Registered capital is the most impressive figure on a Chinese company's record and, at the same time, the one that says the least on its own. Since 2014 the Chinese system allows capital to be declared without being contributed upfront. This guide explains how that works, what changed in 2024 and how to check the number that actually matters.
The two concepts
| Concept | In Chinese | What it means |
|---|---|---|
| Registered capital | 注册资本 | The capital shareholders commit to contribute. It is a promise on record, not money in the bank. |
| Paid in capital | 实缴资本 | The capital shareholders have actually contributed to the company. |
| Subscription system | 认缴制 | The regime in force since 2014: subscribed capital is registered and shareholders set their own contribution schedule. |
What changed in 2014
The reform of the Chinese Company Law that took effect on 1 March 2014 removed the upfront payment requirement and the minimum capital thresholds for most companies. Since then, incorporating a company with a registered capital of 10 million yuan does not require having 10 million: committing to contribute it within a period that, until recently, shareholders could set at 20, 30 or even 50 years was enough.
The goal of the reform was to make starting companies easier, and it worked. The side effect is the one foreign buyers suffer: registered capital stopped being an indicator of solvency. A high figure can reflect a solid company or simply a grand promise nobody has fulfilled yet.
What changed in 2024
The new Company Law, in force since 1 July 2024, partly corrected that excess: shareholders of a limited liability company must pay in the subscribed capital within a maximum of 5 years from incorporation. For existing companies, transitional rules require them to adjust their contribution schedules gradually.
For you as a buyer this means two things. First, capital figures will move closer to reality over the coming years. Second, and more useful today: many companies are formally reducing their registered capital to match what they can actually pay in. A recent capital reduction on your supplier's record is not necessarily bad news, but it is a fact you want to know before negotiating.
Why it affects you as a buyer
- Registered capital is no guarantee of recovery. If something goes wrong and you claim, the company's real ability to respond depends on its assets, not on the figure on record.
- The gap is a character signal. A company declaring 10 million while having contributed 50,000 is building an image. Knowing that changes how you read the rest of its claims.
- Shareholder liability has a ceiling. In a Chinese limited company shareholders are liable up to the subscribed capital. High subscribed capital with little paid in means shareholders with outstanding obligations towards their own company.
The typical case we look for in every report: a supplier boasting millions in registered capital on its website and on Alibaba, a registry record with that capital subscribed and minimal or unpublished actual contributions, and a company age of two or three years. None of those facts alone is fraud. Together, they describe a company much smaller than it appears, and that changes how much of an advance payment you are willing to make.
How to check it
- Registry record on GSXT. The 注册资本 field shows the registered capital. The step by step is in the verification guide.
- The company's annual reports. In the annual reports section of GSXT (企业年报), companies declare each shareholder's capital contributions. It is self reported and not always complete, but the gap between subscribed and contributed usually shows here.
- Professional sources. Chinese business information platforms and the legal databases accessed by licensed lawyers allow the figure to be cross checked, and also reveal capital reductions, share pledges and disputes between shareholders.
Quick questions
Does low paid in capital disqualify a supplier?
Not by itself. There are excellent factories with modest capital. What disqualifies is the inconsistency: boasting a figure that does not match reality. The data helps you calibrate risk and negotiate sensible payment terms.
Does paid in capital always appear in the registry?
Not always directly. It often has to be reconstructed from annual reports and professional sources. That is exactly the kind of work we do in the China Due Diligence Report.
Does this also apply to Hong Kong?
No. Hong Kong has its own registry and its own company regime, separate from mainland China's. This guide refers to mainland Chinese companies.