Things You Should Know about Offer Letter

Background information: A lawsuit caused by an offer letter

Our client was planning to expand it’s business after CNY.  They interviewed and sent out offer letters to qualified applicants. In the offer letters, they specified all terms related to the positions, such as salary, probation, social security and on-board date. However, after CNY, they had to give up their expansion plan due to some unexpected circumstances and had to “revoke” the offer letters. They called me and asked, if they could.

Then, what does the law say about the offer letter?

Offer letter with specific terms is a binding document to the company once the applicant accept the offer, company should handle it carefullyThere is no clear specification in labor law about the nature and validity of an offer letter. According to the Contract Law of PRC, an offer letter with specific terms is an “offer”, such an offer can only be revoked before the offeree confirms their acceptance. Otherwise, the offer letter is binding to both parties.

So, though the labor law doesn’t specify anything particular, the employer still has to be careful.

Quick Tips:

1. Do Not issue an offer letter until you have made the final decision.

Employers should issue an offer letter, only after they have decided to hire the employee, and remember that they can’t change the content of it unilaterally once it’s been sent out.

2. Leave yourself some wiggle room

Employers should specify situations under which they could choose not to hire the applicant; or specify a deadline for the applicant to confirm their acceptance. If the applicant can’t give their confirmation before the deadline, the employer could then cancel the offer.

3. Ask for a medical examination report before sending out the offer letter

Some employers’ recruitment process is like this: they send out an offer letter and ask the applicant to bring a medical examination report on the on-boarding day, among other papers, such as their graduation certificate. In our    opinion, it’s better to ask applicants to send in their medical examination reports before issuing any offer letters. This way, the employer has a chance to make a final decision based on the result of the medical examination and avoid any labor dispute caused by claimed or suspected employment discrimination.

4. Remember: an offer letter is not a labor contract

An offer letter only indicates intention of the employer to hire the applicant,   but it’s not an official contract. Employers should sign a labor contract with the employee within one month of the on-board date and, specify that:

1) the labor contract will supersede any mutual agreements between both parties or;

2) in the event of any inconsistency between the labor contract and offer letter, the terms of the labor contract shall prevail.

Anything else?

Chinese Green Card, Are You Qualified?

It is said that Chinese green card  is extremely difficult to be granted.  Let’s see if you have a chance to get it.

How to get a China green card

1. Category of applicants

(1) Have made direct investment in China with stable operation and a good tax paying record for three successive years;

(2) Have been holding the post of deputy general manager, deputy factory director or above or of associate professor, associate research fellow and other associate senior titles of professional post or above or enjoying an equal treatment, for at least four successive years, with a minimum period of residence in China for three cumulative years within four years and with a good tax paying record;

(3) Have made a great and outstanding contribution to and being specially needed by China; (you may visit our post to know more:What’s the Points-based System?)

(4) Being the spouse of a Chinese citizen or of a foreigner with permanent residence status in China, in a marriage relationship for at least five years, with at least five successive years of residence in China and at least nine months of residence in China each year, and having stable source of subsistence and a dwelling place;

(5) Being an unmarried person under 18 years old turning to his parent; or

(6) Being a person who is or above 60 years old, who has no direct relative abroad and is to turn to any directive relative in China, and has stayed in China for at least five successive years with at least nine- month residence in China each year, and has stable source of subsistence and a dwelling place.

2. Documents required

To apply for the green card, the following documents are required to be submitted together with the application:

(1) Copy of his/her valid passport;

(2) Health certificate;

(3) Certificate of no criminal record in the country concerned;

(4) Four recent full-face color photos; and

(5) Other materials (elaborated as below).

3. Family reunion green card

Generally speaking, there are three kinds of family reunion green cards, that is spouse, minor children and dependent. Except for the above mentioned documents listed in #2, applicant should provide the following documents:

1) Spouse

  1. His/her Chinese spouse’s registered permanent residence certificate or foreign spouse’s Foreigner’s Permanent Residence Card;
  2. Marriage certificate;
  3. Evidence of stable income and housing.

2) Minor children

  1. His/her Chinese parent’s registered permanent residence certificate or foreign parent’s Foreigner’s Permanent Resident Card;
  2. Birth certificate or parentage certificate.

3) Dependent

  1. The Chinese citizen’s registered permanent residence certificate or the Foreigner’s Permanent Residence Card to whom he/she is to turn;
  2. Certificate of kindred;
  3. Certificate certifying that he/she has no direct relative abroad;
  4. Evidence of stable income and housing for he/she or the person to whom he/she is to turn.

4. Cancellation of green card

However, the government may cancel the green card if the holder has stayed in China without approval for a period less than three cumulative months a year or less than a cumulative year in five years, or has threatened the national security and interests of China, or has been expelled from China by the people’s court, etc.

5. Application for Couples Reunion

Since most of our readers are intended to apply for their green cards under this “Couples Reunion” category, we are going to mainly discuss here how to prepare the documents as required and other issues people feel concerned about:

1) Preparation of application

I. Spouse’s identity

ID card and Household Register (户口簿, hukou bu) in local city for spouse with Chinese nationality, or valid passport and Permanent Resident ID Card for spouse with foreign nationality. Marriage status in the spouse’s Household Register should note married or indicate the same English name as the applicant’s valid passport.

II. Marriage certificate

If this certificate was issued abroad, a verification from the Embassy/Consulate General of China will be needed, which has a validity of up to 6 months.

III. Evidence of stable income and housing

Evidence of stable income, under most situations, such evidence can be applicants’ or their spouse’s Certification of Deposit in domestic banks of certain amount of RMB (The freezing period must be more than 6 months after the application date), and this should be verified by a notary office. If the deposit is under the name of applicant’s spouse, the declaration that the spouse is willing to guarantee security should be notarized and submitted as well.

As to how much money need to be deposited, it varies from city to city. For example, in Qun Ming of Yunnan Province, it’s explained that the evidence of stable income refers to disposable property as the applicant’s living security, the amount of which is equivalent to more than 10 years of deposit, based on the local monthly minimum living security, or any certificate of stable monthly income source no less than the local monthly minimum living security for up to five years starting from the acceptance of the application. But no specific amount is specified.

However, we can check other cities for reference. For most cities, such as Guangzhou, Beijing (both are the first-tier cities of China) or some remote city in the Northwest of China, for example Xi’an, 100,000RMB will be good. However, the deposit needs to be no less than 200,000RMB in Shanghai.

On the other hand, the pension of the applicant or the applicant’s spouse can be treated as “stable income” in Shanghai. If the pension is received from abroad, verification by the Embassy/Consulate General of China is required. If such proof is owned by the applicant’s spouse, the declaration that the spouse is willing to guarantee security should be notarized and submitted. The proof and the notarization should both be issued within 6 months before the application date.

IV. Evidence of stable housing

Talking about stable housing, some of our clients feel frustrated. Some of them claimed that they never have a plan to buy any real estate. Some of them regret that they haven’t bought a house before the two decades of real estate boom in China. But don’t worry, stable housing doesn’t mean you have to own the house yourself, no matter where you are. Those who are renting a house should submit the rental contract with more than one year’s renting period from the application date with notarization by a notary office.

If the house is owned by the applicant and spouse, the house property certificate should be submitted. In some cities such as Beijing even the house property certificate needs to be notarized. But there are no such requirements in Guangzhou or Shanghai.  So, it’s highly recommended to consult with local authorities for updated information before you proceed with the preparation of all documents.

V. Health certificate

The Health certificate should be issued by a domestic entry-exit inspection and quarantine agency (or by foreign medical institutions verified by the Embassy /Consulate General of China). The health certificate should be issued within the validity of the last 6 months.

VI. Certificate of no criminal record

A Criminal Record/ Background check which shows no criminal history of any kind must be verified by the Embassy/Consulate General of China. The name on the record must match that on the valid passport. In case the applicant has changed names, the former names should be noted in the record. In case the applicant has lived in a country/region outside the passport-issuing country more than/for two years consecutively after he/she is 18 years old, a criminal record from that country/region is also needed.

2) What’s the consequence of a divorce?

Despite the above mentioned provisions regarding “cancellation of Green card”, the current 《Measures for the Administration of Examination and Approval of Foreigners’ Permanent Residence in China》and the  《Regulations on Foreigners’ Permanent Residence in the People’s Republic of China 》(draft for comments) failed to mention what will happen if the green card holder based on a couple’s reunion get divorced later on. Though it should be more humanitarian to allow the green card holders to maintain their “permanent residence identity” even after their divorce, considering that the green card holder has settled here and built their life and career here. However, since all green cards for people older than 18 years old have ten-years terms and have to be renewed before the expire date, many green card applicants have such a worry: what if the local authority refuses to renew their green card if it’s found that they got divorced with their Chinese spouse?

It seems that divorcing is not one of the reasons to cancel the green card, but no explicit provisions says that once applicants obtain their green cards based upon marriage with Chinese citizens, their green card will be renewed even after couples get divorced. We expect an explanation to be given by the competent authority in the near future.

Kind reminder:

(1) The application needs to be submitted to local entry and exit administration with Public Security Bureau (PSB), where the prereview will be undertaken. However, the final decision will be made by the Ministry of Public Security of the PRC and it usually will take 6 months.

(2) The applicant can assign lawyer or other institution to help to prepare the application, but the applicant should visit the local authority in person for interview. An application form will be filled by the applicant under the instruction of the interviewer.

(3) In case the applicant has changed nationality, certificate of naturalization is required. In case the applicant was once of Chinese nationality, the former mainland Chinese citizen shall also provide their previous private passport and overseas permanent resident certificate (Chinese nationals who join another nationality when holding an official/service passport must renounce Chinese nationality first), former Taiwanese shall also provide a residence deregistration certificate; former Hong Kong/Macau people shall also provide an ID cancellation certificate. If necessary, certifications issued abroad must be verified by the Embassy/Consulate General of China.

(4) In case the applicant has changed their name, relevant certifications and 2 copies of these are required. Certifications issued in a foreign country should be verified by the Embassy/Consulate General of China.

(5) The Criminal Record/Background check, Marriage certificate, Birth certificate, relationship certificate, adoption paper, name changing proof or other relevant documents issued by overseas authorities must either be verified by the Embassy/Consulate General of China, or be certified by his/her country’s Embassy/Consulate General in China (personal statement is not acceptable).

(6) All the above-mentioned certification or verification documents should both be issued within 6 months before the application date.

Abstract of Foreign Investment Law of PRC

China’s national legislature on Friday passed the Foreign Investment Law in Beijing on March 15, 2019.  This landmark legislation aims to provide stronger protection and a better business environment for overseas investors.

With unified provisions for the entry, promotion, protection, and management of foreign investment, it is a new and fundamental law for foreign investment in China.

It aims to improve the transparency of foreign investment policies and ensure that foreign-invested enterprises participate in market competition on an equal basis.

Let’s see the main content:Foreign investment law of PRC will come into effect on 1st of Jan, 2020

1.Identity of foreign investment

foreign investment refers to investment activity within the territory of China,directly or indirectly conducted by foreign natural persons, enterprises and other organizations (the “foreign investors”), including the following circumstances:

1) a foreign investor establishes a foreign-funded enterprise, independently or together with any other investor; and

2) a foreign investor acquires shares, equities, property shares or any other similar rights and interests of an enterprise within the territory of China; and

3) a foreign investor invests in any new construction project, independently or together with any other investor; and

4) other foreign investment within the territory of China in any other way stipulated under laws, administrative regulations or provisions of the State Council.

The above mentioned foreign-funded enterprise refers to an enterprise incorporated under Chinese laws within the territory of China and with all or part of its investment from a foreign investor.

2. Market Entry

The State shall implement the management systems of pre-establishment national treatment and negative list for foreign investment; save as otherwise provided under international treaties or agreements that the People’s Republic of China concludes or joins in, such provisions shall prevail.

For the purpose of the preceding paragraph, the negative list refers to special administrative measures for access of foreign investment in specific fields as stipulated by the State. The negative list will be issued by or upon approval by the State Council.

3. Investment Protection

The State shall protect foreign investors’ investment, earnings and other legitimate rights and interests within the territory of China according to the law.

4. Standardization Work

Foreign-funded enterprises shall equally participate in standardization work, and information disclosure and social supervision shall be reinforced for the formulation of standards.

The compulsory standards formulated by the State shall equally apply to foreign-funded enterprises.

5. Government Procurement

The State shall guarantee foreign-funded enterprises’ fair participation in government procurement activities. Products produced by foreign-funded enterprises within the territory of China shall be equally treated under government procurement.

6.Intellectual Property Rights Protection

The State shall, according to the law, protect the intellectual property rights of foreign investors and foreign-funded enterprises, protect the legitimate rights and interests of holders of intellectual property rights and the relevant right holders, and encourage technology cooperation on the basis of free will and business rules.

In the process of foreign investment, technology cooperation conditions shall be determined by all investment parties upon negotiation, and no administrative organ or functionary working therein shall force the transfer of technologies by administrative means.

7. Effective Date

The Law shall come into force as of 1st of Jan, 2020. The Law of the People’s Republic of China on Sino-foreign Equity Joint Ventures, the Law of the People’s Republic of China on Wholly Foreign-owned Enterprises and the Law of the People’s Republic of China on Sino-foreign Cooperative Joint Ventures shall be annulled simultaneously.

 

Corporate Burdens-Reduced Further

On 5th of March, 2019, Premier Li Keqiang delivered the Government Work Report to the second session of the 13th National People’s Congress in Beijing.

Here are the highlights:

1. Corporate burdens

In our previous blogs: Tax in china – Reduction in 2019! and Tax Reduction in China-More Details, we talked about the tax cut policy starting from 1st of Jan, 2019.  Further, China aims to reduce the tax burdens and social insurance contributions of enterprises by nearly 2 trillion yuan ($298.3 billion) in 2019, as part of its broader push to promote manufacturing and fuel the growth of small and micro-profit businesses.

The government will deepen the value-added tax reform, reducing the current rate of 16 percent in manufacturing and other industries to 13 percent, and lower the rate in the transportation, construction, and other industries from 10 to 9 percent.

As for social security, the government will cut the proportion of basic endowment insurance units for urban workers, which will be reduced to 16%. The report notes that this year it is important to make the burden of social security contributions for enterprises, especially small and micro-profit enterprises, substantially decline. To this end, all local governments, shall not take the practice of increasing the actual contribution burden of small and micro-profit enterprises, and shall not carry out centralized payment of historical arrears on their own, to ensure stabilization of current mode of payment.

Corporate burden will be reduced further--highlights of the central government work report

 2. Broadband, mobile internet rates

China will further cut the rates for broadband and mobile internet services, as the nation steps up push to nurture innovation and speed up the growth of emerging industries.

This year, average broadband service rates for small and medium enterprises will be lowered by another 15 percent, and average rates for mobile internet services will be further cut by more than 20 percent.

3. High-tech sector

China will continue to upgrade its traditional industries, support the emerging high-tech sector, and increase support for basic and applied research.

The country will strengthen its innovation capabilities, boost the integrated development of advanced manufacturing and modernized services, and create industrial internet platforms to facilitate the transformation and upgrading of  manufacturing.

4. Green measures

China will pursue both high-quality development and environmental protection by reforming and refining relevant systems. Green development is a critical element of modernizing an economy and a fundamental solution to pollution.

China plans to reduce sulfur dioxide and nitrogen oxide emissions by 3 percent in 2019, while making continuous effort to decrease the density of PM 2.5, a major particle pollutant, in key locations, including the Beijing-Tianjin-Hebei region, the Yangtze River Delta region and the Fenhe-Weihe River Plain area.

5. Elderly care sector

China will take significant steps to develop the elderly care sector, especially community services, in 2019 as the number of people aged 60 and above has reached 250 million.

The country will provide support to institutions offering services in communities, like day care, rehabilitation, assisted meals and assisted mobility, by using measures such as tax reductions, fee cuts and exemptions, funding support, and reduced charges for water, electricity, gas and heating.

6. Rural students

China will beef up efforts to cut the dropout rates of rural students and improve their college enrollment numbers to stop poverty from passing down to the next generation.

A quota system will also be used to boost attendance of rural students at top universities.

7. Vocational education

The country will take strong moves to develop modern vocational education to help ease current employment pressure and address the shortage of highly skilled personnel.

A vocational skills training initiative will be implemented with 100 billion yuan ($14.9 billion) from the surplus in unemployment insurance funds allocated to provide training for the 15 million targeted attendees, helping job seekers to upgrade skills or switch jobs or industries.

8. Opening-up

China will open more sectors and improve the process of opening-up. The country will continue to promote opening-up based on flows of goods and factors of production, and give greater emphasis to opening-up based on rules and related institutions.

China will continue to push forward China-US trade negotiations. The country is committed to mutually beneficial cooperation and aiming to settle trade disputes through discussions in an equal manner.

9. Employment

China will create more than 11 million new urban jobs this year and keep the urban unemployment rate within 4.5 percent. Multiple channels will be used to achieve stable and expanding employment in 2019.

Having taken prompt steps to ease the impact of changes in the external environment on employment, the central government of China will work to ensure employment for key groups such as college graduates, demobilized soldiers and migrant workers.

Useful link:

The State Council of PRC

Close Your WOFE Properly-Don’t Just Give It Up!

Incorporating a WOFE in China is easier now, however, shutting down a WOFE remains complicated as ever. Some foreigners think: if they don’t conduct the annual registration  and tax filings, then they can just give up the WOFE.  They are wrong, wrong, wrong!

1. Direct consequence

If any WFOE owner don’t conduct the annual registration and tax filings, the direct consequence is the local AIC (Administration of Industry and Commerce) will revoke the business license  and the WFOE can’t do business any more, but it doesn’t mean everything related to the WFOE will be eliminated.

Most important, liability to taxes, government fees and employee salaries is still there.

2. Personal liability

Close WFOE properly is very important

First of all, the legal representative, directors and shareholders of the WOFE will be put in a blacklist which will be issued to all SAIC offices in China  and PRC border control authority.

Usually, people on the blacklist will not be permitted to do any investment or management of any company for three years, and their entry to PRC will be refused if they want to revisit China someday.

Moreover, if the WFOE owes any taxes, fees, salaries or debts, the legal representative and directors could be prosecuted by the PRC authorities.

3. Best way to do it properly

Technically speaking, anyone who does not have enough funds to maintain the company  could file for bankruptcy liquidation with the court based on the PRC bankruptcy laws. However, it seems that no WOFEs are going through this procedure, likely because it is complicated as well as  time and fund-consuming.

So let’s de-register it with local AIC.

First, pay all debts, especially all debts to employees (salary) and to the government (tax).
Then,  go through a long drawn-out government audit, which is far more complicated and time consuming  than you could ever think of. Considering this, it’s strongly recommended that you do it earlier and have a sound plan for it-in both timing and funds.

Anything else?

Useful Link:

State Administration for Market Regulation

Outline for the Development Plan of Great Bay Area

On 18th of Feb, 2018, the China central government issued the Outline for the Development Plan of Guangdong, Hong Kong and Macau Bay Area, the main points of the outline is listed as below:

On 18th of Feb, 2018, the China central government issued the Outline for the Development Plan of Guangdong, Hong Kong and Macau Bay Area

1. Division of Great Bay Area

The “Guangdong, Hong Kong and Macao Bay Area includes the HKSAR, Macau SAR and Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen, Zhaoqing of Guangdong province, with a total area of 56,000 square kilometers, and total population of about 70 million in late 2017.

This area is one of the regions with the highest degree of openness and the strongest economic vitality in China, which plays an important strategic role in the overall development of the country.

2. Finance

Gradually expand the scale and scope of RMB cross-border use in the Great Bay Area.

Promote cross-border transaction of financial products such as funds and insurance in the area in well-organized way.

Continuously enrich investment product categories and investment channels, and establish mechanisms for exchange of funds and products.

3. Airport Construction

The outline also proposes to support the construction of the third runway of HK Airport and the reconstruction and expansion of Macau Airport, and the implementation of the airport reconstruction and expansion of Guangzhou and Shenzhen.

It also proposes develop pre-research work of the new airport in Guangzhou, research and construct some feeder or general airport.

4. Intellectual Property Rights ( IPR )

Relies on the regional IP cooperation mechanism between Guangdong and Hong Kong, Guangdong and Macau and the Pan-Pearl River Delta region to comprehensively strengthen cooperation of IP protection and professional training in the area.

Strengthen administrative law enforcement and judicial protection of IP, give better play to the role of Guangzhou IP Court and other institutions, strengthen IP law enforcement in e-commerce, import and export and other key areas.

5. Communications

Will take multi-measures to achieve a reasonable decline in communication fees, promote the reduction of long-distance and roaming charges for mobile phones in the area.

Actively carry out a feasibility study to eliminate long-distance and roaming charges for mobile phones and provide infrastructure support for construction of smart cities.

6. Technical Exchanges

Promote the “Guangzhou-Shenzhen-Hong Kong-Macau” Science and Technology Innovation Corridor construction.

Explore the policy which is to the benefit of cross-border movement of talent, capital, information, technology and other innovative elements of and regional integration.

7. Science and Technology Industry

Promote the development of new generation of pillar industry, such as information technology, biotechnology, high-end equipment manufacturing, new materials.

Cultivate a number of major industrial projects in key areas, such as new display, new generation of communications technology, 5G and mobile internet, protein and other biomedical, high-end medical diagnostic equipment, genetic testing, modern Chinese medicine, intelligent robot, 3D printing, Beidou satellite applications etc.

8. Capital Market

Support Shenzhen to develop capital market with Shenzhen Stock Exchange as the core, accelerates innovation of financial openness.

9. Tourism Industry

Promote effective implementation of yacht free travel in the area, speed up improvement of hardware and software facilities.

Jointly develop high-end tourism projects. Explore the construction of an international yacht travel free port in suitable area.

10. Talent Policy

Encourages Chinese citizens in Hong Kong and Macau to hold positions in the state-owned enterprises in mainland. 

Study and promote Chinese citizens in Hong Kong and Macau to apply for position of civil servants in mainland.

11. Integration

Implements the CEPA series agreements between the mainland, HK and Macau. Promote implementation of special open measures for HK and Macao in the areas of finance, education, legal and dispute resolution, shipping, logistics, railway transport, telecommunications, Chinese Medicine, construction and related projects.

Study the further abolition or relaxation of restrictions to HK and Macau investors, such as qualification requirements, shareholding ratios and Industry access, etc.

Provide one-stop service for HK and Macau investors and related practitioners.  

Make sure better implementation of opening up measures for HK and Macau under the framework of CEPA.

Divorce in China-What Options You Have?

If for some reason, the couple have to split up, what to do in China?

There are two options.

1. Split up peacefully by signing a divorce agreement.

Under this situation, the couple shall apply to local Civil Affairs Bureau for divorce. The Civil Affairs Bureau will issue a Certificate of Divorce if they are convinced that:  

1) the couple are indeed willing to split up and;

2) they have made proper arrangements for bring-up of kids and have properly disposed of their asset.

Divorce in China-what options do you have

2. File a lawsuit if can’t split up peacefully.

If either the husband or wife doesn’t want to split up, or if though the couple both want to split up, but fail to reach an agreement about how to bring up the kids or dispose their asset, then either party could file a lawsuit to get divorced.

Just like in any civil cases, the couple may hire lawyer to represent themselves in the court. However, the couple should participate in the court hearing in person even they already hired a lawyer.

As a rule, the court shall make mediations during court hearing, which is a necessary procedure in a divorce suit. Divorce shall be granted if mediation fails and the judge is convinced that mutual affection between the couple doesn’t exist any more.

Besides, if any of the following circumstances occurs and mediation fails, divorce will be granted:
a. either party is a bigamist or co-habits with a third party;
b. there is domestic violence or abuse or abandonment of any family member;
c. either party is indulged in gambling, drug-abuse or has other vicious habits;
d. the couple have been separated due to emotional incompatibility for up to two years;
e. other circumstances that lead to breakdown of the couple’s feelings.


However, the husband may not file a divorce suit when his wife is pregnant, or within one year after giving birth to a kid, or within six months after interruption of pregnancy. But usually, this restriction shall not apply to the case where the wife files a divorce suit.

3. How to split asset

As mentioned in our previous blog: Personal Asset or Family Asset? both husband and wife have equal right in the disposal of the family asset, so usually split of the family asset is fifty-fifty.

both husband and wife have equal right in the disposal of the family asset, so usually split of the family asset is fifty-fifty.

However, In any of the following circumstances, the innocent party shall be entitled to claim damages:
a. bigamy;
b. co-habitats with a third person;
c. domestic violence;
d. abuse or abandonment of any family member.

4. Who to bring up the kids

Either parent has the right and the obligation of upbringing their children, even if after divorce.

Usually, kids during lactation shall be brought up by their mother.

For kids after lactation, the judge will make the decision based on the specific conditions of both parties, such as the income level, education background, personality and relationship between the kids and parent, sometimes, the parent’s respective family will be taken into consideration too, such as if the grandparent is willing to support the parent to bring up the kids. In one word, the judge will consider which way is better for the kids, sometimes they will consider if the kids used to be taken care of by dad or mom.

For kids over ten years old, the judge will consider their personal willingness too.  

Is it clear enough?

Personal Assets or Family Assets, Can You Tell?

One of our clients called recently, he said he was going to get married to his Chinese fiancé. He wanted to know what’s the Chinese Marriage Law’s provision about family assets and asked if there is anything like prenuptial agreements in China. 

Generally speaking, a married person’s assets could be divided into family assets and personal assets. According to the Chinese Marriage law, if not otherwise agreed by the couple:

1. The following assets incurred during the marriage shall be family assets jointly owned by the couple, including:

a. wages and bonuses;
b. any income incurred from production or management;
c. any income incurred from intellectual property;
d. any property inherited or bestowed. However, if the deceased or donor failed to express specifically that the inheritance or bestowal will  only benefit the inheritor or donee instead of their spouse, then the property only belongs to this specified person.

e.others.

So if there is no agreement between the couple specifying otherwise, most of the income during the marriage should be jointly owned by the couple, even if only the husband or wife make money while the spouse have no income at all. Both husband and wife shall have equal rights in the disposal of the jointly owned assets.

Besides, if the couple get divorced, the family assets will be divided between the couple fifty-fifty.  But it could be a relief to most of the husbands, because there is no rule about alimony for ex-wives in China.  Though the marriage law does say if one party has financial difficulty, the other party shall provide some assistance from his/her personal assets.

2. Personal assets:

a. the pre-marital asset that is owned by one party;
b. the payment for medical treatment or living subsidies for the disabled arising from bodily injury on either party;
c. the articles of living specially used by either party,
d. others.

3. A written prenuptial agreement will be binding to the couple.

Prenuptial agreement could specify what asset is family asset or personal asset

The marriage law makes a general rule about what assets will be treated as family assets and what assets are personal assets, but the marriage law also specifies that the couple could come to an agreement otherwise. In another words, prenuptial agreements are allowed in China.  

The couple could specify in the prenuptial agreement if the assets during or prior to the marriage would be owned by each party jointly or separately.  The agreement should be in writing, but not have to be notarized to be effective.  If not all assets are jointly owned by the couple, it’s a smart move to draft a detailed list of assets and include the list as attachment to the agreement.  Also, it’s highly recommended to specify clearly how to pay the family expenses when the assets are not jointly owned by the couple.

Related post: Divorce in China-What Options You Have?

Useful Link:

Ministry of Civil Affairs of the People’s Republic of China