News via lexology.com by Herbert Smith Freehills LLP, Betty Tam and Karen Ip

Bigger fines will be imposed on foreigners illegally entering, living or working in China. Foreign executives of companies that fail to pay full remuneration to employees may also be prevented from leaving China. Refugees have been formally recognized.

These and other changes have been introduced by the “Exit and Entry Administration Law of the People’s Republic of China”, effective 1 July 2013, (New Law) and the “Exit and Entry Administration Regulations of the People’s Republic of China”, effective 1 September 2013, (Implementing Regulations). Several previous laws and regulations that were issued in the 1980s have been repealed.

Highlights of the New Law include:

  • Introduction of biometric data collection for foreigners applying for residence certificates
  • Establishment of the “Talent Introduction” visas (an “R” visa)
  • Provisions on the treatment of refugees
  • Increased penalties for individuals and employers who violate the New Law
  • Prohibition on certain foreigners exiting China

Visas, data collection and refugees

1. Biometric data collection
The Public Security Bureau (PSB) and the Ministry of Foreign Affairs may, with the State Council’s approval, enact laws to obtain biometric data from persons entering and exiting China. The PSB has the authority to compel foreigners to provide their finger-prints and “other biometric data” when applying for residence permits.

2. “Talent Introduction” Visas
The New Law permits foreigners with “special talent” to be granted a “talent introduction” visa. “Special talent” is defined broadly as “high-level foreign talent and urgently-needed and in-shortage special talent”. It is likely that people with well-developed technology skills will be targeted under this new type of visa, which the Implementing Regulations have labeled as an “R” visa.

3. Refugees
The New Law explicitly recognizes that foreigners may apply for refugee status in China. A refugee applicant may, during the screening and identification process, remain in China using a temporary identity certificate.

4. “Green Cards”
Under the New Law, foreigners may apply for and be granted permanent residency if they have made “outstanding contributions” to China’s economic and social development, or if they meet “other criteria” established by the Ministry of Public Security. However, what constitutes “outstanding contributions” is uncertain. Based on statistics from the Ministry of Public Security, it appears that only 4,752 foreigners were issued with permanent residency nationwide in 2011. The New Law may result in this number increasing.

Supervision

5. Validity Periods for Residence Permits
The minimum validity period for work-based residence permits is now reduced from 1 year to 90 days, with the maximum period remaining unchanged at 5 years. This is widely seen as part of the Chinese government’s strengthened control of foreigners’ residence in China. That is, any foreigner intending to do business in China for a cumulative 90 days or above in any calendar year may need to apply for a work permit and a work-based residence permit (instead of relying on a business visa). Foreigners who visit China for an extended period should therefore closely monitor the implementation of the New Law in this respect. Non-work related residence certificates have a minimum tenure of 180 days, with a maximum of 5 years. The processing time for residence permits applications is now 15 days. Interviews may be required.

6. Reporting Obligations
Upon employing foreigners, or recruiting foreign students, employers must now report to the PSB. Citizens and organisations in China are also obligated to report any illegal entry, residence or employment to the PSB.

7. Discretionary Powers to Refuse the Issuance of Visas
Chinese immigration authorities now have broad discretion (which was not previously expressly granted) to refuse or deny the issuance of visas in circumstances considered “inappropriate”. No guidelines are given for determining what constitutes “inappropriate”, and there is no obligation to provide a reason for the refusal of a visa.

8. Restrict Access to Certain Areas for Foreigners
It is now clearly articulated that foreigners may not access areas restricted for foreigners without approval from the PSB. The New Law does not specify which areas are restricted; however, such areas likely include military zones and places that are deemed politically sensitive.

Penalties

9. Fines and Detention
The New Law specifies a number of penalties for illegally working in China, including:

  • Fines of between RMB5,000 and RMB20,000 for foreigners working without valid employment documentation. Detention of 5 to 15 days may also be imposed in serious circumstances.
  • Fines of between RMB5,000 and RMB50,000 for individuals that recommend foreigners for illegal employment.
  • Fines of between RMB5,000 and RMB100,000 on employers for each foreigner illegally employed. Illegal earnings may also be confiscated.

For foreigners illegally residing in China, the New Law provides for the PSB to issue a warning. In serious circumstances, a foreigner may be fined between RMB500 and RMB10,000 per day or detained for 5 to 15 days.

The New Law also gives the PSB a right to on-the-spot interrogation and further interrogation for up to 48 hours. If the suspicion of illegally working or residing cannot be cleared following interrogation, the PSB may detain the suspects for investigation for up to 30 days, or 60 days for complex cases.

10. Repatriation and Deportation
Foreigners may be ordered to leave within a prescribed time period if they engage in activities inconsistent with the purpose of their residence, or if they violate Chinese law and are considered by the PSB as not appropriate for residence in China.

Foreigners may be deported if they:

  • illegally enter, live or work in China;
  • do not leave within the prescribed time period as ordered by the PSB; or
  • seriously violate the New Law (not being subject to criminal penalties).

Foreigners who are deported for the first and second reasons may also be barred from re-entering China for a period of between one and five years. Foreigners deported for the third reason will be barred from re-entering China for 10 years from the date of deportation.

11. Prohibitions on Exiting China
Foreigners who are involved in unsettled civil cases or who are sentenced to criminal punishment may be prohibited from exiting China. The New Law adds another category for foreigners who have control of a company that is in arrears with the payment of employee remuneration.

The New Law does not specify which office holders may be prevented from leaving China; however, it is likely that the New Law may be applied against legal representatives, directors and senior management. This could mean, for instance, that a general manager of a company that has failed to fully pay its employees will be prevented from leaving China. It might also mean that a foreign director who flies in for a board meeting could be trapped in China if the company is in arrears on employee remuneration.

Local laws and regulations may also prevent foreigners from leaving China in certain circumstances.

 

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