Bank Question for those living in China

[-葛亚辉-]

I've been working here (China) for nearly a year and have saved up some money in the form of cash (RMB, obviously). In a few months, I will return to America, and while I do plan to return to China again in the future, I have no definite plans.

Apparently, it's illegal to take more than 6000 RMB in cash out of China, and I don't really need a big pile of cash at home in the States anyway. Nor do I really want to convert the money into USD because (1) I'll be back in China sooner or later anyway and (2) who knows what, if anything, the USD will even be worth given the current state of the financial system.

Ideally, I'd like to open a bank account in China that I could still access if necessary from the States, most ideally one that I could check/get reports on online, and one that wouldn't close due to inactivity if I hadn't deposited or withdrawn money for years.

Up to now, I have not done much in Chinese banks other than pay my electricity bill, so I have no idea if what I'm looking for is standard everywhere or something that no one offers. Obviously, I'll ask my Chinese friends too, but I figured it would make sense to check here, as some of you here may have experience bouncing between countries and managing your (meagre, if you're anything like me) assets in multiple currencies.

Advice/Recommendations/Flamewar?

[anon6969]

It's suprisingly easy to open up a bank account in China - I did it using relatively little Chinese. Took around half an hour. Just a bit of form filling and choosing a PIN number basically. You might want to set up the special options for bank transfers above 1000rmb. I went with ISBC because I heard that their online banking has the best English service.

[-葛亚辉-]

Yeah, I'm not worried about being able to open a bank account.

My question is, will said account allow me to access/transfer funds easily and remotely from the United States?

[flameproof]

Apparently, it's illegal to take more than 6000 RMB in cash out of China,

It's 20,000

My question is, will said account allow me to access/transfer funds easily and remotely from the United States?

I am in Hong Kong and have NO problems to access my China ICBC account from HK. I can transfer online. I am not sure if I can transfer overseas though.

Ideally, I'd like to open a bank account in China that I could still access if necessary from the States, most ideally one that I could check/get reports on online, and one that wouldn't close due to inactivity if I hadn't deposited or withdrawn money for years.

Get ICBC. They have English online banking. When you open the account get that USB security stick too.

Edited March 11, 2009 at 01:16 PM by flameproof
I meant of course NO problems...

[gato]

My question is, will said account allow me to access/transfer funds easily and remotely from the United States?

You have to go to a bank in person to make a wire transfer between different banks.

That is the case even with most banks in the U.S. Few banks allow online wire transfers. I think Citi allows it, but BofA doesn't.

[kdavid]

You can always Western Union all of your cash home. You can send up to US$10,000 home without putting up any red flags. Over that amount, you can be investigated for money laundering, etc.

If you decide to keep the money here in China, put it in a long-term bond. The only issue with bonds here is that they won't automatically be reinvested if you're not here when the investment period expires. Instead, it will sit in the bank's account until you come in in person and tell them what to do with it. If you dig deep enough, you may find that you can do this online, though I doubt you could.

If you're really adventurous, you could also invest in a 基金 which is similar to a mutual fund back home, only poorly researched and, well, managed by Chinese.

I don't really need a big pile of cash at home in the States anyway

You might want to re-think this. If you've got extra cash now, open up an IRA and start investing in your future. Right now is a great time to buy into the market as everything is so cheap. If you need more advice on this, you can ask me at school.

[-葛亚辉-]

hahah ok thanks, will do.

[imron]

hahah ok thanks, will do.

Don't forget to come back and tell everyone about it, so that future readers looking for an answer to the same questions can find the answer.

[kdavid]

Don't forget to come back and tell everyone about it, so that future readers looking for an answer to the same questions can find the answer.

In all seriousness, I'd recommend that he stay far away from any Chinese-managed investments, and that includes long-term bonds. Chinese investment firms today come nowhere near comparing to their American counterparts in research, transparency and education.

The OP and I are colleagues, which is why I posted that last comment about asking me more at school.

For anyone with extra cash just laying around, I'd strongly recommend opening an IRA/brokerage account and investing in one's future. Particularly those that are young, as the pure earning potential that time gives us is invaluable. A young person in their 20s who socks away 5,000 a year and earns the historical average of 10% will have one million dollars by the time their 60. Sure, that one million won't be worth what it is today, but it's better than having nothing and having to work through retirement.

If one is interested in investing in China, do it through a western-managed group, and not through the Chinese. The Matthews group, for example, has a mutual fund that invests particularly in China that I've bought in to (MCHFX).

For newcomers to investing, I recommend starting with websites such as E*Trade and Fidelity. Work on building your "financial IQ" and get smart about how investing today can greatly improve the quality of your life later down the road.

[IMOM0929]

Mr. -葛亚辉-: I have a RMB/US$ account (opened with Chinese ID) and my wife has a RMB acct (opened with non-Chinese passport).

Here is what I know. I can exchange my buy upto US$50K (or equivalent amount in other foreign currencies) in one calendar year with my Chinese ID account. But my wife can not with a passport-ID account. We have accts with ICBC. So I use this bank as example. Assume you have a foreign passport, so here are your options:

1. you either can ask your Chinese friends to buy US$ for you and you deposit into your RMB/US$ combined account (one acct carries both currencies) or just a RMB account. Problem is you can not buy US$ online when in US.

2. Don't forget to add online banking when opening the acct. There are 2 types of online transaction security levels. Level 1 is ID code card with max RMB 1K transaction limit. Level up is a Security Flashdrive key. If you terminate a >1K CD or wire large funds online (either to other ICBC accts, other banks or to banks in US or many other countries, you need this level. I have it for a while but I have not used it and honestly I hate it. This is the worst banking security system I have seen (compared to US as I am in financial service industry here in the States)

3. You CAN access your account (with online banking option) in the states and buy/sell CD and Chinese mutual funds online and the speed is quite fast. You CAN also wire your US$, not RMB, online to most major banks in US even a small bank in Omaha I have relationship with. Ask for a printout sheet of US intermediate bank of ICBC just in case.

4. Interest rate on savings and CD is really low. You can buy no-load money market or chose 7 day call savings option (1.35% now). Or you can buy bond funds or other stock funds online. Granted, many here think investment/research in China is not sophisticated. True. But keep it simple might get you ahead. Listen up, wallstreet!. YTD major index growth, China actually tops major mkts. So it is a good diversification to invest directly in China.

5. You can buy gold online too (think the gazillion US debt)

6. With the online banking/payment option, you can shop on Chinese website (rose to that special friend) and pay in RMB.

7. Never used ICBC English version so can't comment. But there is many feature in Chinese bank websites I wish US banks can learn a thing or 2. That is viable when Fed nationalizes them all just like Chinese banks are all owned by the big brother.

BTW, don't open acct with Etrade. It is on its last breath. Not baby breath.

p.s. I opened the ICBC acct in Shanghai. ICBC in your city may have slightly dif security levels or opening process. But online experience should be similar.

Edited March 11, 2009 at 02:39 AM by IMOM0929

[kdavid]

BTW, don't open acct with Etrade. It is on its last breath. Not baby breath.

What's wrong with E*Trade?

[gato]

E-Trade stock is trading at less than $1 per share now, down 75% from six months ago:

http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chdet=1236755857082&chddm=48875&q=NASDAQ:ETFC&ntsp=0

Looks like they bought too much of those toxic securities (with their customers' money???). This is news from about a year and half ago. It's probably gotten worse.

http://www.marketwatch.com/news/story/mortgage-meltdown-leads-e-trade-58/story.aspx?guid={C23443AE-5625-4252-8B8A-99F20931A2B0}

Last update: 6:50 p.m. EDT Oct. 17, 2007

SAN FRANCISCO (MarketWatch) -- Despite record trading activity and asset growth, write-offs of mortgages and related home equity loans led E-Trade Financial Corp. Wednesday to report a third quarter loss of $58 million.

E-Trade had some $29.7 billion of mortgage loans that were considered high-quality on its balance sheet by quarter's end. Another $3 billion in loans were consumer loans. Margin loans to customers represented another $7.7 billion.

[kdavid]

Eh, everything is down now. I'm not worried.

Plus, all my money is in the market, not with E*Trade directly, so if they ever went belly up I'd just have to go directly to the group that has my money.

And all their savings and checking accounts are FDIC insured.

How do they compare with groups like Fidelity or AmeriTrade?

[jbradfor]

My question is, will said account allow me to access/transfer funds easily and remotely from the United States?

Is is possible to use an ATM card from a Chinese bank in the USA to get money out? Obviously that would limit you to only a couple hundred $ a day, but do that every day and you can suck an account dry pretty quickly.

[peekay]

On ATM. Yes it's possible to use Chinese "UnionPay" ATM cards abroad, although outside of China/HK/Macau/Singapore, relatively few ATM machines accept UnionPay. In the US, Citibank ATMs accept UnionPay cards for USD withdrawals. You might not get the best exchange rates, and the daily withdrawal limit might be relatively low.

On E-Trade. E-Trade is a group of companies, having both a "banking" business and a separate "brokerage" business.

The E-Trade banking business operates much like any other bank. They take deposits from customers (checking & savings account, etc.), and invests that money to make a profit. Some of the investments will be in the form of loans, including in toxic mortgages. E-Trade's banking unit has been hit especially hard by the financial downturn, and might be insolvent soon. Like any other bank, E-Trade banking accounts are insured by FDIC (up to $100,000).

When you buy & sell securities, you do so with E-Trade's "brokerage" business. There is no such thing as "the market", so any cash and securities you trade with them are held at E-Trade brokerage's accounts.

Cash and securities held in brokerage accounts are not FDIC insured.

Now, unlike the banking unit, the brokerage business is not allowed to make investments using customer assets held in brokerage accounts. Basically E-Trade acts as a "custodian", recording the amounts of cash and securities you trade through them. So realistically there is almost zero risk of loss, unlike money held in banking accounts.

However, it's possible loss could happen if there is fraud, or if E-Trade record-keeping system got messed up somehow, so there is a form of brokerage insurance called SIPC. If a brokerage goes bankrupt, basically the brokerage accounts are "transferred" to another brokerage, hopefully intact. Any "missing" cash or securities will be replaced by SIPC up to certain limits, providing you make a claim and can prove your lost positions.

While E-Trade's banking business is in big trouble, E-Trade's brokerage business is doing well... except that they were rated dead-last out of all major on-line service providers in a recent customer satisfaction survey.

Having said all that, the best way to invest for the long term is not by opening brokerage accounts and start trading on your own. Most people (including me) do not have the knowledge, time and/or patience to trade. If you really want to grow your money, the best way is to consult a capable financial planner.

Just make sure his name isn't Maddoff.

[roddy]

On topic, thanks folks!

/runs off to check Etrade's UK operations are safe . . .

[kdavid]

That's what I meant, I'm not worried about my E*Trade account as I don't have much in my savings account with them, and if I did, it's insured.

I do most of my own research online as to what to buy into, and I buy mostly mutual funds and ETFs. I'm very anal about my research, so I feel safe with all of my investments.