Virginia, US
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| Becky Xia

China’s Much Anticipated Exit-Entry Law Finally Starts to Take Shape: An Examination of the Draft Implementing Rules

As highlighted in previous client alerts, China’s new Exit-Entry Law seeks to strengthen enforcement of existing immigration and labor laws, and to increase coordination of data collection among the agencies charged with overseeing foreigners’ employment in China. It also seeks to impose more serious penalties for noncompliance, including detention, steep fines, and even confiscation of revenue generated by illegally employed individuals in China. Although the broad contours of China’s soon-to-be-implemented Exit-Entry Law were conceived more than a year ago, the State Council only released the implementing rules and regulations on 3 May.
 
New visa categories and changes to existing categories
 
The Draft Implementing Rules introduce multiple new visa categories, including the M (new business and trade visa, replacing the Business F visa), and R (designed to facilitate entry of top foreign talent into China). The M visa is roughly analogous to the current Business F visa; thus, for work authorization purposes, Fragomen continues to recommend that whenever an employee receives direction from a Chinese entity or enters onto a Chinese entity’s payroll, the Z visa will be appropriate.
 
The following illustrates the changes between China’s current system and the proposed new system in some of the visa categories which most affect business travelers and foreign workers:
 
Current system (type of visa and use/application)
  • Z visa - Single-entry visa issued to foreign workers and accompanying family members
  • F visa - Business visa issued for official visits, lectures, business, technological or cultural exchanges, and short-term studies or internships
  • J visa - Journalist visa, issued to foreign journalists
 
Proposed new system (type of visa and use/application)
  • Z1 visa - Issued to foreign workers working over 90 days
  • Z2 visa - Issued to foreign workers working no more than 90 days 
  • F visa - Non-business visa, issued for non-business (scientific, cultural, educational, health or sports) exchanges
  • J1 visa - Issued to resident foreign journalists
  • J2 visa - Issued to foreign journalists for short-term stays
 
Additional visa categories in proposed new system (Partial List)
  • M visa - New business visa issued for business and trade activities. This appears to replace the F visa
  • R1 visa - Issued to foreign professionals who are highly skilled or whose skill is urgently needed by China, and will be residing in China
  • R2 visa - Issued to individuals who meet the R1 criteria but will only be staying in China for a short period
 
Clarification of visa categories requiring interviews
 
According to the Draft Implementing Rules, the only visa categories requiring an interview are those in the residence category, namely, the J1, R1, Z1, Q1 (family reunion visa, issued to family members of Chinese citizens) and X1 (long-term study in Chinese educational or training institutions). Some applicants, however, especially those who have had past immigration compliance issues, will need to complete interviews.
 
Differentiation of visa categories based on duration of stay in China
 
Multiple visa categories, including Z (work), X (study), J (journalism), and R (talent), are differentiated in the new Draft Implementing Rules by the length of stay in China. For example, the Z1 visa will be issued to foreign workers staying in China for more than 90 days and the Z2 visa will be issued to workers staying in China for up to 90 days (the implementing rules do not explicitly state whether the 90 days includes cumulative time within a calendar year or 90 days per entry into China).
 
The business community also hopes that the shorter duration of stay for the R2 and Z2 visas, among others, will result in reduced processing times for these visas. Article 22 of the Draft Implementing Rules hints, for example, that health certificates will only be required for residence permits of one year or longer, suggesting that the shorter term Z2 visa may carry fewer administrative requirements.
 
What can employers expect going forward?
 
The new law has received positive public feedback for the flexibility it introduces for short-term work permits and talent visas, as well as for its clarification of what constitutes illegal work in China. The Draft Implementing Rules, though, are silent on many key points, including duration of stay for the new visa categories, eligibility requirements for the talent visa, and how employers can achieve compliance with the new law’s provisions for employees who work remotely or at multiple locations. The Draft Implementing Rules are also silent on a much-noted provision in the initial release of the law that allows confiscation of revenue generated by employees lacking proper work authorization.
 
Given the short period for public comment (3 May 3–3 June) and the short timeframe before the law comes into force on 1 July, the Draft Implementing Rules may well constitute the essence of the new law. Employers should also expect that individual localities could implement other policy changes in addition to those discussed above. For example, in addition to Beijing and Shanghai, which already allows 72-hour visa-free-transit for nationals of 45 countries, Guangzhou and Chengdu have recently announced that they will offer this accommodation for travelers who have confirmed onward air tickets to a third country.
 
Fragomen will continue to closely monitor developments related to both the Draft Implementing Rules and the overall implementation of the new Exit-Entry Law. We will issue an additional newsletter article in July to address any changes made to the Draft Implementing Rules.