In this context, the business operations of China's offshore banks and the foreign offshore banks used by the Chinese people are all covered with a hazy layer of uncertainty.
It is as if you are appreciating the views in a misty mountain, but you do not know when will fall from the cliff. China's offshore banks are like goats in captivity. They are not allowed to eat and sleep along with other goats, and it sometimes more difficult to transfer money from an offshore branch to the onshore one than from a foreign bank.
Another interesting phenomenon is that one should not take it for granted that foreign banks in China automatically enjoy more freedom. Though they have the same unified logo and signature smile as their international branches, but they have been isolated by the Great Wall of SAFE. What they are allowed to do is sometimes even more limited than the offshore branches of domestic banks. Though the inconvenience of the Great Wall may annoy a trader or investor, it is inevitable that strict separation between Chinese and foreign banks will be implemented, considering the situation in China. For an authority that cannot accurately manage financial affairs, this is a good way to separate what they know and what they are unclear about. There should not be any blame.
Pretentious innocence
The policies of Chinese offshore banks are very cautious, but the banks are reluctant to give up. The reason is simple: capital itself is not patriotic, chasing freedom and low-cost liquidity is its nature. If there is no domestic offshore business, capital will naturally go international to search for a way out. However, the pragmatic Chinese government does not want to give up a potential benefit. China wants to make use of every opportunity, and so do other continental countries. Major countries in the developed world all have their offshore banks, be it in Europe, the United States, Australia, or Japan. While during the G20 summit, they were rigorous calls for sanctions against some of the offshore financial centers in Caribbean and Switzerland, local offshore banking businesses have never stopped, and everyone gives preferential tax plans to offshore capital.
A professional once conducted an experiment. He gave his passport and driver's license to some banks in major continental countries, and opened accounts quickly and easily. However, it was much difficult to open accounts in some offshore jurisdictions. This amusing fact tells us that politics are ruled by interests but always pretend to be innocent. Mainstream countries are always likely to be umbrella for some capital. So it is so true that the more dangerous a place is, the more secure it will be. We have heard of scandals from UBS and other Swiss banks, but it seems that there are no scandals coming from any US banks. Isn it ridiculous?
Swords of Dragon Gates
There is nothing more suitable to describe the situation of China offshore banks than with the name of the film, Swords of Dragon Gate. In the film, an ancient underground golden city would be blown open with blasts of wind every 60 years and an hour later, everything would be covered by sands under tornado. It no need to worry who will recognize you, because the Dragon Gate inn is in the middle of nowhere, but all passers-by are inhumane swordsmen. At this place, opportunities and danger co-exist. The repeated halting and adjusting of offshore policies by the Chinese authorities are similar to tornados. It is hardly possible for a Chinese client to raise funds from offshore banks overseas, but in China, if the policies permit, you will have the opportunity to realize unexpected goals. Besides, the cost and efficiency of local offshore banks are sometimes more beneficial than that of overseas banks. In regards to the danger, the point is that you are never certain when the tornado will arrive to cover up the imperial palace. For example, an offshore account of a domestic bank will suddenly receive notification that their position is insufficient, so that your money cannot reach your account. Or otherwise, they tell you that the authorities ordered the money to go through certain inspections before it can be sent out. Much upstream capital will sometimes choose China offshore banks instead of traditional ones in the UK, Hong Kong or Singapore. Because even though the dragon gate has its uncertainties, it is separated from the outside, and it is the choices for swordsmen.
Back to the professional
I prefer the Italian leather goods to Germany ones, but on the contrary I prefer the German cars to the Italian ones. Professional things are better left for the professionals. I believe that if an entrepreneur or investor needs offshore financial services, they will eventually have to return to an offshore financial center. While those pretending to be innocent have been smearing these places and while Hollywood robbers are depicted as putting their money there, this is not the truth.
Offshore financial centers are company-oriented, and they are no longer banking centers so it can be very difficult if you want to open offshore bank account in these areas. For example, it is very difficult to open an account in the British Virgin Islands. Even in the United Kingdom, opening an offshore bank account is not an easy task. It is generally only possible with the involvement of a professional or trustee, and all your transaction records have to be kept in archives accessible to the authorities at any time. In other tax neutral zones, the due diligence policies of financial service providers are very strict. For example, when a company registers in Luxembourg, it will need to open a bank account first, where all advance reviews are very strict and demanding. It is quite different from opening an account in continental countries. An offshore financial center is not influenced by any local economic policies, and has wide range of financial tools and stable legislation. The interests of clients are the financial center ultimate pursuit. In short, offshore financial centers are the headquarters of the offshore banking system.
Conclusion
There is no perfect system, and there is no perfect jurisdiction. What we only have is the changing world. Governments, banks and investors, all need to search for a suitable solution. The best strategy is to pursuit the one interests and avoid disadvantages in a legal way.
