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Chinese online brokerage companies are tightening restrictions on residents trying to open new accounts, now requiring proof of permanent residency abroad as Beijing cracks down on cross-border investments.
Recent updates in account opening procedures at a well-known securities firm reveal that customers from mainland China must provide documentation proving permanent overseas residency before gaining access. A customer service representative confirmed that, since last week, the company no longer accepts applications from mainland residents who only present documents indicating they work or live overseas. Only those with non-mainland identification are eligible to open accounts.
For several years, these brokerages served as popular avenues for mainland investors to trade U.S. and Hong Kong stocks. However, since 2022, regulatory authorities have been pressuring these firms to shut down their account opening channels for residents of mainland China.
When asked whether the previous lenient policies might return later, a representative noted that there have been no official updates and advised clients to stay attentive to future announcements.
International brokers such as a major U.S.-based firm have also adopted stricter measures. This company, the world’s largest online broker, began making account openings more difficult for mainland Chinese users in August, and its app was removed from Chinese app stores.
Another overseas brokerage based in Singapore announced in June that it had ceased allowing mainland residents to open accounts using proof of existing holdings. Its app is no longer available for search or download within mainland China.
These policy shifts coincide with intensified tax enforcement on Chinese individuals’ overseas income. Since the second quarter, many investors holding assets in U.S. and Hong Kong stocks have received notices from local tax authorities demanding back taxes. This has sparked increased discussions about offshore trading channels.
Some of these brokers report user information to tax agencies in New Zealand, Hong Kong, or operate within Hong Kong and mainland China, all regions participating in the global Common Reporting Standard for tax data sharing. In contrast, a prominent U.S.-based broker is outside this framework, leading some investors to believe they could avoid Chinese tax monitoring by using that platform.
Despite these challenges, mainland investors can still access Hong Kong stocks through programs like the Shenzhen-Hong Kong and Shanghai-Hong Kong stock connect schemes, as well as Hong Kong-listed ETFs traded in the mainland, which are also taxed more favorably, according to market experts.
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