Foreign Exchange and the Ability to Repatriate Profits

This article examines the foreign exchange restrictions on foreign investment enterprises ("FIEs") in the PRC.

Generally, FIEs in the PRC are encouraged to export their products, and sales within the domestic market are strictly controlled. While there is no outright prohibition or quota set for domestic sales by FIEs, the de facto restraint lies in the need for the enterprise to balance its foreign exchange flows.

Under existing PRC regulations regarding foreign exchange control, all foreign exchange deposits and disbursements of a joint venture must flow through the FIE's bank account in the PRC, so the PRC authorities can easily check the income and expenditures which are being incurred.