What You Need to Know About Banking Practices

Doing Business in China

By: Grace Zhu, Karen Wang

If you are new to doing business in China, you may find that opening a bank account is a little more complicated than you might expect. There are also a number of ways that banking practices differ from those in the United States and other countries. This article is designed to give you the basic information you need to move forward.


A company can open a bank account only after it has obtained its business license.

It will take at least two weeks or longer to complete the account opening procedure for one bank account. The length of time depends on the bank.

The original passport for the company's legal representative and authorized signatories for the account must be submitted to the bank in order to open the account. If the legal representative or authorized signatories are based overseas (e.g., the U.S.) and are unable to fly to China or send the original passport to the bank, some banks may accept:

  • Notarization and legalization of the passport and signatories issued by a Chinese embassy overseas
  • Video recording of legal representative/the authorized signatories with their passport

Please note the above is subject to each bank's own policy.

Prior to obtaining the license, some investors pay expenses directly from the parent company or from the investor's personal account. However, as China has strict regulations for cross-border payments, this creates barriers for the parent company or the individual to be reimbursed even after the subsidiary in China has opened its bank account and injected the registered capital.

A preliminary expense account ( 前 期 费 用 账 户 ) may be a better option. In this case:

  • The account owner is the foreign investor (the parent company).
  • The foreign investor needs to register at their bank for the preliminary expense disbursement. After registration, the amount injected into this account is treated as part of the injected registered capital.
  • The amount injected into this account should be less than $300,000 (or equivalent) in principal. Otherwise, the foreign investor needs to apply with the local State Administration of Foreign Exchange (SAFE) for approval.
  • The balance in this account will be transferred to the capital account after the company obtains its business license and opens the capital account.
  • It is valid for six months, but the foreign investor can apply with their bank to extend it to the maximum 12 months.

Types of Bank Accounts

The most commonly used bank accounts for doing business in China include:

Capital accounts in RMB and foreign currencies to accommodate registered capital injections.

Basic accounts in RMB only. These accounts have certain restrictions:

  • They can be used for cash business (cash deposit and withdraw), payroll and settlement.
  • Each company can open only one basic account; this is the only account from which the company can withdraw RMD cash.

Settlement accounts include two approaches:

  • RMB settlement accounts are intended for cash deposits (withdrawal of cash is not allowed) and settlement business. Each company can open several settlement accounts at different banks.
  • Foreign currency settlement accounts are used for settlement in foreign currency.

Differences Between Foreign and Chinese Banks

There are significant differences between capabilities and limitations of Chinese banks and those of foreign banks.

Foreign banks' capabilities and limitations:

  • Some foreign banks can provide a global platform, credit and transaction services.
  • Foreign Banks typically have a limited network in China.
  • Pricing is relatively high.
  • Many have minimum business volume or revenue requirements due to cost considerations.
  • Resources are limited compared to Chinese banks.
  • Some foreign banks have implemented de-risking strategies and declined to serve companies whose revenue contributions to the bank cannot cover the increasing compliance cost.
  • Relative to the Chinese banks, most foreign banks are more conservative and stricter on regulation implementation and compliance management.
  • Most foreign banks do not have an agreement with the tax bureau and cannot sign tripartite agreements among the bank, the company and the tax bureau to provide local tax payment. In this case, the company needs to open another RMB account (a basic account or settlement account) with the Chinese bank for the local tax payment.
  • Most foreign banks do not provide cash services; thus, the company needs to open an RMB basic account with a Chinese bank for cash business.

Chinese banks typically offer:

  • An extensive network in China.
  • Competitive pricing.
  • Fewer requirements for minimum business volume or revenue.
  • Sufficient business resources, e.g., various kinds of quotas due to their size, including lending, foreign exchange and foreign debt quotas.
  • Strong relationships with the regulators.
  • An agreement with the tax bureau and can sign tripartite agreements among the bank, the company and the tax bureau for local tax payment.
  • Cash Services.

Challenges in the Banking Industry in China

Regulation is one of the biggest challenges for foreign companies doing business in China. Therefore, it is important that the company has local resources to assist them.

Cross-border business is still under supervision. Once trade transactions have begun, the banks are still required to verify the supporting documents to verify the background of the trade transactions.

Heavy reliance on “window guidance.” Window guidance refers to verbal instructions from the regulators about a new policy or a temporary adjustment to an existing rule in lieu of a formal written notification. Though it is referred to as guidance, it is mandatory at a certain level.

Frequent regulatory changes. Banks receive hundreds of new rules and regulations updates every year from different regulators. 

Centralization vs. decentralization. Though central government has its rules and regulations, each local government may have its own implementation rules and interpretations. As a result, business practices may differ from city to city.

Similarly, different banks in different cities, and even the same bank’s different branches/sub-branches in the same city, may have different approaches to the same business. 


Ranked among the top three corporate service providers globally, Vistra Group provides a broad range of services and solutions from International Incorporations to Trust, Fiduciary and Fund Administration Services.

Vistra employs more than 3,500 professionals across 75 locations in 48 jurisdictions. In China, we help foreign companies with market entry including setting up Offshore Company Structures, Incorporation in China, Virtual CFO and HR Solutions.

Grace Zhu

Chief Representative

PNC Bank N.A., Shanghai Representative Office

Grace Zhu is responsible for PNC’s business in mainland China and Hong Kong.

She has more than 25 years’ experience in the banking industry in Shanghai, including check clearing, payments, cash management, trade finance and loans business. Prior to joining PNC Bank, Zhu served other major U.S. and international banks. 

Zhu holds a bachelor’s degree in finance and taxation from Shanghai University of Finance & Economics and a master’s degree in business administration from the joint program of Shanghai University of Finance & Economics and Webster University.

Karen Wang

Associate Director

International Expansion,  Vistra China

Karen Wang has been helping overseas companies enter China for more than 10 years. She gained her experience from multinational organizations and international consultancy firms, where she advised overseas clients in a variety of industries, including manufacturing, consumer goods, trading and consulting, including both multinationals and startups.

Wang co-chairs the American Chamber of Commerce Future Leader Committee and is a frequent speaker on China-related topics.

Ready To Help:

Established in 2008, PNC's Shanghai Representative Office (SRO) is available as a resource to PNC clients who are doing business with China or in China. The SRO can provide assistance and guidance on:

  • Corporate Establishment
  • Obtaining Local Banking Services
  • Market Information
  • Introductions to Local Resources

Should you have any questions, please contact the International Advisory Team; Grace Zhu, Chief Representative or Chris Chen, Representative, in the PNC Shanghai Representative Office.

If you are new to doing business in China, you may find that opening a bank account is a little more complicated than you might expect.

Important Legal Disclosures & Information

This document and the Information it contains is intended for informational purposes only, and should not be construed as legal, accounting, tax, trading or other professional advice. You should consult with your own independent advisors before taking any action based on the Information. Under no circumstances should the Information be considered trading advice or a recommendation or solicitation to buy or sell any products or services or a commitment to enter into any transaction. The Information is gathered from sources PNC Bank believes to be reliable and accurate at the time of publication and are subject to change without notice. PNC Bank makes no representations or warranties regarding the Information’s accuracy, timeliness, or completeness. All performance, returns, prices or rates are for illustrative purposes only. Markets do and will change. Actual results will vary, and may be adversely affected by exchange rates, interest rates, or other factors.

PNC is a registered service mark of The PNC Financial Services Group, Inc. (“PNC”). 

PNC Bank’s Shanghai Representative Office was approved by the China Banking Regulatory Commission on April 16, 2008. PNC’s Shanghai office is prohibited from engaging in any form of operational business activities in compliance with the People’s Republic of China on Administration of Foreign-funded Banks released by the State Council. Accordingly, PNC’s Shanghai Representative Office does not accept deposits, underwrite loans or issue credit of any kind, or sell wealth management products in China. Any activities of these types in China using the PNC name or trademarks are not authorized by PNC.

Bank deposit and treasury management products and services are provided by PNC Bank, National Association (“PNC Bank”), a wholly-owned subsidiary of PNC and Member FDIC.

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