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 SAFE branches in Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo; and all designated Chinese-funded foreign exchange banks:

In order to further reduce the number of administrative licensing items, promote the facilitation of trade and investment, and steadily advance the convertibility of the RMB under the capital account, the State Administration of Foreign Exchange (hereinafter referred to as the SAFE) has decided to cancel or adjust certain approval authorities for foreign exchange businesses under the capital account and to adjust certain administrative measures for trade credit in accordance with the Administrative Licensing Law of the People's Republic of China, the Regulations of the People's Republic of China on Foreign Exchange Administration, and the relevant provisions on foreign exchange administration. You are hereby notified of the relevant matters as follows:

I. Cancellation of the Registration and Approval of Overdue Deferred Payments under the Management of Trade-Credit Registration

Where an enterprise handles the registration for the withdrawal of deferred payments after 120 days (inclusive) upon the issuance of the import customs declaration by customs, it is not necessary for the enterprise to go through the overdue registration and approval formalities at the local foreign exchange authority, and it is no longer required that a special red mark be assigned to the enterprise in the Trade Credit Registration Management System.

The relevant provisions of Section 12.9 "The Base Ratio and Quota for Deferred Payments, and Overdue Registration and Approval for Deferred Payments for Imports by Domestic Enterprises," with respect to the overdue registration of deferred payments for imports of domestic enterprises, of the List of the State Administration of Foreign Exchange of Administrative Licensing Items (HuiFa No. 43 [2010], hereinafter referred to as the List) shall be invalidated, and the title of Section 12.9 shall be changed to "Approval of the Base Ratio for Deferred Payments and the Quota for Deferred Payments for Imports of Domestic Enterprises."

II. Cancellation of the examination and approval for the return of foreign exchange under advance payments in the management of trade-credit registration.

Where foreign exchange from an advance payment of an enterprise is returned, the enterprise can directly log into the Trade Credit Registration Management System to go through the cancellation procedures, as well as the formalities of entering the returned funds into the account in accordance with the relevant regulations on foreign exchange administration of the current account.

Section 20.5 of the List "The Examination and Approval of Returns of Foreign Exchange under Advance Payments for Imports of the Enterprise" shall be invalidated.

III. Cancellation of the Recording Procedure for the Transfer of Foreign Exchange obtained through a Reduction of State-owned Shares in Overseas Listed Companies to the National Social Security Fund.

The designated foreign exchange banks are authorized to directly transfer the foreign exchange obtained through a reduction of state-owned shares in overseas listed companies to the national social security fund. Domestic companies may apply to the banks where the domestic special accounts are opened for the transfer of the foreign exchange to the special foreign exchange accounts of the Ministry of Finance upon the authorization of the explanatory documents for turning over capital obtained through a reduction of state-owned shares and relevant authentic evidentiary materials (see the Annex for the relevant operational rules).

Section 23.7 "The Recording Procedures for the Transfer of Foreign Exchange Capital Obtained through a Reduction of State-owned Shares in Overseas Listed Companies to the National Social Security Fund" on the List shall be invalidated.

IV. Certain Approval Authorities to Check and Ratify the Quota for the Balance of External Financing Guarantees are Delegated by the SAFE to the Branches and Foreign Exchange Administrative Departments

The branches and foreign exchange administrative departments of the SAFE (hereinafter referred to as the Branches) are authorized to check and ratify the quotas for the balance of the external financing guarantees (excluding those explicitly stipulated to be ratified by the SAFE) for the designated foreign exchange banks registered within their jurisdictions in accordance with the current regulations on the administration of external guarantees, and to submit the information item by item upon checking and ratification of the quotas to the SAFE for the record. The Branches shall submit information on the implementation of the quotas for the balance of the external guarantees provided by the guarantors to the SAFE within their jurisdictions on a quarterly basis.

V. Increase in the base ratio for advance payments of goods under trade credit from 30 percent to 50 percent.

After cancellation or adjustment of the above approval authorities and the administrative measures for trade credit, the Branches and the designated foreign exchange banks shall improve the relevant internal control management system, strengthen personnel training, and strictly implement the provisions hereof. The Branches shall increase efforts for ex-post supervision and inspection and further strengthen statistics and monitoring.

This Circular shall come into force as of June 1, 2011. All branches shall promptly forward this 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. In the case of any problems encountered during implementation, please send feedback to the Capital

Account Management Department of the SAFE in a timely manner.

Tel.: 010-68402250.

                                                                                                                                              May 23, 2011