Mar 21, 2018 08:45 AM

Banks Choke Off Cash Lifeline for Workers Lacking Proper Visas

China’s Great Wall didn’t appear overnight, and instead was constructed over many centuries as the culmination of a larger effort to keep out invaders. It seems like China is trying to construct another, more-abstract Great Wall these days, this one aimed at making long-term residency more difficult for a newer breed of foreign invaders: young job-seekers and self-employed operators of one-person shops.

That was my key takeaway after learning from one of my newest colleagues that China Merchants Bank, the bank used by Caixin, had launched a new policy this year barring foreigners from opening accounts without a work or student visa lasting at least a year. That prompted me to do a bit of my own market research, which revealed that many other banks have recently rolled out similar policies, albeit with quite a degree of variation in this new wave of restriction.

The bottom line was that it has recently become harder for foreigners without long-term work and student visas to open bank accounts in China. While that may not mean much for people employed by legal companies, foreign or Chinese, it adds a further layer of frustration for recent China-minded graduates who already faced difficulty due to rules requiring two years of work experience for a proper work visa. Another group being challenged by this latest clampdown is the independents who set up their own one-person shops doing research or consulting, often without formally registering a business and getting a proper long-term work visa.

This kind of clampdown occurs periodically, and I remember the last one that occurred three or four years ago targeting people living in China on tourist or other short-term visas. You can’t really fault a country for doing this kind of thing, since anyone who wants to work or study here should legally be on a proper visa. But at the same time, this kind of crackdown certainly doesn’t send a very welcoming message to foreign entrepreneurs or young recent graduates who will become the China professionals of tomorrow.

Perhaps I sound a little defensive because I was once among those legions of young people lacking proper status when I first came to Asia in the 1980s. Back in 1986, the first stop on my Asia odyssey was Taiwan, where I lived for nearly a year and studied Chinese while working part-time as an English teacher. In the absence of a proper work visa, I used two-month tourist visas that could be extended twice and required me to leave the country every six months.

I never had a proper bank account during that time and kept my limited cash in a desk drawer. Being unable to open a local bank account wasn’t a big deal back then, since this was back in the Stone Age, when cash was still king. The biggest drawback was safety, since it’s obviously not great to have all your life savings stashed in a desk drawer with minimal protection, even if that savings was just the modest equivalent of perhaps $1,000.

Going cashless

Fast-forward to the present, where the crackdown on opening bank accounts made me realize just how difficult it is to get around in today’s China without a proper bank account. For someone doing business here, it’s nearly impossible to pay most of your partners without such an account, and for your local customers to pay you.

What’s more, you’re cut off from an increasingly cashless world where people pay for everything with WeChat, Alipay or local bank cards that must be linked to a local bank account. I have yet to meet a merchant who refused to accept my cash. But a growing number automatically ask if I want to pay for purchases with WeChat or Alipay, and I suspect the day may not be far off when some decide that cash is too much hassle and refuse to accept it.

My survey of five different banks in Beijing showed that all had rolled out new policies within the last year or so to clamp down on people working here on improper visas. Among that group, which included Bank of China, ICBC, Everbright, Bank of Communications, and the China unit of Citibank, only ICBC was still willing to consider opening an account for someone with only a tourist visa.

Policies were somewhat varied after that, with a few saying they now required people setting up accounts to provide a tax ID number from their home country. Bank of Communications had one of the strictest policies, requiring anyone setting up an account to provide a letter proving they were doing work for a locally based company.

Three of my contacts who might be affected by such restrictions agreed a new clampdown seems to be in progress, though two noted there are often workarounds for people who can’t open bank accounts. Such workarounds could include things like getting clients to pay you offshore, one noted, pointing out such payments also avoid the potentially thorny issue of moving money out of China. Another noted you might be able to set up an offshore WeChat or Alipay account linked to a Hong Kong dollar bank account, and use that account for mainland-based purchases or to pay local business partners.

At the end of the day, such obstacles are just one more brick in the wall, so to speak, of a growing field of barriers that will discourage foreigners from pursuing career paths here. One of my former students, who got legal working status only after overcoming a number of such obstacles, nicely summarized the likely mood being created by this growing tide of new barriers. “Personally, were I unable to open a local bank account and therefore be unable to work legitimately in China, I would leave,” he said. “The burdens of living an under-the-table, cash-heavy life are of no interest to me.”

Doug Young has lived in Greater China for two decades, including a 10-year stint at Reuters, where he led China corporate news coverage. Send your questions or comments to

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