What restrictions apply to the use of foreign currencies in China?

In China, foreign currencies, such as the US dollar, are restricted in terms of how they can be used. According to the China Business Ventures Law in Florida, any foreign currency transactions conducted within the country must first receive approval from the State Administration of Foreign Exchange (SAFE). Furthermore, foreign exchange activities are subject to the Foreign Exchange Administration Rules, which details the procedures for conducting foreign exchange transactions. The use of foreign currencies in China is limited to certain types of transactions. For example, foreign currencies may not be used for payments of wages, open foreign exchange markets, or trade financing. In addition, domestic citizens and residents must strictly abide by foreign exchange regulations when transferring large sums of foreign currencies to or from the Chinese mainland. The ownership and exchange of foreign currencies is also heavily regulated. Foreign exchange bureaus and banks are the only entities allowed to buy or sell foreign currencies. Moreover, converting foreign currencies into the renminbi—the Chinese currency—is strictly monitored and requires approval from SAFE. Finally, foreign companies operating in China are expected to repatriate their earnings in US dollars. This is because Chinese companies are prohibited from holding foreign currencies for more than a month. Any foreign currencies that are held must be reported to the local financial bureau.

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