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FOREX

Conversion of the Chinese currency unit CNY (Yuan or RMB) against the USD:

CNY 1.00 is worth: USD 0.15018
USD 1.00 is worth: CNY 6.65861

 

ECONOMIC OVERVIEW

** THE ADAB AT THE OECD FORUM IN PARIS **
Beijing, May 02, 2016; == The ADAB has been invited to the OECD Forum 2016 of the Organisation for Economic Cooperation & Development, OECD, in France.
ADAB's Asia/Africa CEO, William "Bill" K. KUSTERS, will attend the annual event, which will be held from May 31 to June 02 at the OECD Centre in Paris.
** CHINA EXPORTS BIGGEST FALL SINCE 2009 **
BEIJING, March 08, 2016; = China's February 2016 exports fell by 25.4% year on year, the worst performance since May 2009, while imports were down by 13.8% for the period, according to data from the Chinese General Administration of Customs.
With external demand weakening, China posted a trade surplus of USD 32.59bn for the month, down from USD 63.29bn in January. The trade figures were far worse than economists had expected, with analysts predicting that exports would decline by just 12.5% and imports by 10%. However, imports of crude oil hit a record high of 31.8 tons, up 19% from the previous month.
** FREE DOMESTIC INVESTMENTS BY FOREIGN ENTITIES **
BEIJING, Nov. 20, 2015; As of June 01, 2015, Circular 19 of SAFE, the State Administration of Foreign Exchange, on Reforming the Management Approach regarding the Settlement of Foreign Exchange Capital of Foreign-invested Enterprises has come into effect.
According to Circular 19, foreign-invested enterprises (“FIE”) may, at their discretion, settle their foreign exchange (“forex”) capital into Renminbi (“CNY”) funds at banks based on the actual operation needs of the FIE rather than on the actual payment needs as before.
Article 4 of Circular 19 specifically outlines the permitted use of the CNY capital funds obtained from forex settlement. It provides that FIEs may use the funds for equity investments.
Put in simple terms: Pursuant to Circular 19, it should be possible for a foreign investor to inject forex into a Chinese subsidiary, which subsidiary could then convert the funds into CNY and use them to acquire shares in another Chinese company.
Before Circular 19, only regulated foreign-invested investment companies, venture capital and private equity enterprises were generally permitted to use capital funds for equity investments. However, the regulatory thresholds for establishing such investment vehicles in China are rather high. Equity investments by “normal FIEs” (other than regulated investment vehicles) were only permitted if such normal FIEs used funds other than equity capital, such as CNY funds out of profits, equity transfer in China, etc.
Although the wording of Circular 19 provides for a relaxation in the use of capital funds for equity investment, the application of Circular 19 appears to vary in practice. Apparently, the SAFE and some of its local counterparts are of the opinion that the use of such CNY capital funds shall in general comply with the business scope of the FIE, and in case of equity investment the word “investment” shall be expressly reflected in the business scope of the FIE. On the other hand, administrative approval is required for changing the business scope of an FIE and an approval to include the “investment” activity in the business scope of an FIE might in some cases only be granted by the competent commerce department if the FIE fulfils the aforementioned regulatory thresholds.
** NEW VISA RULES FOR CHINA **
On January 1, 2015, new visa rules relating to the entry of foreigners for short-term work tasks in China became law. The rules provide guidelines for implementing the 90-day work permit rule under China’s new exit-entry law and regulations. It defines “short-term work” and clarifies the visa, work permit and residence permit application requirements and procedures for foreign nationals entering the country for short-term employment purposes.
AA)Work Permit Requirements for Short-Term Work:
Foreign nationals who intend to participate in the following activities in China for up to 90 days are also required to apply for a work permit:
-Visiting a cooperating partner in China to complete work in connection with technology, scientific research, management and provision of guidance;
-Physical training in a sports agency (applicable to coaches and athletes);
-Shooting a film (including commercials and documentaries);
-Participating in a fashion show (applicable to runway or print models);
-Participating in a foreign commercial performance; and
-Other activities specified by the labour administration authority.
In addition, the Procedures also require foreign nationals to apply for a work permit to undertake the following short-term work if they intend to stay for over 90 days per entry:
-Providing maintenance, assembly, testing, taking apart, guidance or training for purchased equipment or machines;
-Providing guidance, supervision or inspection of a project that won a bid;
-Short-term assignment to a subsidiary, branch office, or rep office;
-Participating in sports events held in China (applicable to athletes, coaches, team doctors and assistants);
-Volunteers without pay or paid by overseas organizations; or
Conducting performances that are not defined as “foreign related commercial performance” in China.
BB)Foreign nationals entering to participate in the above listed events for fewer than 90 days are exempt from the work permit requirement, and can enter on an M visa (for the first four types of activities) or an F visa (for volunteers and performers).
A major impact of the Procedures is on foreign nationals coming to China temporarily to perform contracts with a Chinese entity. Before the new law, generally foreign nationals could enter with a business visa for visits of 90 days or less. A work permit was only required for visits longer than 90 days. Under the new law, foreign nationals visiting a Chinese entity for fewer than 90 days to complete work in connection with a contract are required to obtain work authorization, unless the purpose of their visit falls within one of the exemptions listed above.
CC) Work Permit Application
The new law also clarifies the application process and document requirements for the short-term work permit applications. For foreign nationals whose working period is no more than 30 days, an employment license and “Approval for Short-Term Employment for Foreigners Working in P.R. China” (the “Approval”), and a Z-visa need to be obtained. The hosting entity needs to first apply for the employment license and the Approval at the local labor bureau, and then apply for a Z-visa invitation letter. Foreign nationals must then apply for a Z- visa to enter China. They will receive a Z- visa for 30 days with a note, “Allowed to work only within the period of time indicated in the approval.”
For those whose engagements are more than 30 days, there is one more step. After the above stated steps, they will receive Z- visas with a note to apply for 90-day resident permits upon entry. They need to obtain the resident permits accordingly.
The new regulations also provide detailed work permit requirements for participants of sports events in China and participants in performances not categorized as foreign commercial performances by the culture authority.
Foreign nationals entering China for short-term employment cannot remain in China beyond the period noted in their approval of short-term employment, and the Approval cannot be renewed unless they intend to be employed by a Chinese entity during their stay.
There are still open issues to be further clarified by the Chinese government authorities. Employers should pay close attention to the development of the implementation of the new law regarding these issues.
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