Money Matters in China

[Hypiereon]

Several people have queried me about exchange rates, exchanging money in China, and the banking system. I've decided to post the basic information I've been giving out for the benefit of anyone who had not thought to ask the same question.

First of all, you can get a pretty good idea of the current exchange rate for ANY currency here: http://www.xe.com/ucc/

At this site, on January 30 2006, you would get this information -->
1.00 USD United States Dollars = 8.06225 CNY China Yuan Renminbi
1 USD = 8.06225 CNY
1 CNY = 0.124035 USD (that's 1 RMB for .12 cents USD)

Now, you may be surprised to find out that this rate is wrong. Wrong because it does not "float" with the exchange rates on a daily basis, is not updated frequently enough to stay perfectly current in any case, wrong because it does not reflect the different types of exchanges available, and wrong because the exchange rate beteen USD and RMB is falling as the RMB revalues to something more honest in it's true value to the USD.

Where it will ultimately end up is up to speculation, but Hong Kong dollars may be a good measuring stick.

That said, the website is usually pretty close. For instance, my last wire exchange (will talk about that in a sec.) was made at 8.04 RMB for each USD I exchanged. That was the high mark anyone could hope for. So, be aware that this website is only giving you "current" information that seems to grow old rather fast.

Now, you may ask "Can I get money exchanged in the USA?" - sure, and you will get ripped of for having done it. It seems like a safe thing to do to get some money in your pocket before arriving in China, but if you can help it at all, don't. If you MUST, I'd exchange as little as they would let me get by with. Exchanging 100 - 200 USD is MORE than enough to get done what you need to get done, and allow you to exchange the rest when you get here.

I have taken the route of exchanging money in the USA, and after the service fee, (which is higher on lower amounts of exchange), we came off with something close to a 1USD:7RMB exchange with our bank. Get my drift? Bring your money here.

Before you get here, look up a backpacker guest house - again, another great source of survival information on the cheap. Guest houses are used to dealing with foreigners, sometimes are paid in foreign currencies, and know the nearest black market dealer for exchanging that currency into RMB at the street rate of exchange. They will help you do it at no cost. They are usually very eager to help, and don't think twice about bending a rule or two to do it.

There are also street dealers hawking around the major bank entrances and fronts of hotels where foreigners are known to stay or exchange money, but these guys are looking to get you on the cheap. It's possible you'd get one to give you a decent exchange, but not likely. Going through the guesthouse owner is far better - it establishes a relationship between him and the street dealer, and ensures future deals so he's a little more likely to give you a fair rate and it gives face to the guesthouse manager. As well, being an actual "guest" at the guesthouse, will also work in your favor as it is in the guesthouse owners best interest to make you happy and a possible repeat customer. If you're not staying there, then it is entirely possible he may try to cut a little for himself in on the deal, but you'd probably end up with what the guys in front of the bank or hotel would offer you.

Best way to get a better rate from the street than you would at the bank is to walk into the bank and find out what the rate is for a cash exchange, then try to deal on the street for more than that. If you can't, or just get too nervous, then you always have the bank rate sitting there without any hassles. On low amounts (a few hundred dollars) this might be a good idea. However, when you get into the four digit range, you're giving up a lot more than you have to. Don't think in terms of USD, you have to think of RMB AS USD. Each RMB to a Chinese person is a whole dollar - so long as that RMB is not used to buy western goods, it will stretch pretty far.

That said, let me set up the tiered system of exchange in China for you:

• 1. CASH for RMB at the Bank - MUCH better than you'd get in the states, but a little less than the market value because of the possibility of counterfeit notes. Also, this rate is less than you'd get from dealing on the street.
• 2. CASH for RMB on the street - better than the CASH for RMB rate from the bank because they want your USD. Your notes can be sold to other Chinese people these guys know who will buy them at a higher price than they could at the bank. The reason is simple, private Chinese citizens are very strictly limited in the amount of USD they are allowed to purchase / exchange from banks. This creates the black market scenario which allows you to exchange your cash for more than you would be able to at the bank. If you know a particular Chinese businessman who is seeking those dollars, then you could do an exchange at a much MUCH higher rate - but you don't, so do the deal on the street. Also, this rate is less than you'd get for a wire exchange.
• 3. WIRE TRANSFERS for RMB at the Bank. This is the highest rate of legal exchange you can get in China. There is no risk, the notes will not be counterfeit, and the exchange will also be just above what the guy on the street will offer you. Reason is, he deals in cash, not wire transfers. If you have cash, then all he has to do is beat what the bank would give you for cash - he does NOT have to beat what the bank would give you for a wire transfer because 99% of foreigners are the tourist types carrying around cash to exchange.

Understand so far? Get your money exchanged on the street. Best way to set it up is through a kind owner at a guesthouse who would be willing to help you out and set it up at the guesthouse. Be aware of the rate yourself so you know for sure you're not getting ripped off. When the exchange takes place, bring a friend if you can. I've NEVER had any trouble, nor have I ever heard of anyone else ever having any trouble, but don't assume you wouldn't be the first. Don't be paranoid, just be smart about it.

Make sure you arrive at numbers before you or anyone else starts showing off any money. When the amounts are agreed to, it's time to ask to see the cash. Ask the guesthouse manager to count out the RMB once, (a completely irrelevant guesture that sets you up for your part of the exchange), then you count out the RMB to yourself laying the bills in front of you. Then, when you are satisfied, with one hand on the bills, move your money out of your pocket to the guesthouse manager and ask him to count the USD. Keep count with the manager while moving the RMB to your pocket. If the manager is satisfied, he'll hand the money to the dealer who will count it out again. This is not so much for accuracy or for double checking as much as it is for establishing that the bridge of trust between you is the guesthouse manager.

Now, if you're going to be in China a long time - more than a year - and want to get funds sent from the USA to you in China, you're going to need to wire it, which means you need a SWIFT account.

The Bank of China can set the SWIFT account up for you on this end. I don't think you even need any money for it. To them, it's just a bank account established by your passport and visa numbers. (They'll want you to make copies so bring copies with you.) When the account is set up, you send the SWIFT number (account number) and physical address of the Bank of China you established the account at to the person in the USA who will send you the money.

They will need to take this information and deal with whatever bank they are going to use to send you money. If you have a bank account in the USA you want to withdrawal money from, then the person will need official access to that account to send you money from that account. Your person in the USA will go through all the hoops your bank has to get the money out and sent to the Bank of China in New York, from there it gets routed to the account in your name in China. This takes less than a day, but the verification/confirmation process lasts three days at the least. The verification/confirmation process is everyone making sure everyone else knows what happened and that none of them are going to object to it or say something is wrong or that it shouldn't have happened.

Reason I mention the verification/confirmation process is that some unknowing foreigners go to the bank early, see the digits have been moved into the account, and want their money right then - only to be politely refused by the bank employeee who does NOT know how to explain the whole process to them. The foreigner gets mad thinking the bank employee is inept, and the bank employee knows that the foreigner will eventually get his money anyway, but there's nothing he can do about it, so he sits there and "smiles" while he listens making the foreinger think the bank employee is just trying to aggravate him. It's the classic cultural/language barrier you're better of knowing about before trying to smash your head through.

After the minimum three day verification process, the money is yours, but do NOT take out the USD in USD cash. Tell the cashier you want to exchange the money into RMB, he'll flip in the current rate for wire transfers, and hand you RMB. If you take out USD and try to hand them directly back to the exact same cashier, you WILL get the cash exchange rate (lower) instead of the wire exchange rate (higher).

There is a fee for wire transfers, and the fee is the same for ALL transfers, so be sure you're only wiring large amounts if you can help it. You can legally wire 9,999 USD without any red tape, but even then banks don't like it, so keep it to 9,000 and you won't get any flak. Once you hit the 10,000 mark, red flags go off all up and down the system and you're looking at reams of paperwork and notices to the IRS/Treasury Dept./and even the FBI to get the money sent. This is to defeat money laundering practices.

My friend actually went through the WHOLE paperwork process to get 20,000 USD wired only to have FBI agents show up at his in-laws house asking questions about why they sent the money, who it was going to, and what it was to be used for. It was all perfectly legal and no one was in any trouble, but having FBI agents knocking at your in-laws door was a bit of a surprise to everyone.

Now, the same limits also go for withdrawing money. You can exchange 9,999 USD from a wire account into RMB, but try 10,000 and the red flags will fly again. So, if you had 7,000 sent this month, and 7,000 sent the next month, you would NOT be able to withdrawal all 14,000 at once. I'm not sure what the interval is for waiting between wires and withdrawals - never had that much sent or had to take that much out at once - but you can just ask if it becomes an issue for you.

This is bascially the extent of my knowledge about exchanging money in China or having it wired, but if there is something you still have a question about or anything I can do to help, let me know. hypiereon@hotmail.com

[restless]

HI,

is it possible to move funds via internet, e.g. online australian bank account, linked to an international credit card?

is this safe? and is this accesible from chinese servers?

I was planning to acces funds from home this way,

[englishaffairs]

Not sure what exactly your banking system is, but you can easily access your cash with a Visa card here at almost any ATM.

After ya open an account, you can also have money transfered no problem.
Takes like 3 days for a transfer.
Hope that helps,

[restless]

but you can easily access your cash with a Visa card here at almost any ATM.

Hi,
can you tell me whether the visa debit card works over there, just as the credit card would?
my experience in china, is that visa credit card for e.g., works with less glitches than my master card

what i was referring to with internet banking, is whether i can log onto my oz bank account and do regular banking online, as i would here, or is this too risky via chinese isp?
i wasn't thinking about transferring money out of oz to china, but i suppose i could, since i've used the internet banking from this end to send money to thailand,

thanks for your on the ground advise

[englishaffairs]

just wakin up, but i will answer at least part of your question now.
I only brought a Debit card with the Visa logo and no problems, so yes this is fine. As for Mastercard, pretty much as useless here as most places, so you should bring it maybe for an emergency, but I doubt you will see too many places that have the Mastercard logo displayed.
I hope this helps... As for your banking question, I hate to try to answer that one as I have no experience with that. I could ask around.
cheers, romas
check out my homepage sometime

[restless]

Debit card with the Visa logo

this is what i wnat to bring with me, to access funds from home, is yours an oz bank?
why is mastercard a prbolem?
thanks for letting me know
restless esl

[englishaffairs]

As for Mastercard, I never really see the logo anywhere. Visa is everywhere though even at most all the ATMs and you can use it to pay for purchases as well at the bigger stores.
I feel like I have seen the Mastercard logo maybe at some of the big hotels, but not sure. I think if you really get in a bind, you will figure out how to get cash from your Mastercard if needed. Like you could even fund a moneybookers account with it as a go around.
I am from the states, so was using a US bank debit card - but all the same I would think so no worries. Just watch your service fees, they add up quick coming from both sides, so try to take out more / less often if ya can.
Dont stress too much, Shanghai will be way more convenient than where I am. And opening a bank account here is a good idea, and will make things easier. I have been here about 3 years now, and honestly - I dont even have a bank account back home anymore.
if ya dont catch me on here, feel free to e-mail me
cheers, romas

[restless]

Hi Romas,
yeah, what about this 'payment in hard currency" does this mean in us dollars?
i've seen this as part of some contracts, but i'm figureing that most of my pay, will jsut be pocket money, so i may as well recieve in rmb, and dose that mean opeing local banck account??
restless esl

[englishaffairs]

hmm, I am not sure really. Never really read an ad like that. But I cant imagine them paying you in US dollars, so I would think it is just maybe meant to mean putting cash (RMB) in your hand.
As for the bank account, I didnt really understand what you were asking.

[restless]

- That “70% of salary may be converted to foreign currency” will be included on the Foreign Expert Certificate when it is obtained on your behalf, and paid for by the school. (see this website: http://english.gov.cn/2005-08/31/content_27701.htm)

quoting hyperion there, from another thread, i think it means hard currency?
my questiOns
do i need to open a chinese bankc account?
do my employers then deposti salary in rmb, or over seas currency?
how have you arranged your money matters? (without being too personal)
thanks
rookie