The branches and foreign exchange administrative departments of the State Administration of Foreign Exchange (SAFE) in all provinces, autonomous regions, and municipalities directly under the Central Government; the branches in Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo:

For the purpose of preventing financial risks from cross-border capital flows, relevant issues concerning the further strengthening of administration of foreign exchange business are hereby notified as follows:

1. Further strengthening the administration of the comprehensive positions of banks in the settlement and sales of foreign exchange. Based on the lower-limit management of the outstanding positions of banks engaging in forward foreign exchange settlement and sales on a cash basis, further adjustments were made to the lower limits of banks with outstanding negative positions on a cash basis on November 8, 2010. Specifically, the lower limit of banks with outstanding positions lower than USD-2 billion (inclusive) on November 8, 2010 shall be adjusted to 40% of the outstanding positions; in cases where the lower limits of banks with outstanding positions ranged from USD-2 to 0 billion on November 8, 2010, the lower limit shall be adjusted to 50% of the outstanding position. In cases where the current positions of banks are lower than the adjusted lower limits, the relevant positions shall be increased progressively to be adjusted to an amount within the limit before September 30, 2011 at the latest. The aforesaid provisions do not apply to foreign-funded banks that have not entered into Renminbi business and have not implemented balanced management of special Renminbi accounts for the settlement and sales of foreign exchange.

2. Strengthening foreign exchange administration for transit trade. Foreign exchange proceeds under transit trade shall be settled or transferred after external payments for the corresponding transit trade have been made by the enterprises. The banks shall, upon receipt of the foreign exchange proceeds from transit trade, transfer the proceeds into the to-be-verified accounts of the enterprises. When handling the foreign exchange settlement for the proceeds from transit trade or when transferring the proceeds into accounts under the current account, the enterprises shall submit to the banks the relevant export contracts, import contracts, and vouchers for the exchange collection/payment for the transit trade. The banks may handle the relevant procedures for foreign exchange settlement or transfer for the enterprises after verification and examination of the relevant documents. In cases where the amount of foreign exchange settlement/transfer from the transit-trade proceeds exceeds 20% of the corresponding amount of payments, the enterprises shall file an application for the handling of the relevant procedures with the foreign exchange authorities in their localities by presenting to the latter the above documents, and the banks may handle the relevant procedures for foreign exchange settlement/transfer after receiving approval from the foreign exchange authorities in their localities.

3. Reducing the basic proportion of advances on sales and deferred payments for a term of more than 90 days. The basic proportion of enterprisesadvances on sales under trade in goods or deferred payments for a term of more than 90 days shall be reduced to 20% of the total proceeds from exports or the total payments for imports during the previous 12 months respectively.

4. Strengthening the administration of the short-term external debts of financial institutions. The quotas for short-term external debts of domestic institutions in 2011 shall be further reduced based on the verified quotas for short-term external debts of domestic institutions in 2010; quotas for the outstanding short-term external debts of banks with relatively large amounts of inter-bank deposits/lending shall be reduced appropriately.

This Circular shall come into force as of April 1, 2011. All branches and foreign exchange administration departments of the State Administration of Foreign Exchange shall promptly forward the Circular to all central sub-branches, sub-branches, and banks within their respective jurisdictions; all Chinese-funded banks shall promptly forward it to their branches/sub-branches.

If any problems arise from implementation of this Circular, please provide feedback to the SAFE in a timely manner.

Tel.: 010-68402450, 68402313, 68402446.

                                                                                           March 18, 2011