar simply by scanning a QR code.

Read more about the developments here


Crackdown on Micro-lenders

Chinese regulators are cracking down on the country’s USD151.1 billion micro-lending sector, which is seen as a threat to financial stability. The loans, which are typically around RMB1,000 and have interest rates of 36%, are taken out by consumers who are unable to access traditional banks. The National Internet Finance Association of China has issued a letter telling unqualified institutions to stop advancing the loans, while qualified ones must exercise increased discipline and charge interest rates at a reasonable level.

Read more about the developments here



This Market Profile is brought to you by DBS. Get in touch with us for further insights on doing treasury in China and take advantage of our innovative solutions to empower your business. Click here to find out more.



Sources: IMF World Economic Outlook database, October 2016; CIA World Factbook; Trading Economics; PwC

Please note that the information contained in this document, assembled based on information available and accurate as at July 2017, is of a general nature only and is subject to change whether for economic, political, social or other reasons.


Rate our content below:
Share this page via:
Last updated on 29 Jan 2018