I have found the FEC to be necessary for the following activities. As with all things in China, your experience may vary:
1: Changing money
2: Transferring money by T/T
3: Opening a bank account
4: Registering my residencey
It is also damn handy for lots of things because it has all of your details under categories written in Chinese.
The local SAFEA office can give you permission to keep it at the end of the contract as a souvenir, it is at their discretion though. Not that anyone ever cares. Sometimes they fine the employer thirty what what kuai for not giving it back.