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; and all designated Chinese-funded foreign exchange banks:
To push forward with the reform on foreign exchange administration, promote trade and investment facilitation, support the growth of the real economy and guard against the risks arising from cross-border capital flows, relevant measures are notified as follows:
I. The lower limits of comprehensive positions of banks in the settlement and sales of foreign exchange will be extended. For banks with the equivalent of their foreign exchange settlements and sales over USD 200 billion, the lower limit of their positions will be adjusted to USD -5 billion; for banks with the equivalent value between USD 20 billion and USD 200 billion, the lower limit of their market-making positions will be adjusted to USD -2 billion while that of the non-market-making positions, USD -1 billion; for banks with the equivalent value between USD 1 billion and USD 20 billion, the lower limit of their market-making positions will be adjusted to USD -500 million while that of their non-market-making positions, USD -300 million; for banks with the equivalent value between USD 100 million and USD 1 billion, the lower limit of their positions will be adjusted to USD -200 million; for banks with the equivalent value below USD 100 million and those recently obtaining the qualification for foreign exchange settlements and sales, the lower limit of their positions will be adjusted to USD -50 million. These adjustments shall become effective following the issuance of this Circular.
II. The approach to the delivery of forward transactions for foreign exchange settlement will be diversified. When providing forward foreign exchange settlement services to institutional customers, banks may choose full or net settlement at their own discretion as a way of delivery, in conformity with the principle of satisfying actual needs. The currency and reference rate for the net forward settlement of foreign exchange are subject to the foreign exchange administration provisions on options.
III. The administration of foreign exchange receipts from trade in goods will be simplified for Class-A enterprises. The foreign exchange receipts by Class-A enterprises from trade in goods (other than foreign exchange refunds and offshore entrepot transactions) will temporarily not be recorded in the accounts pending verification for receipts from exports, but will be directly recorded in the foreign exchange accounts under the current account or settled.
IV. Policies for the administration of foreign exchange settlement for the external debt of Chinese and foreign-funded enterprises will be unified, with the foreign debt of by Chinese non-financial institutions subject to foreign exchange settlement in accordance with the provisions on external debt administration for foreign-funded enterprises.
V. The administration of foreign exchange receipts and payments will be standardized for offshore entrepot transactions for trade in goods. When providing receipt and payment services to enterprises for offshore entrepot transactions, banks shall verify the contract, invoice, authentic and valid documents of title including shipping bill, bill of lading and warehouse receipt of each transaction, to ensure the authenticity, compliance and reasonableness of the transactions. The receipt and payment of the same offshore entrepot transaction shall be processed by the same outlet of the bank in the same currency (foreign currency or RMB).
The receipts and payments for offshore entrepot transactions for Class-B enterprises subject to foreign exchange administration for trade in goods will be suspended.
VI. The outward remittance administration will be standardized for foreign exchange profits from direct investments. For outward remittances of the profit equivalent of more than USD 50,000 (exclusive) by domestic institutions, banks shall review the relevant board resolution (or the partnership resolution) on profit distribution, the original copies of tax return forms and the financial statements evidencing the profits, in accordance with the principle of authentic transactions. In each outward profit remittance transaction, banks shall affix seal and endorsement to the original copies of the relevant tax return forms indicating the actual amount and date of the transaction.
VII. The measures for the administration of risk reminder notifications will be standardized for trade in goods. The SAFE and its branches and sub-branches (foreign exchange authorities) may send a risk reminder notification (see the Appendix) to enterprises with significant mismatch between capital flows and goods flows or with significant one-way capital flows, requiring them to give explanations within 10 working days. For enterprises failing to give timely explanation or to provide supporting documents and give reasonable explanations, foreign exchange authorities may classify them into Class-B enterprises subject to rigorous regulations, in accordance with Article 55 under the Implementation Details of the Guidance on Foreign Exchange Administration for Trade in Goods. Such Class-B enterprises can be classified as Class-A enterprises provided that their relevant indicators remain normal for 3 consecutive months.
VIII. Any companies violating this Circular will be punished by foreign exchange authorities in accordance with the Regulations on Foreign Exchange Administration.
IX. The Circular shall take effect as of the date of promulgation. Circular of the State Administration of Foreign Exchange on Relevant Issues Concerning Strengthening Administration of Inflows of Foreign Exchange Funds (Huifa No. 20 [2013]) shall be abolished simultaneously.
For the previous regulations such as the Circular of the State Administration of Foreign Exchange Concerning Printing and Distributing the Provisions for Foreign Exchange Administration of Trade in Goods (Huifa No. 38 [2012]), Circular of the State Administration of Foreign Exchange on Promulgating the Measures for Administration of External Debt Registration (Huifa No. 19 [2013]), the Circular of State Administration of Foreign Exchange on Printing and Distributing of the Regulations for Foreign Exchange Administration on Trade in Services (Huifa No. 30 [2013]), the Circular of the State Administration of Foreign Exchange on Further Improving and Adjusting the Policies for Foreign Exchange Administration under the Capital Account (Huifa No. 2 [2014]), the Circular of the State Administration of Foreign Exchange on Abolishing and Revising Relevant Regulatory Documents Involving the Reform on Registered Capital Registration System (Huifa No. 20 [2015]), if there is any discrepancy between the above regulations and this Circular, this Circular shall prevail.
On receiving this Circular, all SAFE branches and foreign exchange administrative departments shall transmit it in a timely manner to the central sub-branches, sub-branches, and designated foreign exchange banks under their administration, and implement it earnestly.
Appendix: Risk Reminder Notification by XX Branch (Sub-Branch) of the State Administration of Foreign Exchange
State Administration of Foreign Exchange
April 26, 2016
FILE: Risk Reminder Notification by XX Branch (Sub-Branch) of the State Administration of Foreign Exchange