I Have a Chinese Bank Account – And Why You Should Too!
True, a post about banking might be a stretch for a travel, technology and food blog, but China (and its currency, the Yuan) is one of the hottest topics of the week, and investors considering investments with Chinese companies (or just holding the Yuan) are likely to take advantage. Beginning a few weeks ago, Bank of China (yes, it’s state-owned) began allowing non-Chinese citizens to open Chinese bank accounts through one of its three U.S. branches — two in Manhattan and one in Los Angeles. Most agree that holding cash in RMB is as solid an investment as any. Though the value of the currency is expected to climb significantly against the dollar, it’s incredibly unlikely to decline. Today, 1 Yuan buys about 15 cents. It wouldn’t be unreasonable to expect 1 Yuan to trade at 25 cents, 30 cents, or even higher in the future. An article published last week in the Wall Street Journal does a fairly good job of explaining the pros and cons of holding the Yuan, but my experience while opening an account today was slightly different than what the author explains, so I want to clarify a few points here.
1. You’ll need more forms of identification than you’d need when establishing an account at a U.S. bank. Though I arrived with three government issued ID cards — a driver’s license, broker’s license, and pilot’s license — the banker and her manager insisted that I also fax a copy of my passport before they could open my account. According to the banker, you don’t need more than three documents, assuming one is a passport. You also need to present either your Social Security card or an official document that contains your SSN, such as a W-2 or 1099.
2. You’ll need to open two bank accounts — one in USD and one in RMB — each with a minimum of $500. There’s a catch here too, though: you can open only a USD account during your first visit. Three weeks after funding your account, you must return to the same branch to open a second account, converting funds from your USD account to RMB. You’ll also need to maintain a $500 balance in the USD account, even after converting funds.
3. You cannot deposit or withdrawal cash in RMB. Even in China. To withdrawal funds, you’ll need to convert RMB in your RMB account to USD, wait three days, then convert USD back to RMB cash at the current rate. The bank charges a percentage fee for each transaction. You can request a debit card that you can use to withdrawal RMB cash in China, but this card is linked to your USD account, as bizarre as that may sound. In summary, you cannot make deposits or withdrawals from your RMB account — even at Bank of China branches in China — you can only conduct transactions with your USD account, unless you’re moving (and converting) funds between your USD account and RMB account.
4. The banker I spoke with claims that there is no daily or annual limit for deposits or conversion, though the WSJ article lists the daily limit at $4,000 per day and $20,000 per year, unless you open a business account.
A Chinese bank account is clearly not for everyone, but if you’re holding cash and looking to make a safe, liquid investment, it certainly makes more sense to convert USD to RMB than to leave your Dollars in a U.S. bank account, earning less than 1% interest.