Canonical article: Company in China: WFOE, SAFE, fapiao and a bank account →
Concept
Mainland China is the world's second-largest economy: in 2025 its GDP topped ¥140 trillion for the first time (¥140.19 trillion, +5%, about US$20 trillion). Yet the system here is self-contained at every level: the yuan and CIPS instead of dollar correspondents, Golden Tax and fapiao instead of conventional accounting, SAFE currency control instead of free capital movement. Foreign business enters under a "national treatment up to admission + negative list" model: the 2024 Negative List keeps 29 restricted positions, and the manufacturing sector is fully open.
Foreign direct investment inflows have declined for a third year running (MOFCOM tallied 2025 in January 2026), but the structure says more than the headline: high-tech industries hold about a third of the funds raised, and the number of new foreign-invested companies is growing — investors are coming in smaller amounts and selectively, while Beijing responds with targeted incentives, such as a tax credit for reinvesting dividends (2025–2028).
Our view: China is an operational jurisdiction, not a structuring one. People come here for the market, manufacturing, and supply chains; the holding company, capital, and personal status more often stay in Hong Kong or Singapore. Hong Kong remains the default gateway: CNH liquidity, Stock Connect, and banking access without entering mainland compliance.
Section map: where to start and where the answer is.
| Reader's question | Page |
|---|---|
| How to register a company and what the first year costs | Company in China: WFOE, SAFE, fapiao |
| Which bank will open an account for my profile | China banks for foreign trade |
| How to move a payment to China and back | Payments to China |
| Why a bank turns back a payment or the goods | Chinese bank restrictions |
| How to get a work permit and residency | Residency in China |
| Whether you can enter without a visa | Visa-free entry and transit |
| Where the holding above a Chinese business sits | Hong Kong: companies, banks, status |
| Who inherits Chinese assets | Intestate succession in China |
The Russia angle: figures and limits
The Russia–China goods flow in 2025 — four reference figures.
| Flow | 2025 |
|---|---|
| Russia–China trade turnover | US$228.1 billion (−7% from the 2024 record) |
| China's imports from Russia | US$124.8 billion |
| Of which energy | US$78.7 billion (−17%) |
| China's exports to Russia | US$103.3 billion |
About 90% of settlements run in rubles and yuan, so all the practical mechanics come down to yuan routes and a given bank's willingness to process them.
The boundary is set by secondary sanctions: EO 14114 (December 2023) threatens any bank with being cut off from dollar correspondents for serving the Russian defense-industrial complex, and in July 2025 the EU listed two Chinese regional banks for the first time (Heihe and Suifenhe Rural Commercial). The planning takeaway: the Big Four are all but closed to the RU profile, the flow lives in regional banks and shifts quarterly — the route map and the sending-bank-to-Chinese-correspondent pairings are in the payments hub.
Goods are screened separately from money: banks check HS codes against the EU sanctioned-goods list and their own stop-lists (how this works). Backup circuits outside China are kept configured in advance: Collect & Pay in the AIFC as a Kazakhstan RUB/CNH route and Freedom Bank for the personal circuit; the overall framework is in Relocation from Russia.
Company and presence
Forms of presence, in ascending order of obligations: representative office (no commercial activity: procurement, QC, market research — the route and pricing are in the residency article), WFOE (100% foreign ownership, full access: fapiao, hiring, export VAT refunds), joint venture (when a Negative List industry requires a Chinese partner, or the partner brings licenses and distribution channels).
Key rules from the canonical company-china:
- registered capital must be paid up within 5 years (Company Law 2024) — a "pretty" figure in the charter turns into a real obligation
- registration takes 15–20 business days, a working company with an account 45–60 business days, first-year budget €10,700–20,700
- an annual audit by a Chinese CPA firm is mandatory: the annual reconciliation 汇算清缴 by May 31, the SAMR report by June 30; Golden Tax IV reconciles fapiao, bank, and returns automatically, and a nationwide e-fapiao has been in force since December 2024
Choosing a region means choosing a bank, incentives, and the speed of government agencies:
| Region | CIT | Profile |
|---|---|---|
| Shanghai | 25% (HNTE 15%) | trade, finance, consulting; the easiest banking for foreigners |
| Shenzhen | 25% (Qianhai/HNTE 15%) | electronics, hardware, a link to Hong Kong (40 minutes) |
| Hainan (FTP) | 15% for encouraged industries | since 18.12.2025 — island-wide customs, 74% of tariff lines zeroed; substance is checked strictly |
| Hangzhou | 25% (HNTE 15%) | e-commerce (Alibaba ecosystem), customs models 9610/1210 |
| Chengdu | 25% (WDS 15% until 2030) | manufacturing, back-office; rent and salaries −40–50% vs Shanghai; rail to Europe |
| Harbin | 25% (HNTE 15%) | trade with Russia and the CIS, a Russian-speaking environment, banks for RMB/RUB |
Taxes: summary
| Tax | Rate | Comment |
|---|---|---|
| CIT | 25% | on the worldwide income of a Chinese resident |
| CIT preferential | 15% | HNTE, Hainan FTP, Western Development, Qianhai (encouraged industries + substance) |
| CIT for small companies | ~5% effective | first ¥3M of profit, extended to 2027 |
| VAT | 13% / 9% / 6% | goods / transport / services; input credit only against correct fapiao |
| WHT on dividends | 10% (5% under a tax treaty) | RU–China: 5% for qualifying participation; a credit of up to 10% for reinvestment (2025–2028) |
| IIT | 3–45% | residency from 183 days; the six-year rule for worldwide income — in the residency article |
Export VAT is refunded when the chain is clean: declaration, payment, contract, purchase fapiao, the correct goods code — this is one of the main economic arguments for a WFOE over procurement without your own legal entity in China.
Banks
A corporate account at a Chinese bank runs on one fuel — the real Chinese economy: suppliers and buyers in China, settlements in yuan, trade finance. For a pure holding or transit with no China footprint it is weaker than a Hong Kong or Singapore account, and the bank sees this immediately. A guide by segment:
| Segment | Banks | RU-UBO regime | Timeline / support budget |
|---|---|---|---|
| Big Four | BoC, ICBC, CCB, ABC | a working channel only at Bank of China, with residency | see profile / €7,000 (BoC) |
| Joint-stock | Everbright, Ping An, Huaxia | by arrangement, with residency | 15–35 business days / €2,500–8,000 |
| Regional | Harbin, CZCB, Dalian, Langfang | from an active channel to refusal — depends on the bank | 15–40 business days / €1,250–8,000 |
| Hong Kong circuit | BOCHK, HSBC HK, digital banks | case-by-case review | the map is in the Hong Kong hub |
The full map with niches, stop-criteria, and service codes — China banks for foreign trade. Working CZCB guides: online banking login, payments, statements, currency exchange.
The Hong Kong layer is covered bank by bank: HSBC Hong Kong, Hang Seng Bank, and Bank of China (Hong Kong) — plus digital banks with a mainland link: livi bank (transfers to mainland China), Ant Bank HK (the Alipay ecosystem), Fusion Bank (WeChat Pay). When a bank is overkill, neobanks step in: Airwallex, Wise Business, Statrys, Currenxie, Payoneer — the class overview is in Neobanks.
Personal banking and everyday payments
A personal account at a mainland bank is opened with a long-term visa or a residence permit — tourist status won't do; you need an in-person visit, a local number, and an address, and 1–2 weeks to full functionality. For short trips Alipay or WeChat Pay with a linked foreign card is enough: after passport verification the limits are US$5,000 per transaction and US$50,000 per year, payments up to ¥200 with no fee, above that about 3%. Without a Chinese phone number no onboarding works at all.
Payments and currency control
The yuan's infrastructure grows faster than individual banks close.
| Circuit | Metric |
|---|---|
| CIPS, participants | 194 direct and 1,597 indirect (end of Q1 2026) |
| CIPS, turnover | a record ¥920 billion per day in March 2026 (+20% year on year); ¥1.22 trillion in a day in April |
| Yuan in SWIFT | about 3% of global payments, sixth place |
| e-CNY | over ¥16 trillion accumulated |
| mBridge | about US$55 billion (China, Hong Kong, Thailand, the UAE, Saudi Arabia) |
A notable share of yuan settlements goes through CIPS and never reaches the SWIFT statistics.
The stack: CNAPS, CIPS, SWIFT, and UnionPay
China's payment infrastructure has several layers, and they are confused most often. CNAPS (China National Advanced Payment System) is the People's Bank's domestic circuit: HVPS clears large amounts in real time, BEPS handles retail netting; any yuan inside the mainland is finalized here. CIPS is the cross-border overlay for settlements with non-residents: messages in ISO 20022, finality via participants' accounts in CNAPS. SWIFT remains the messaging layer for most indirect participants — which is why a "payment via CIPS" is often visible in SWIFT tracking too. The card layer is UnionPay, the digital one is e-CNY.
In practice, a payment to a mainland bank almost always needs, besides the SWIFT BIC, the 12-digit CNAPS code of the recipient's branch (the equivalent of a local routing number) — regional branches often have no BIC of their own, and without the CNAPS code the payment goes to manual handling; the recipient's and the bank's names are duplicated in Chinese. Routes and correspondents are in payments to China.
SAFE currency control is the frame around any flow, and it operates through the bank as the first line of checks:
- capital comes in to a dedicated capital account and is converted into yuan as permitted use arises
- dividends go out only after the annual audit, payment of CIT, a tax clearance, and the bank's review of the corporate resolution; 10% withholding (5% under some tax treaties)
- service payments and royalties abroad require a contract, an invoice, proof of the service, and withholding-tax documents — each route undergoes an economic-substance check
- for individuals, an annual quota of US$50,000 for buying foreign currency; transfers above it go through documented grounds
- the first payment on a new route always takes longer to clear; a predictable history under a single contract is the main asset
Focused breakdowns: the three payment filters and the route map, HS codes and stop-lists, trade finance and Sinosure, and the WorldFirst and PingPong platforms for suppliers and marketplaces.
Investment and market access
Direct entry of foreign private capital into the mainland market remains rationed, and almost all working channels run through Hong Kong: Stock Connect (Shanghai and Shenzhen shares via HKEX infrastructure without a China account), Bond Connect (the interdealer debt market), QFII/RQFII for institutional volumes. For a client with large capital this is legitimate China exposure without entering mainland compliance — the mechanics are in the Hong Kong hub.
Real estate is a restrictive regime: a foreigner may own one property for their own residence after a year of work or study in China; an investment purchase "off the street" does not work. Crypto operations have been banned since 2021 — the crypto circuit is built outside the mainland, usually via Hong Kong. China takes part in CRS: accounts with foreign controlling persons are reported to their country of tax residence (how the exchange works).
Residency and status
- Residency in China: work permit, Z visa, and permanent residence — the A/B/C points system with a full table, routes via a WFOE and a representative office, the K visa for STEM (since October 2025), the five-star card, and the IIT scale
- China: visa-free for Russians — 30 days without a visa, the regime extended to December 31, 2027; 240-hour transit
- Documents: since November 7, 2023 China is in the Hague Convention — Russian documents are accepted with an apostille, without consular legalization
- Tax residency — 183 days, the six-year rule for worldwide income (2026 is the year to plan a "resetting" departure for those resident since 2019), fringe-benefit reliefs through the end of 2027
Capital and inheritance
Inheritance is governed by the 2021 Civil Code: the orders of succession, shares, and planning are in Intestate succession in China. For family assets with a Chinese element the practical rule is the same as for business: ownership is structured outside the mainland (Hong Kong, Singapore), while operational assets with a clear succession path stay inside China.
Operational topics
- Apostille and legalization — since November 7, 2023 China is in the Hague Convention: Russian documents for the bank, the work permit, and deals go with an apostille instead of consular legalization
- AML/KYC for the private client — the source-of-funds / source-of-wealth pack a Chinese bank will ask for at onboarding
- Beneficial ownership and nominee — the UBO is disclosed to the bank and reported under CRS; nominee arrangements do not work in China
- Economic substance — an office, staff, and decisions on the ground: the condition for the Hainan/Qianhai preferential perimeters and for the resilience of a holding above the WFOE
- Over-the-counter crypto settlement (OTC USDT) — crypto liquidity in the China deal circuit lives outside the mainland, usually via Hong Kong
- Holding structures — where the top tier above the WFOE sits: Hong Kong, Singapore, Luxembourg
Typical scenarios
Trade without a presence
An HK Ltd or another foreign company → an account for China trade per the bank map or a neobank → settlements in yuan via CIPS. A WFOE is added when you need fapiao, local contracts, and export VAT refunds.
Timeline: the account 15–40 business days depending on the bank and profile.
A WFOE for an operating business
Registration 15–20 business days → seals, tax setup, e-fapiao → a bank account 25–30 business days → SAFE capital registration → an audit and 汇算清缴 annually.
Timeline: a working company with an account — 45–60 business days, first-year budget €10,700–20,700.
Founder relocation
A WFOE or RO → apostilles (4–8 weeks) → a notification letter → a Z visa → a work permit + residence permit in 8–12 weeks → after 4 years of work (2 for certain hi-tech) — an application for permanent residence.
Timeline: the first status — about six months, counting the company and legalization.
China exposure for private capital
When the goal is not operations but investment: a Hong Kong company and account (HSBC HK / BOCHK) → Stock Connect and Bond Connect for mainland securities → yuan liquidity in CNH without China's currency control. No mainland structure is created at all; all reporting and compliance stay in the Hong Kong circuit. Timeline: 6–10 weeks for the company and account.
Where China works and where it doesn't
Works
- Manufacturing, procurement, and supply chains — direct contracts with factories, fapiao, and export VAT refunds
- Yuan settlements — CIPS as a standalone clearing circuit without dollar correspondents
- Regional incentives — Hainan 15%, Western Development 15%, HNTE 15%, small companies ~5%
- Access to the domestic market — a WFOE with 100% foreign ownership in open industries, e-commerce through the Hangzhou zones
- A sanctions perimeter separate from the Western one — with clean goods and transparent documents; the bank filter is strict all the same
- Talent and infrastructure — the engineering market, logistics, rail routes to Europe
Doesn't work
- Holding and structuring — CIT 25% on worldwide income, currency control, inflexible distributions: the holding stays in Hong Kong or Singapore
- Storing capital — deposit protection of ¥500K, withdrawal control, a bank review of every large flow
- A "backup airfield" with no function — residency is derived from work, and a dormant status is not renewed
- Confidentiality — Golden Tax IV reconciles fapiao, bank, and returns automatically; accounts are reported under CRS
- Crypto-native operations — banned since 2021; the crypto circuit is built via Hong Kong
- A quick exit from investments — repatriation goes through an audit, a tax clearance, and SAFE: weeks, not days
China vs Hong Kong
| Objective | Jurisdiction of choice |
|---|---|
| Fapiao, hiring in China, export VAT refunds | Mainland China (WFOE) |
| A holding for Chinese assets | Hong Kong |
| Yuan liquidity without mainland compliance | Hong Kong — CNH, BOCHK |
| Foreign-trade settlements with Russia | Mainland regional banks — Harbin, CZCB; routes in payments to China |
| Investing in Chinese securities | Hong Kong — Stock Connect, Bond Connect |
| Personal residency | Hong Kong is easier (TTPS/QMAS); in China — only through work |
| Profit tax | Hong Kong: 8.25/16.5% territorial; China: 25% on worldwide income with 15/5% reliefs |
| Capital movement | Hong Kong — a free port with no currency control; China — SAFE and a capital account |
| Sanctions logic | Hong Kong — UN sanctions + banks' extraterritorial compliance; China — its own perimeter + fear of secondary sanctions |
Common mistakes
A WFOE without bank pre-screening
Registration goes through, the account does not: a virtual address, unexplained capital, and sensitive jurisdictions in payments read to the bank as a weak KYC pack. The second filing already carries a rejection history. The correct sequence: bank pre-screening → registration → filing.
A company for residency with no activity
A work-permit renewal is checked against the IIT history: an empty shell is not renewed. If there is no operating business, a representative office is cheaper; a comparison of routes is in the residency article.
"Large capital" in the charter
Under the Company Law, an LLC's registered capital is paid up within 5 years — a pretty figure turns into a real obligation, and the auditor and the bank check the actual contribution.
Expecting CIPS = a payment guarantee
CIPS is infrastructure, while throughput is decided by a given bank's compliance: HS codes, counterparties, the origin of funds. The route is designed from the bank's risk policy, with a backup circuit.
Ignoring fapiao discipline
Without incoming fapiao there is no VAT deduction and no recognition of expenses, and Golden Tax reconciles invoices, bank, and returns automatically. "Year-end from PDFs" accounting does not come together in China — the auditor first reconstructs the books, which is more expensive and slower.
Dividends without preparation
A payout requires an audit, a tax clearance, and a bank review; 10% withholding (5% under some tax treaties). From 2025 to 2028 a tax credit of up to 10% applies for reinvesting dividends into encouraged industries — it is often simply not used.
Working on visa-free entry
The 30-day visa-free entry covers negotiations and trade shows, but not paid functions. On-site office checks are common practice; a violation closes off future statuses.
Q/A
Do you need a Chinese company to buy from China?
Up to a certain volume — no: neobanks and a Hong Kong company with an account cover the need. A WFOE is justified when you need fapiao, local contracts, and export VAT refunds — that is already a presence with an audit and SAFE.
Can a foreign company open an account at a Chinese bank?
Yes — this is the main scenario in the bank map: an HK Ltd and other foreign structures for China trade. Goods, counterparties, and the owner decide, not the bank's signboard; the RU profile narrows the choice to the regional segment.
How do you get profit out of a WFOE?
Dividends after CIT, the audit, and a tax clearance; 10% withholding at source (5% under some tax treaties). Service payments and royalties are possible, but each undergoes a SAFE economic-substance check. There are no fast routes — repatriation is planned around the audit calendar.
What happens with Russian payments?
The Big Four are all but closed, the flow lives in regional banks and shifts quarterly. The current map is in the payments hub.
Can a foreigner buy real estate in China?
One property for their own residence — after a year of work or study in China. An investment purchase without status does not work, and the property itself grants neither a visa nor residency.
Do Alipay and WeChat Pay work with a foreign card?
Yes: after passport verification — US$5,000 per transaction and US$50,000 per year, up to ¥200 with no fee, above that about 3%. For full-fledged living you need a local account, and that requires a long-term status.