The previous five articles covered “what to buy.” This one covers “through what pipe, and how much the pipe charges.” Accounts and fees are the most boring and the most concrete part of investing — returns are uncertain, fees are certain, and every basis point of fees you save is risk-free return.
One brokerage account holds most of the shelves
Many people’s understanding of a brokerage account stops at “for trading stocks.” In fact, a single A-share brokerage account can buy far more than stocks:
- Shanghai and Shenzhen Main Board stocks (enabled by default at account opening)
- Exchange-traded funds: ETFs, LOFs, money market ETFs, bond ETFs, gold ETFs, cross-border ETFs
- Government bond reverse repo, book-entry treasury bonds, convertible bonds (permission must be enabled separately)
- Public REITs (requires enabling permission and completing a risk assessment)
- New stock and new convertible bond subscriptions
- The broker’s own fixed-income products such as income certificates and quoted repurchase agreements
In other words, apart from over-the-counter funds and savings treasury bonds (which go through bank channels), one brokerage account covers virtually every instrument in this series. Opening the account itself: ID card + bank card, ten minutes in a mobile app, free throughout.
Two structural terms are worth knowing: the unified investor ID (一码通) is the master account number ChinaClear assigns to every investor — accounts you open at any broker all hang under the same ID (which is why “24 months of trading experience” doesn’t reset when you switch brokers); third-party fund custody (三方存管) means your money sits in a custodial account at a bank that the broker cannot touch — a broker going bankrupt cannot take your money with it. That’s baseline safety by institutional design.
The complete cost breakdown of a stock trade
Take one round-trip A-share trade. The friction cost has four layers:
- Brokerage commission: charged on both buy and sell, commonly around 0.025% of turnover, with a ¥5 minimum per trade. This is the only negotiable item — talk to an account manager before opening the account, and 0.015% or even lower is not rare. Note the killing power of the “¥5 minimum” on small amounts: on a ¥1,000 trade, the theoretical commission at 0.025% is ¥0.25, but you’re charged ¥5 — an effective rate of 0.5%.
- Stamp duty: 0.05%, charged only on the sell side (the rate after the August 2023 halving), goes to the state, non-negotiable.
- Transfer fee: 0.001% of turnover, charged both ways on both exchanges.
- Regulatory fees (exchange handling fee + securities regulatory fee, etc.): roughly 0.005% in total; most brokers bundle them into the commission quote (an “all-in price”) — ask at account opening whether your commission includes them.
The full math: with commission at 0.025% (including regulatory fees), one buy plus one sell costs ≈ 0.025%×2 + 0.05% + 0.001%×2 ≈ 0.102%. Turn your portfolio over ten times a year and friction eats 1% — which is why Part 2 called high-frequency small-swing trading a false proposition for ordinary people.
On-exchange ETFs are far cheaper: no stamp duty, commission only (many brokers will negotiate ETF commissions down to 0.005%–0.01%, and many instruments have no ¥5 minimum), so a round trip can be squeezed to 0.01%–0.02%. For the same money, trading an ETF costs one-fifth to one-tenth the friction of trading stocks.
Quick reference for over-the-counter fund fees
The OTC channel doesn’t go through the brokerage commission system, but it has its own set:
- Subscription fee: 1.5% standard for active funds, with internet platforms commonly offering a 90% discount (0.15%); C-class shares charge no subscription fee.
- Redemption fee: declines in steps with holding time; holding under 7 days draws a flat 1.5% penalty (a regulator-mandated punitive rate, with exceptions for money market funds and some ETF feeder funds), and most funds waive redemption fees after 1–2 years of holding.
- Operating fees (management fee + custody fee + the C-class sales service fee): deducted from the NAV daily — inconspicuous but collected every year. Active funds total about 1.4%/year; broad-based index ETFs are down to 0.2%/year.
One sentence to summarize the two channels: for long holding and low-frequency operations, the gap between OTC and on-exchange is limited; for anything involving rebalancing, rotation, or adjustment, the ETF’s fee advantage is overwhelming. That’s also one reason quantitative strategies are almost entirely built on ETFs.
The private pension account: trading liquidity for taxes
The private pension account is the third-pillar pension system that landed in 2022: a separate account (opened at a bank) into which you can deposit at most ¥12,000 per year, investable in four product categories: designated pension savings, pension wealth-management products, commercial pension insurance, and pension target funds (Y share class, with discounted fees).
The core is a calculation of tax deferral + tax-rate arbitrage:
- At contribution: the ¥12,000 is deducted from your taxable income for the year. If your marginal tax rate is 20%, you save ¥2,400 in tax that year.
- During investment: gains inside the account are untaxed for now.
- At withdrawal: not merged into comprehensive income, but taxed separately at 3%.
As long as your marginal tax rate is above 3%, this is a deterministic positive return — for someone at a 20% marginal rate, the rate spread alone is 17 percentage points of “risk-free arbitrage,” before even counting the time value of decades of deferral. For someone at a 10% marginal rate it matters much less, and for anyone at 3% or below it’s purely locking money away.
The price is liquidity: money in the account is in principle locked until you reach the age for collecting the basic pension (with a few early-withdrawal exceptions such as total loss of working capacity, settling abroad, or serious illness). It’s the “fixed-term account” of the portfolio — only suitable for money you definitely won’t need until retirement.
This article compressed into three sentences
- One brokerage account + one everyday bank channel reaches all seven shelves in mainland China; account safety is backstopped by third-party custody and the unified investor ID.
- Fee magnitudes to remember: a stock round trip ~0.1%, an ETF ~0.01%, an OTC active fund ~1.4% per year in holding costs — the fee ordering is the beginner’s priority ordering.
- For anyone with a marginal tax rate above 10%, the ¥12,000 private pension allowance is a return the system hands you for free; the only catch is that the money is locked until retirement.
The next article wraps up: assembling the seven shelves and the accounts into a decision framework for “choosing instruments by money and time.”
Tax rates and fee rates are the rules in effect at the time of writing and will change with policy; refer to the latest official announcements. This article does not constitute investment advice.