With a population of more than 1.4 billion people, the People’s Republic of China stands to be one of the biggest economies around the world. China has been characterized as an emerging superpower because of its huge economy, fast infrastructural development, and very powerful military. In terms of the nominal GDP, China has the world’s second-largest economy, which was as much as $13.5 trillion as of 2018.
Because of the things that we have talked about, it should not come as a surprise that so many international Forex brokers are doing their utmost best to get to this very diverse market. But, there still are some challenges and problems that FX traders in China might come across. China does not issue licenses to FX brokers, and leveraged services are illegal in the country, but this does not mean that traders can’t find a place to trade in the country.
So, if you are one of those people who are planning to start trading in one of the biggest economies around the world, follow our definitive guide to Forex trading in China and see what are the possibilities that you have on this market as we dive deep into everything that might be important for FX traders.
The best Forex brokers in China and how to find them
As we have already mentioned, China does not issue licenses for FX brokers. But, this does not mean that you can’t find a well-regulated and safe FX broker in the country. Before you start trading Forex, it is of utmost importance that you find a place where you can trade, while also staying safe. Recently, many well-known international Forex brokers started to offer services to the citizens of the country because of the fast pace of economic development of the country.
But, how do you know that you are trading with a safe and secure FX broker? We have done very extensive research regarding FX brokers in China, and thankfully, we were able to come up with a list of the best Forex brokers in the country that you can see below. Do not hesitate to take a look at our list and enjoy some of the best services in the country!
CySEC, IFSC, ASIC
CySEC, FCA, FSA
100 currency units
CIMA, FCA, NFA
Forex trading regulations in China
While talking about Forex regulations in China, it’s a little confusing, to say the least. Although Chinese authorities does not really give out licenses to Forex brokers, they still have some control over the market. The two major bodies that take care of the whole financial market in the country are the State Administration of Foreign Exchange, SAFE, and the People’s Bank of China, PBOC.
SAFE has very simple function. Their main aim is to make sure to maintain financial stability in the country, and it has very diverse and broad responsibilities when it comes to financial markets in the country. SAFE is known to be responsible to regulating crypto market of the country, while also being in charge of China’s external debt and managing the balance of payments.
Over the years, SAFE worked very hard to come up with very strict regulatory framework, as a result of which, it is almost impossible for brokers to offer their services to the citizens of the country, which is why there simply are no local brokers that offer Forex trading services to Chinese traders.
In general, SAFE gives well-known and reputable FX brokers, that also own licenses from reputable regulatory bodies, to offer their services to Chinese clients. Offshore Forex brokers are using this opportunity a lot, because of this, you can see a lot of Forex brokers in China that come from other countries. The Chinese market is huge, which is one of the main reasons why so many brokers are doing their best to get to this market.
Challenges for FX brokers in China
Forex brokers are facing huge challenges when they decide to offer their services to the citizens of the country. Because there are so many restrciitons that the country has, many brokers have to work very hard to get to this market.
In general, it is very much legal to trade Forex in the country, but because of so many restrictions that the country has, the market is getting very hard to access. China is known to have closed capital approach, which means that not every foreign FX broker is allowed to offer services in the country. Also, FX brokers had to find a different type of approach when offering services to the citizens of the country, because of the fact that the country does not allow free flow of money in and out of China.
These brokers have to partner with local companies, which serve as some type of introductory brokers. These companies are giving brokers the ability to connect to those people from China who want to trade Forex, and without this so-called introductory brokers, it is almost impossible for brokers to function in the country. But, China is not the only place where something like this happens – in Qatar, brokers will have to follow the same strategy as well.
It is true that this way it is a lot easier for the country to create a safe and secure space for Forex traders, but because of such restrictions and rules that the country has, the number of brokers that are available in the country is very much limited. Especially if we look at the population that the country has, for more than 1,4 billion people, the number of available Forex brokers is not that much. But, still, traders have the ability to find trustworthy companies this way a lot easier.
Also, China requires the brokers that want to function in the country to be following regulations of agencies such as FCA of the UK, FSA, and other top-tier regulatory bodies around the world.
Keeping the market safe
Since there are not so many local Forex brokers in the country, China had to come up with new ways to make sure that the international brokers that are functioning in the country would offer safe and secure services to the citizens of the country.
One thing that the leadership of the country does is that they are monitoring the market at whole new and different level, especially compared to other countries around the world. Chinese authorities are focused a lot in making sure that the amount of money going in and out of the country, especially when it comes to foreign currencies, is very closely monitored by them.
This is one of the major reasons why Chinese authorities are asking the brokers who want to function in the country to have some type of local presence in the country. However, there is a lot more that the authorities are monitoring than the inflow and outflow of money.
Authorities of the country are doing their utmost best to take their time to monitor almost all of the aspects of the broker, including the way they operate, how the deposits and withdrawals are made, financial reports of companies, success ratios of the traders, and many more aspects. China is also very active when it comes to punishments of those companies that are are not doing business with honesty.
All of these steps are taken by the authorities of make sure that the market is as safe as possible, and, as some research have shown, the steps are working very well in ensuring the safety and security of the local Forex traders in the country.
Forex trading restrictions in China
As you have probably already guessed, there are many Forex trading restriction sin the country. The restrictions does not apply to the brokers only, however, but they also apply to investors as well. It is true that all retail traders are able to invest in this market in China, but, there are several restrictions that you will face while trading Forex in China. For example, the amount of money that you will be able to trade annually is very much restricted.
The amount of money that you will be able to trade in the country very much depends on the experience if you have. The authorities of China make sure that the brokers are focusing a lot on the experience that investors have, because of which, not everyone is able to trade the same amount of money annually.
The Chinese government takes care of this matter and they make sure that they control the expense that investors have in the country. The brokers are required by the government to prohibit those who don’t have enough experience the ability to trade being certain amount of money.
Another very intreating thing is China is that margin is not legal in the country. But, this was not the case in the past at all. For many years, it was allowed in the country, as long as the brokers met certain type of criteria and requirements. But, it has changed in 2008, when the government of the country passed new laws making it illegal for Chines traders to use margin while trading Forex.
Chinese Yuan and currency trading in China
The national currency of China is something that is deserving of discussion. It has a very intreating and long story. Before the communist era of China, the country actually had several different currencies in the country, which were used in different regions of China. However, the communist party of China, soon after coming into the power, started issuing its own currency, which, after some time, has become the Chinese Yuan. But, something that you might not know about it is that it actually has two names, another name that not many people know is Chinese Renminbi.
At first, because the national currency of the country was pegged to the USD, the value of it very heavily depended on the US dollar and the political climate in the USA. However, China became very ambitions about their place on the world market and they started to work ver hard to become economic powerhouse, which ended up ceasing the decision that was made in the beginning about the Yuan being pegged to the USD in 2005.
However, because of the 2008 financial crisis, the government of the country had no other way but the reconnect the national currency to the USD. As of now, the national currency of the country is regarded to be the dominant one in the South-East Asian region. It has recently become a currency that is challenging those currencies such as Japanese Yen and Euro, and it is becoming one of the major Forex reserve currencies around the world.
Forex market in China
Because of the political climate in China, it has never been an easy thing for foreign companies, especially for those from western countries, to get into the Chinese market. This of course includes Forex companies as well.
However, because so many Chinese people wanted to invest in this market and the demand for well-developed Forex brokers was increasing, the government had no other way but to let some of the top Forex brokers in the country. But they did it in a way that they could still have control over this market.
Finding the best FX brokers in China
There are many things that investors will have to keep in mind before they start trading in the country. One of the thing that you should keep an eye on before you choose the broker to trade with is the trading platform that is available at the broker. Trading platforms are the things that will give you the access to the market and you should be able to use the one that offers the best services and tools for trading.
There are tens of different trading platforms available for Chinese Forex traders, but the one that is most actively used in the country, just like any other parts of the world, is the MetaTrader 4. MT4 was developed by a very famous Russian company called MetaQuotes in 2005, and over the last 15 years it has gotten a huge following on the market. MT4 recently got an update and there is a newer version of it called MetaTrader5, but MT4 still stays to be more popular.
On the other hand, there is WebTrader, by the same company, which offers access to a lot of currency pairs on the market, and works very much like MT4 and MT5, but it does not need to be downloaded and can be used in the browser directly.
China is well known for its financial markets, and one thing that is very special about this country are the payment methods that it offers to its citizens. The country has many well-developed and great payment methods that are very useful for investors.
Most of the brokers in the country offer many opportunities for deposits, they are those like WeChat, AliPay, and many others. These two are mobile payment methods, which have become very popular recently in China and has changed the way people pay for mostly anything.
In China, not many places accept foreign cards like Visa and Mastercard, however, you can still use them with most of the Forex brokers because, after all, they are off-shore companies.
While trading Forex, you should be sure that you are using a payment methods that can offer you safety and security. In China, most of the people are using mobile payment methods and they are doing it for a reason – they want to make payments very easy and simple, which is a very great thing while investing in Forex.
Also, look out for the commissions and fees that the brokers have for deposits and withdrawals. In most cases, these fees and commissions are not that big, but still double check the information with the payment provider before you make any payments.
Also, before you choose a broker to use, make sure that they are available in the national language of China. It would be also a great thing for the broker to offer customer support team in the national language, to make sure that you can get the help that you might need any time of the day.
FX trading in China – Key Takeaways
Forex trading in China is very much legal, and Forex traders in China can invest in this market without any problems. However, there are some restrictions that you should know about. One of the major things about trading in China is that there are no local Forex brokers in the country, because the regulatory agencies of the country does not really give out licenses for Forex trading.
Besides, there are many restrictions in the country. But, as an investors, you should always remember that these restrictions are in place because the authorities of the country are doing their utmost best to make sure to safeguard the rights of investors on the market.
There are many international offshore companies in the country that are licensed and authorized by top regulatory bodies around the world, which is making trading with them a lot safer and secure experience.