The State Administration of Foreign Exchange (SAFE) recently issued the Notice on Examination and Ratification of Short-term External Debt Quotas of Financial Institutions in 2009 (hereinafter referred to as the "Notice"), which discloses the examination and ratification scheme for short-term external debt quotas of financial institutions in 2009. The Notice also clarifies the scale, specifications, and purposes of short-term external debts.
In 2009 the management of short-term external debts is implemented under the guidance of  "maintaining growth, guarding against possible risks, and promoting balance," using the methodology of "ensuring the controllability of an increase in the overall scale and taking into account the efficiency and fairness of the individual institutions." The SAFE has adjusted the short-term external debt quotas of national-level Chinese and foreign-funded banks with legal person status and the quotas of various regions. The examined and ratified short-term external debt quotas of financial institutions total US$32.9 billion, representing a 12 percent increase over that in 2008.
The Notice attaches special importance to the financing of trade activities. According to the scheme, the Chinese and foreign-funded financial institutions entitled to the incremental quotas should make use of the total quota increment to support the financing of imports and exports of domestic enterprises. The quota increment of the various regions shall be used preferentially to support financial institutions with a larger volume of trade settlement. These measures will help facilitate the guidance policy on short-term external debt management, as well as ensure the healthy and stable development of China's foreign trade.
The Notice makes clear that the SAFE will transfer authority for examining and ratifying quotas of financial institutions that have a close relation to the development of the local economy and quotas in need of timely adjustment from the SAFE headquarters to its branches, with the purpose of further increasing efficiency in the use of short-term external debt quotas and bolstering regional economic development.