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Legal Update

China's New Entry-Exit Rules for Foreigners Take Effect

12 September 2013
Mayer Brown JSM Legal Update

The Administrative Regulations of the People's Republic of China on Entry and Exit of Foreigners, issued by the PRC State Council on 12 July 2013 (the "New Regulations") to implement the Exit-Entry Administration Law of the People's Republic of China (the "New Law"), came into force on 1 September 2013.

The Law of the People's Republic of China on Control of the Entry and Exit of Aliens, the Law of the People's Republic of China on the Control of the Exit and Entry of Citizens (the "Old Law"), and the Detailed Rules for the Implementation of the Law of the People's Republic of China Governing the Administration of the Entry and Exit of Foreigners (the "Old Regulations"), have been repealed.

The most significant changes contained in the New Law and New Regulations and which may have a significant impact on PRC employers are highlighted below:

Circumstances of "illegal employment" and corresponding legal consequences

Under the New Law, three circumstances shall be considered as "illegal employment": (i) employing a foreigner who does not have a work permit and a residence permit; (ii) employing a foreigner beyond the scope specified in the work permit; or (iii) employing a foreign student who may hold a student visa but works in violation of its restrictions relating to job position or time limits.

When there is any violation, both the employer and the foreign individual will be penalised. Specifically, (i) for the employer, a fine in the amount of RMB10,000 per illegally employed person but no more than RMB100,000 in total will be imposed, and any proceeds of the illegal act will be confiscated; (ii) for the foreign individual involved, a fine in the amount of RMB5,000-20,000 will be imposed. In serious circumstance, he or she may be also detained for 5-15 days; and (iii) if there is any individual or entity acting as the job agent, in the case of an individual, a fine in the amount of RMB5,000 per illegally employed person referred but no more than RMB50,000 in total will be imposed; and in the case of an entity, a fine in the amount of RMB5,000 per illegal employed person referred but no more than RMB100,000 in total will be imposed. Any proceeds of the illegal act will also be confiscated in both cases.

Employer's duty to report

Under the New Law, it is required that an employer who employs foreigners or receives foreign students as interns shall report prescribed information in a timely fashion to the relevant public security authority. The New Regulations further specify that under any of the following circumstances the employer is under the obligation to report to the exit-entry administrative division of the public security bureau of the local people's government at the county level or above at the place it is located, if the employer is aware that (i) the foreigner it employs has quit the job or changed the work location; (ii) the foreign student it engages to work as an intern has left the school, graduated, dropped out or departed from the company; (iii) the foreigner employed or the foreign student engaged has violated the entry and exit rules and regulations; or (iv) the foreigner employed or the foreign student engaged has died or has gone missing.

Foreign students' off-campus work is legally recognised

The New Regulations, for the first time, clearly provide that a qualified foreign student will be able to legally undergo off-campus work or internship, and get paid. It is stipulated that where a foreigner holding a study-type residence permit needs to do off-campus work or internship, he or she shall, after obtaining the consent of his/her university, apply to the entry-exit administration of a competent public security authority for an endorsement as to where he works and how long the internship will last as well as other information specified in the residence permit.

Please note that the above-mentioned "foreign students" are presumably restricted to those who hold a valid student visa (i.e., X visa) and study in the Chinese local universities or colleges only, and may not include those who study in the overseas universities or colleges. Under the Old Regulations, it was explicitly provided that (i) the X visa can be issued to a person who enters China for the purpose of internship for a period of more than six months, and (ii) the F visa can be issued to a person who enters China for the purpose of internship with a period of six months or less.

However, the New Regulations do not expressly include the term "internship" into any provisions relating to the various types of visa. Therefore, it is unclear as to whether the legal and practical position on this aspect will be changed.

Employers being prohibited from leaving China

The New Law adds one more circumstance, namely, a foreigner (who is acting as the legal representative, principal or other persons in charge who may directly impact the performance of paying debts of a company), upon the decision made by the relevant authority of the State Council or the local government at the provincial level, may be prohibited from leaving China where the company he or she is in charge of has defaulted in paying labour remuneration to the employees.

Other than the above, the New Regulations have increased the categories of ordinary visa from 8 classes to 12 classes. The 4 new classes of visa are M visa (Maoyi, i.e., commerce), Q visa (Qinshu, i.e., relatives), R visa (Rencai, i.e., people with special skills), and S visa (sishi, i.e., personal affairs) respectively. Also, the applicable scopes of the original F, X and Z visas have been adjusted.


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