Transferring foreign currency in China

March 2, 2013 8:58 PM

Asking on behalf of two friends in China: one (not a Chinese national) wants to loan a large amount of money to the other (who is Chinese). The problem is the foreigner's account (even though it's a Chinese bank account) is in Euros. They tried to go to the local (Chinese) bank and do a transfer, but were told that it was illegal to transfer a foreign currency to a Chinese person like that, and that they would have to first convert all the money to RMB and then could give it to him, but that gets pretty expensive with exchange rates and fees, since this is apparently a pretty large sum. So the question is: What's the best way for a foreigner to transfer his money, in euros, at his Chinese bank account to the Chinese bank account of a Chinese national? Is there any bank card or service which the Chinese national can apply for to make it easier?
posted by jef to work & money (7 answers total)

What if they open an account together, the foreigner makes the deposit in the amount of the loan and then the Chinese person withdraws it? After the transaction, close the account.
posted by carmicha at 9:27 PM on March 2

Two suggestions:

1. Ask HSBC if they have a way to do this. If any bank were set up to facilitate such a transaction, it would be HSBC.

2. Do it all in cash. Hauling around large bundles of cash is rather common in China, as insane as that may sound to Westerners who tend to trust banks a lot more.
posted by qxntpqbbbqxl at 9:39 PM on March 2

China's National Tourism Administration has a web page with some advice for foreigners who need to legally deal with foreign currencies in China as this is highly regulated in China and that, as they note, "foreign currency circulation and foreign currency-based settlement are prohibited in the territory of China". They go on to say that "there are only two legitimate means for the transaction between foreign currency and RMB: the banks providing foreign exchange transaction business and the China Foreign Exchange Trading Centre and its system."

If this loan of a large amount of money is not just a personal loan intended to cover the personal expenses of the Chinese national, but instead could be interpreted as funds to be used by a business the Chinese national owns or plans to start, your friend should be careful, as foreign investment in China is also highly regulated (many methods of investment that a European might consider entirely conventional are illegal in China). If this is, in fact, an investment then you might take a look at the Journal of Accountancy's article "Business Basics in China". It covers a couple of common methods for foreign investors to do business in China as well as the complications related to China's currency regulations. Seeking the advice of a professional would certainly be wise.
posted by RichardP at 11:19 PM on March 2

that gets pretty expensive with exchange rates and fees,

Does the Chinese national want the money in euros? That seems on the sketchy side of the law.

If he wants it in RMB, then one of them will have to pay all the exchange fees. Your foreigner friend really should just go to a bank and withdraw the money as RMB in a lump sum, then take it to the other bank and deposit it. They can agree between themselves whether the loan is inclusive or exclusive of fees.
posted by jacalata at 11:24 PM on March 2

that gets pretty expensive with exchange rates and fees,

The whole idea is that the system is extremely controlled and that the government is going to get its share...so it is unlikely that there is a way to do this that doesn't entail a bunch of transaction costs whatever they may be.
posted by koahiatamadl at 1:51 AM on March 3

I haven't been in China for about five years, but I and everyone I knew always found that the best exchange rates by far were from black market money exchangers.
posted by skewed at 10:26 AM on March 3

Seconding black market money changers. Either that or one of them just has to pay the exchange fees. Just be happy you're not trying to do the opposite -- convert RMB into EU or USD -- where there's a US$50k per person per year limit and the bank can deny your transaction if they consider it at all "suspicious."

Whatever you do, do not withdraw the euros in cash in order to re-deposit them. There are two different exchange rates for each currency depending on whether it was physical cash or electronic (現鈔 vs 現匯), and the rate for cash is a lot worse.
posted by bradf at 1:06 PM on March 3