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 offer 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.


China Market Profile Infographic_small


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 48th in the world for financial market development in The Global Competitiveness Report 2017-2018.
  • The report ranks China 82nd for the soundness of its banks, with access to financing seen as the most challenging aspect of doing business in the country.
  • China has the largest banking sector in the world. It is dominated by five large state-owned banks.
  • 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 continuing to internationalise the renminbi, which was added to the IMF's Special Drawing Rights basket in October 2016.


Sophistication of Banking Systems

  • China's banking sector is dominated by five 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, valued at around USD12 trillion. 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, although they currently hold less than 2% of the debt.
  • 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. A second phase of the scheme has been launched extending its operating hours and enabling more foreign direct participants.


Regulatory Bodies

  • China is in the process of reforming financial regulation, merging the China Banking Regulatory Commission (CBRC) and the China Insurance Regulatory Commission. The central bank, the People's Bank of China (PBOC), will be given an enhanced regulatory role, including creating new laws and regulations, as well as maintaining 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.



  • The corporate income tax rate is 25%.
  • Resident enterprises are taxed on their worldwide income whilst non-resident enterprises are taxed on all China-sourced income.
  • A lower corporate income tax rate of 10%, 15% or 20% is available under certain circumstance, including for small-to-medium enterprises (if certain conditions are met) and enterprises with new/ high-technology status.
  • Value Added Tax (VAT) is charged at 6%, 10% or 16% depending on the type of goods or services (as of 1 May 2018). Some goods and services are zero-rated.
  • Withholding tax is charged at 10% on interest and dividends. For dividends, with effect from 1 January 2017, companies can defer withholding tax on dividends distributed to foreign investors by reinvesting into "encouraged investment projects" in China and meeting certain other conditions. As for interest, in addition to withholding tax, a standard VAT of 6% is imposed. Rates range from 0% to 15% for countries where a tax treaty is in place and a non-resident can provide a Certificate of Residence.
  • Interest income and capital gains are treated as ordinary income. Interest expenses that are used for business purposes are generally tax-deductible although excessive interest expense from related party financing will not be tax deductible. Generally, if the debt-to-equity ratio exceeds 3:1, the excess portion will not be tax deductible. Certain companies such as banks, financial holding companies, insurance companies, securities companies, etc. are not subject to the ratio.
  • Unrealised exchange gains are generally taxable.
  • Stamp tax at ad valorem basis of between 0.005% and 0.1% is charged on various types of contracts and documents.
  • Foreign tax credits can be claimed by tax-resident enterprises for foreign income tax paid overseas on income derived outside of China, subject to fulfilment of certain criteria prescribed.
  • 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 centres 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

  • China recently announced a clamp down on entrustment loans, the vehicle through which intercompany lending must be done in most circumstances.
  • Notional pooling is not allowed in China.
  • 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 bureaux.
  • 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.


Login to Treasury Prism banner





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 859 rural commercial banks, 12 joint-stock 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, with a further five in 2016. These banks have a focus on providing lending facilities to small and medium-sized enterprises.
  • Foreign banks (145) are active, although they make up only 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.
  • The PBOC’s capital and currency controls have stemmed the depreciation of the renminbi and resulted in an increase in foreign exchange reserves.


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 should be opened with a 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.
  • After China’s stock market turbulence in 2015, measures have been put in place to tighten regulation of the financial sector. The China Banking and Insurance Regulatory Commission was established in 2018 under the auspices of the PBOC, a consolidation of the China Banking Regulatory Commission and the China Insurance Regulatory Commission. Its role is to manage and limit financial risk and supervise the development of the insurance and financial sectors.
  • The Financial Stability and Development Committee, under the State Council, was launched in 2017 to coordinate overall strategy for the financial sector and formulate policy at a local government and high level. 
  • The PBOC set up a financial technology (fintech) committee in 2017 to oversee developments in fintech and examine the effects on monetary policy and the financial sector. In parallel, the PBOC has increased the use of regulatory technology (regtech) to boost its capabilities in managing financial risk.

  • 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. As part of the initiative to further liberalise China’s capital markets, RQFII has been made less restrictive and Hong Kong’s quota for the scheme has increased to RMB 500 billion.

  • 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, to bring the total to 11.




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 (auto debits)

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


Card Payments

  • A common form of payment. There were 6.35 billion cards in circulation at the end of 2017, of which 58.28 million were debit cards and 520 million were credit cards.
  • China UnionPay (CUP) is the most common card used in China, although Visa-branded cards are being increasingly adopted by local banks.
  • Chip-embedded payment cards in the form of IC-based bank cards are being promoted by the PBOC in a move away from renminbi-denominated magnetic cards.
  • Transactions are processed and cleared via CNAPS–BEPS same day or next day.
  • ATM and EFTPOS networks are operated by CUP. Coverage is increasing in line with the use of payment cards.


Online Payments

  • Fintech has been widely integrated across China’s banking industry, being adopted prominently in areas such as online lending, consumer finance, online money market funds, online insurance, personal financial management and online brokerage.
  • Mobile banking has become a rapidly increasing mode of banking by the big banks and third-party providers, offering a wide variety of banking services online. The most popular mobile banking apps are offered by China Construction Bank, Industrial and Commercial Bank of China and a smaller player, Ping An Pocket Bank.
  • Mobile wallet use is a major payment medium, with China having the largest mobile payment market in the world (in terms of value of transactions). Alibaba’s Alipay and Tencent’s WeChat Pay are the two dominant mobile payment apps. Both offer payment and transfer facilities, whether online or offline using QR codes and PINs, and target small and medium-sized enterprises
  • Online payments have outstripped the use of payment cards, with the three dominant players being Alipay, UnionPay and Tencent Finance.
  • Mobile banking and online lending are the two most prominent sectors in China’s fintech industry.
  • The Bank of Communications launched a mobile credit card in 2017, the first Chinese bank to make a credit card’s features completely digital.
  • A few Chinese banks have introduced facial recognition technology at ATMs in cities across China, doing away with the necessity to carry payment cards and improving financial security.


Digital Currencies

  • Cryptocurrency exchanges are currently banned in China and the PBOC has declared initial coin offerings to be illegal.
  • However, the central bank has also announced plans to develop a ‘sovereign digital currency’ and acknowledged the potential for this monetary system.


Cash, Cheques and Money Orders

  • The Cashless Alliance, a collaboration with the United Nations Environmental Agency and 16 other partners, was set up to develop financial mechanisms to eliminate the use of physical payment cards and cash.
  • The overwhelming growth of cashless systems has triggered a directive from the PBOC for vendors not to discriminate or refuse cash payments. Recent surveys rank cash as the fifth most popular form of payment in China, behind various mobile, credit and debit systems.
  • 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.
  • Money orders are available in China through vendors such as Western Union and MoneyGram. Money can be sent domestically or internationally, either online or in person.



China Market Profile Infographic


Recent Developments


QFII and RQFII Set to be Combined

The China Securities Regulatory Committee is consulting on new rules that will see the Qualified Foreign Institutional Investors (QFII) and RMB Qualified Foreign Institutional Investors (RQFII) programmes combined. The draft rules also set out measures to widen market access and expand the type of investments covered under the schemes in a bid to increase foreign investment. It was recently announced the quota for the QFII would be doubled from USD150 billion to USD300 billion, as part of ongoing moves to open up China’s capital market.

Read more about the development here


Greater Protection for Payment Platform Users

The People’s Bank of China has introduced new measures to protect money that consumers deposit with third-party payment groups. The central bank has become the custodian of all customer funds deposited with payment platforms, as it seeks to increase regulation of the sector. It will not pay interest on the money, bringing to an end a source of revenue for payment platforms, which would typically reinvest customers’ money in mutual funds, peer-to-peer lending and other wealth management products.

Read more about the development here.


UnionPay International Opens APIs

Payment services group UnionPay International has opened access to its application planning interfaces (APIs) to enable third-party developers to create apps and services linked to its cross-border payment products, increasing access and convenience for cardholders. UPI Developer gives developers at other companies access to the APIs of 18 of UnionPay’s most popular payment and data services, including QR code payments, as well as the ability to combine multiple APIs to offer one-stop payment solutions. UnionPay International will also offer technical support services to developers.

Read more about the development here


Digital Payments Drive ATM Decline

China’s switch to digital payments is set to cause the first ever decline in global ATM installations, according to research from RBR. The total number of ATMs installed is now expected to peak at 3.28 million in 2017. Although installation numbers are still increasing in most countries, they have begun to decline rapidly in China – which accounts for nearly a quarter of the world’s cash machines. In 2017, 20,000 ATMs were withdrawn in the country as China’s mobile payments market grew by 28% to RMB4.7 trillion.

Read more about the development 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: The World Economic Forum The Global Competitiveness Report 2017-2018; IMF; Bank for International Settlements; Bloomberg; People's Bank of China; PwC; OECD; Association for Finance Professionals

The information herein is published by DBS Bank Ltd. (“DBS Bank”) and is for information only. The information is assembled based on information available and accurate as at Feb 2019.

The information is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

The information herein may be incomplete or condensed. Any terms, conditions and opinions contained herein may have been obtained from various sources and neither DBS Bank, its subsidiaries/affiliates nor any of their respective directors or employees (collectively the “DBS Group”) make any warranty, expressed or implied, as to its accuracy or completeness and thus assume no responsibility of it. The information herein may be subject to further revision, verification and updating and DBS Group undertakes no responsibility thereof.

DBS Bank Ltd. All rights reserved. All services are subject to applicable laws and regulations and service terms. Not all products and services are available in all geographic areas. Eligibility for particular products and services is subject to final determination by DBS Bank Ltd and/or its affiliates/subsidiaries.


Last updated on 10 Jun 2019