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China AMC's purchasing quota of foreign exchange for overseas portfolio investment approved 2007-09-10/en/2007/0910/851.html
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1. Basic Information about the Qualified Foreign Institutional Investors System The Qualified Foreign Institutional Investors (QFII) system refers to an opening-up mode of the capital market whereby approved qualified foreign institutional investors are permitted to remit inwards foreign exchange funds and exchange them into local currencies, to invest in the local securities market with the exchanged funds via special accounts, and, with approval, to process outward remittances of their principal, capital gains, dividends, and so forth with the purchased foreign exchange. In November 2002, when the QFII system was formally implemented in China the China Securities Regulatory Commission and the Peoples Bank of China jointly promulgated the Provisional Regulations on the Administration of Domestic Securities Investments by Qualified Foreign Institutional Investors (QFII). Since the first QFII was introduced in China in June 2003, QFII experiments have been steadily carried out. Implementation of the QFII system has played a positive role in introducing advanced investment theories, cultivating institutional investors, promoting market innovations, and so forth, and has facilitated the development of Chinas capital market. 2. Basic Information about the Qualified Domestic Institutional Investors System The Qualified Domestic Institutional Investors (QDII) system refers to an opening-up mode whereby qualified domestic institutional investors are permitted, within a certain quota approved by the regulatory authorities, to invest in overseas securities market via special accounts. In April 2006, the QDII system was approved and formally initiated. Currently, the QDII system includes three kinds of institutional businesses, i.e., overseas securities investment businesses such as overseas wealth management services on behalf of clients provided by commercial banks, overseas uses of insurance funds, and fund management companies. Implementation of the QDII system broadens the channels for overseas investment by domestic institutions and individuals and, in collaboration with the QFII system, jointly promotes regulation over the two-way flow of funds, thus facilitating an equilibrium in the balance of payments and improving the current setup in whereby official reserves dominate Chinas overseas financial assets. Up to the end of 2008, among Chinas overseas financial assets of USD 2 trillion, the share of foreign exchange reserves was about 75 percent, but during the corresponding period in Japan the ratio was only 20 percent. With implementation of the QDII system, the share of non-official overseas financial assets can be gradually increased. 3. What is the situation for investment quota approvals of QFIIs and QDIIs and for the inward/outward remittances of funds? By the end of August 2009, the SAFE had approved institutional investment quotas for 76 QFII, amounting to USD 15.32 billion, and they had remitted inwards a total of USD 13.846 billion. By the end of August 2009, the SAFE had approved overseas securities investment quotas for 56 QDII institutions, amounting to USD 55.951 billion, among which USD 33.565 billion was for 12 fund management companies and securities companies (hereinafter referred to as securities trading institutions), and the net outward remittance of QDII funds amounted to USD 28.711 billion, among which USD 14.495 billion was securities QDII funds. 4. How should the principles in the examination of the QFII investment quota be understood? The QFII system mainly aims at encouraging foreign medium- and long-term institutional investors to make securities investments in China, so during the quota examination, we give priority to prioritize applications from institutional investors such as pension funds, insurance funds, mutual funds, charity funds, donation funds, and government and currency administrative authorities. During the early stage of the QFII experiment, due to the relatively high requirements for approval, institutions that applied for QFII qualifications were usually large-sized institutions with a good reputation, so to some extent we favored their investment quota in order to guarantee the stability of the QFII funds. Later, examination of the QFII quota was conducted in a basically balanced manner, mainly in light of the QFII institutions asset size, asset allocations, investment management capability, past investment performance, and so forth. 5. What is the main content of the Regulations on Foreign Exchange Administration of Domestic Securities Investments by Qualified Foreign Institutional Investors (QFII)? What are the improvements when compared with the 2002 Provisional Regulations on Foreign Exchange Administration of Domestic Securities Investments by Qualified Foreign Institutional Investors (QFII)? The Regulations on Foreign Exchange Administration of Domestic Securities Investments by Qualified Foreign Institutional Investors (QFII) (hereinafter referred to as the Regulations) encompass 6 chapters and 27 articles, including mainly general provisions, investment quota administration, account administration, exchange management, statistics and administration, and supplementary provisions. Compared with the 2002 Provisional Regulations on Foreign Exchange Administration of Domestic Securities Investments by Qualified Foreign Institutional Investors (QFII), the Regulations exhibit the following improvements: first, the ceiling for the investment quota of a single QFII institution is raised from USD 800 million to USD 1 billion; second, QFII institutions are permitted to open fund accounts of different natures and types; third, the principal lock-up period for pension funds, donation funds, open-ended Chinese funds, and so forth for medium- and long-term investments is reduced to 3 months; fourth, the management principles for open-ended Chinese funds are specified, and many phases, such as the account opening, management of the lock-up period, exchange of funds, purchases and redemptions, are more convenient for the applicants. 6. What is the main content of the Circular of the State Administration of Foreign Exchange (SAFE) on Relevant Issues Concerning Foreign Exchange Administration of Overseas Securities Investments by Fund Management Companies and Securities Companies? The Circular of the State Administration of Foreign Exchange (SAFE) on Relevant Issues Concerning Foreign Exchange Administration of Overseas Securities Investments by Fund Management Companies and Securities Companies (hereinafter referred to as the Circular) encompasses 12 articles, including investment quota administration, foreign exchange account management, funds exchange management, statistics and monitoring, and so forth. On the one hand, the Circular simplifies the procedures and required materials necessary for securities trading institutions to apply for an overseas securities investment quota, thus shortening the procedure flow and improving efficiency. On the other hand, it specifies the principles for the balanced management of the overseas investment quota of securities trading institutions. Meanwhile, it also stipulates that securities trading institutions that are awarded an investment quota can invest in all kinds of overseas securities investment products approved by the regulatory authorities. Moreover, in order to avoid a situation whereby the securities trading institutions accept a quota but do not use it, the Circular stipulates that the SAFE has the right to reduce any investment quota that is not used effectively within 2 years. 7. How do the Regulations on Foreign Exchange Administration of Domestic Securities Investments by Qualified Foreign Institutional Investors (QFII) apply to institutions that have been awarded a quota? Those QFII institutions that have been awarded a quota can file an application with the SAFE to open separate accounts so as to satisfy the requirements for differentiating the distinct sources of funds. Those QFII institutions that have transferred or resold their quota prior to promulgation of Regulations should report the relevant situation to the SAFE and end all such activities as of the date of promulgation. 8. What requirements are proposed for follow-up administration of QIIs by the Regulations on Foreign Exchange Administration of Domestic Securities Investments by Qualified Foreign Institutional Investors (QFII) and the Circular of State Administration of Foreign Exchange (SAFE) on Relevant Issues Concerning Foreign Exchange Administration of Overseas Securities Investment by Fund Management Companies and Securities Companies? The Regulations and the Circular further enhance statistics, monitoring, and follow-up administration, including mainly the following improvements: first, the relevant reporting system is improved and the contents of the reports are enriched; second, the responsibilities regarding reporting and filing for QIIs and their custodians are specified; third, the obligation of reporting the balance of payments by the QII and its custodian is stipulated; fourth, the relevant principles and basis for punishment are specified; fifth, the daily administrative responsibilities by the local branches of the Administrations of Foreign Exchange are noted. 2009-11-13/en/2009/1113/905.html
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The Overseas Direct Investment Module of the Information System for Foreign Exchange Business of Direct Investment Will Be Popularized Nationwide Following the successful operation of the foreign direct investment module of the information system for foreign exchange business of direct investment (hereinafter referred to as the "FDI Module") across the country, another informatization measure, which will help raise the level of foreign exchange services, facilitate investments for enterprises, and strengthen risk monitoring and early-warning the overseas direct investment module of the information system for foreign exchange business of direct investment (hereinafter referred to as the "ODI Module") will be generalized and rolled out nationwide on January 1, 2009. Several days ago, the State Administration of Foreign Exchange held a meeting in Chongqing to study and arrange the work to promote the ODI Module; Li Dongrong, deputy administrator of this administration, attended the meeting and delivered a mobilization speech. As an integral part of the information system for foreign exchange business of direct investment, the ODI Module maintains the manner and characteristics of the FDI Module, enables on-line operations and management and data exchange among the administration, banks, enterprises, and accounting firms, and substitutes IC-card foreign exchange registration certificates for paper-based certificates. After operation of the ODI system, enterprises can directly apply to the administration via the network for overseas equity investment, overseas lending, corporate investment for special purposes, and other business and will be informed in a timely manner of the progress of their business through the network. Banks, accounting firms, and other institutions may receive management information from the administration through the network and may transfer the business filing conditions to the administration, while the administration can deal with the related electronic information of banks, accounting firms, and enterprises through the network in a timely manner, and comprehend all overseas investment data and situations in a real-time way, so as to achieve an overall change in the ways of handling foreign exchange business of overseas investments from a manual and paper-based manner to an electronic and IT-based manner. The operation and use of the ODI Module is adapted to the trend of a gradual rise in the amount, regional expansion, and field extension of Chinas overseas investments, having great significance in further upgrading the level of foreign exchange services for overseas investment, facilitating investments for enterprises, and making full use of the Chinese and foreign markets. The electronic processing of the foreign exchange business for overseas investments will considerably enhance the business processing efficiency, avoid the work of enterprise personnel having to travel, and reduce corporate investment costs, so that the enterprises will able to strive for favorable overseas investment opportunities and will be able to grow much larger and stronger abroad. The operation and use of the ODI Module will also effectively improve the statistical approaches for overseas investments, realize real-time capital-flow monitoring of overseas investments, and increase the accuracy of monitoring over cross-border capital flows, which will help the foreign exchange management departments master the objective conditions in a timely manner and rapidly conduct situational analyses and make judgments regarding decision-making scientifically against the backdrop of the current complex and volatile economic situation (End). 2008-12-31/en/2008/1231/882.html
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To implement the newly revised Regulations on the Foreign Exchange System of the People's Republic of China (hereinafter referred to as the "Regulations"), the State Administration of Foreign Exchange (SAFE) recently held a system-wide teleconference, which was presided over by Hu Xiaolian, administrator of the SAFE, and was attended by Song Dahan, deputy director of the Legislative Affairs Office of the State Council, who gave a speech. Song Dahan first introduced the legislative background, principles, main content, and other items regarding the Regulations. He pointed out that aiming to facilitate trade and investment activities and to promote an equilibrium in the balance of payments and the healthy development of the national economy, the Regulations provide balanced management of capital inflows and outflows of foreign exchange, perfect the RMB exchange rate formation mechanism and the administrative systems for the foreign exchange business of financial institutions, establish an emergency security system for the balance of payments, intensify monitoring of cross-border capital flows, and improve exchange regulatory means and other measures and make clear the corresponding legal responsibilities. The revisions and implementation of the Regulations are specific measures to carry out the spirit of the 17th National Party Congress and the government work report and have great significance to facilitate trade and investment, strengthen and improve foreign exchange administration, promote an equilibrium in the balance of payments, maintain sustained, steady, and rapid economic development, and guard against international economic and financial risks. Hu Xiaolian made arrangements for the deployment of the next implementation-related work. She required that foreign exchange administrations at all levels unify their thinking, enhance understanding, and strengthen the initiative and consciousness to implement the Regulations. They should focus on the following points during studying and carrying out the Regulations: the first is to properly handle the relationship between promoting facilitation of trade and investment and intensification of management; the second is to advance with the times and focus on resolving the principal contradictions and main issues which currently affect the steady and rapid development of the national economy, macro-control effects, and the equilibrium in the balance of payments, especially with regard to settling the long-standing situation in the past of weak management of foreign exchange inflows so as to achieve balanced management; the third is all along to prevent international economic risks, in particular, to prevent those activities that harm the healthy development of Chinas national economy through exchange channels and BOP channels; and the fourth is to adhere to administration by law and inclusion of management of services according to the basic requirements of the administrative system reform. (End) 2008-08-11/en/2008/0811/875.html
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For the purpose of improving tax collection and administration as well as examination management of the authenticity of foreign exchange payments under the services trade, income and current transfers, etc., the State Administration of Foreign Exchange (SAFE) and the State Administration of Taxation (SAT) recently jointly distributed the Circular on Issues Concerning the Submission of Tax Certificates for External Payments under the Services Trade and Other Accounts (hereinafter referred to as the Circular") to further regulate the requirements for submitting tax certificates for external payments under the services trade and other accounts. Since 1999, the SAFE and the SAT have carried out joint supervision over external payments under the services trade and other accounts and have stipulated that domestic institutions and individuals shall submit relevant tax payment certificates when making external payments under the services trade and other accounts. This not only enhanced the effectiveness of the examination of the authenticity of transactions, but also greatly facilitated national foreign-related tax collection and administration work. As a result, over the years tax revenue arising therefrom amounted to tens of billions of yuan. In recent years, due to the rapid development of China's trade in services, the corresponding foreign exchange payments have experienced a year-by-year expansion, the services trade and other types of transactions have continued to increase, and tax collection and administration have witnessed an ever-increasing complexity, causing certain difficulties for the banks to conduct examinations and to a certain extent also affecting the external payments by enterprises. To facilitate the banksexamination of foreign exchange receipts and payments under the services trade and other accounts and to provide more conveniences for enterprises to make external payments, the SAFE and the SAT jointly released the Circular. The Circular mainly includes the following contents: the first is to unify the format of the tax certificates and a variety of the original tax certificates into the Tax Certification for External Payments under the Services Trade, Income, Current Transfers, and Partial Capital Account" (hereinafter referred to as the Tax Certification); the second is to further clarify the accounts under which no tax certification is required for external payments, and to specify that domestic institutions or individuals do not need to handle and submit the Tax Certification when paying for travel expenses, meetings, office expenses, as well as individual study and tours abroad; the third is to unify the standard rate below which there is an exemption for the Tax Certification for external payments. With respect to the designated services trade, income, current transfers, and some transactions under the capital account, domestic institutions and individuals need not apply for a Tax Certification when a single outbound payment does not exceed the equivalent of USD 30,000. The Circular will come into effect as of January 1, 2009(End). 2008-12-02/en/2008/1202/880.html
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After twice disclosing in 2006 and 2007 the names of over 600 untraceable companies accused of foreign exchange fraud and in order to coincide with the 2008 nationwide Promotion of Honest Business Operations Month, the SAFE recently again disclosed cases of fraud by untraceable enterprises. Since April 2006, the SAFE has implemented a system for disclosure of (negative) information regarding illegal foreign exchange activities throughout the country, regularly releasing the information publicly and responding to online inquiries, in particular exposing information about fraud by untraceable enterprises both on the Web site of the SAFE and in the Financial Times. The 83 cases of fraud in the present disclosure represent the recent results of the foreign exchange administration and law enforcement inspections. In their operations, these enterprises violated the relevant laws and regulations of the state regarding foreign exchange administration. In addition, for other reasons they had their entity qualifications deregistered. As a result, the foreign exchange administrative departments cannot place the cases thereof on file or impose punishment. Such behavior not only disrupted the normal business environment and orderly competition in the foreign exchange market, but also resulted in hidden dangers to the financial security of the state. Therefore, enterprises and the relevant departments shall pay more attention to untraceable enterprises that commit foreign exchange violations, and shall prevent them from continuing to become in involved in other illegal activities that may cause damages to enterprises that are engaged in normal business operations. After twice disclosing in 2006 and 2007 the names of over 600 untraceable companies accused of foreign exchange fraud and in order to coincide with the 2008 nationwide Promotion of Honest Business Operations Month, the SAFE recently again disclosed cases of fraud by untraceable enterprises. Since April 2006, the SAFE has implemented a system for disclosure of (negative) information regarding illegal foreign exchange activities throughout the country, regularly releasing the information publicly and responding to online inquiries, in particular exposing information about fraud by untraceable enterprises both on the Web site of the SAFE and in the Financial Times. The 83 cases of fraud in the present disclosure represent the recent results of the foreign exchange administration and law enforcement inspections. In their operations, these enterprises violated the relevant laws and regulations of the state regarding foreign exchange administration. In addition, for other reasons they had their entity qualifications deregistered. As a result, the foreign exchange administrative departments cannot place the cases thereof on file or impose punishment. Such behavior not only disrupted the normal business environment and orderly competition in the foreign exchange market, but also resulted in hidden dangers to the financial security of the state. Therefore, enterprises and the relevant departments shall pay more attention to untraceable enterprises that commit foreign exchange violations, and shall prevent them from continuing to become in involved in other illegal activities that may cause damages to enterprises that are engaged in normal business operations. 2008-10-07/en/2008/1007/878.html
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The SAFE recently released China 's Balance of Payments Statement for the first half of 2008. The statistics reveal that the current account and the capital and financial account posted a "twin surplus" and international reserves increased rapidly. In the first half of 2008, China 's surplus under the current account totaled USD 191.7 billion, an increase of 18% year on year. Specifically, according to the statistical coverage of the balance of payments, the surpluses in goods, income, and current transfers reached USD 132.5 billion, USD 38.3 billion, and USD 24.2 billion, respectively, whereas the deficit in services amounted to USD 3.3 billion. Meanwhile, China 's surplus under the capital and financial account totaled USD 71.9 billion, a drop of 20%. In particular, the net inflows of direct investments and portfolio investments amounted to USD 40.8 billion and USD 19.8 billion respectively, whereas the outflows of other investments reached USD 9.7 billion. Furthermore, China 's international reserves continued to grow. At the end of June, China registered a total of USD 1,808.8 billion in foreign exchange reserves, an increase of USD 280.6 billion over that at the end of 2007. The BOP Analysis Team of the SAFE released Chinas Balance of Payments Report for the First Half of 2008 in order to facilitate understanding of the data and analysis of China 's balance of payments among all social groups. The SAFE recently released China 's Balance of Payments Statement for the first half of 2008. The statistics reveal that the current account and the capital and financial account posted a "twin surplus" and international reserves increased rapidly. In the first half of 2008, China 's surplus under the current account totaled USD 191.7 billion, an increase of 18% year on year. Specifically, according to the statistical coverage of the balance of payments, the surpluses in goods, income, and current transfers reached USD 132.5 billion, USD 38.3 billion, and USD 24.2 billion, respectively, whereas the deficit in services amounted to USD 3.3 billion. Meanwhile, China 's surplus under the capital and financial account totaled USD 71.9 billion, a drop of 20%. In particular, the net inflows of direct investments and portfolio investments amounted to USD 40.8 billion and USD 19.8 billion respectively, whereas the outflows of other investments reached USD 9.7 billion. Furthermore, China 's international reserves continued to grow. At the end of June, China registered a total of USD 1,808.8 billion in foreign exchange reserves, an increase of USD 280.6 billion over that at the end of 2007. The BOP Analysis Team of the SAFE released Chinas Balance of Payments Report for the First Half of 2008 in order to facilitate understanding of the data and analysis of China 's balance of payments among all social groups. 2008-10-29/en/2008/1029/879.html
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For the purpose of improving the service level of individual domestic and foreign currency exchange businesses and satisfying the ever-increasing demand for individual domestic and foreign currency exchange, the State Administration of Foreign Exchange (SAFE) has approved the carrying out of pilots for individual domestic and foreign currency exchange franchise businesses in Beijing and Shanghai . In the pilots, eligible domestic non-financial institutions may provide domestic and foreign currency exchange services for individuals upon approval, operate domestic individual foreign exchange sale and purchase business and overseas individual foreign exchange sale business within the prescribed annual total quota, and handle the business of converting RMB into foreign currency for overseas individuals, with a cumulative amount not exceeding the equivalent of US$ 500 per person per day (US$ 1000 in outlets within the borders of the PRC but outside Customs). Institutions operating individual domestic and foreign currency exchange franchise businesses shall use the uniform exchange mark provided by the SAFE, and can use their own brands to conduct autonomous management and to take full responsibility for their own profits and losses; they may decide with which bank to cooperate, may choose the currencies for the listed transactions in line with their own service ability, and may determine their listed exchange rate with reference to the relevant provisions of the Administration of the Exchange Rate of the Peoples Bank of China. According to international experience, the individual domestic and foreign currency exchange market generally comprises bank outlets, franchise foreign currency dealers, and some specially engaged merchants, and it is a multi-level service system relating to different customer groups and different customer characteristics. The trial operation of the individual domestic and foreign currency exchange franchise business is conducive to taking advantage of the long business hours, various exchange currencies, flexible operating mechanisms, and specialized services of the operating institutions, which complement the domestic and foreign currency exchange business of the banks to better service the individual domestic and foreign currency exchange business. (End) 2008-08-20/en/2008/0820/876.html
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At the end of June 2008, China 's outstanding external debt (excluding that of Hong Kong SAR, Macao SAR, and Taiwan Province ) reached USD 427.432 billion, up by 14.40 percent compared with that at the end of 2007. Specifically, the outstanding long- and medium-term external debt reached USD 162.067 billion, up by 5.56 percent compared with that at the end of 2007, accounting for 37.92 percent of the total outstanding external debt. The outstanding short-term external debt totaled USD 265.365 billion, up by 20.57 percent compared with that at the end of 2007, accounting for 62.08 percent of the total outstanding external debt. Among the outstanding registered external debt of USD 278.832 billion, the outstanding sovereign debt borrowed by ministries under the State Council totaled USD 35.048 billion, accounting for 12.57 percent; the outstanding debt of Chinese-funded financial institutions was USD 105.410 billion, accounting for 37.80 percent; the outstanding debt of foreign-funded enterprises was USD 86.541 billion, accounting for 31.04 percent; the outstanding debt of foreign-funded financial institutions in China was USD 46.881 billion, accounting for 16.81 percent; the outstanding debt of Chinese-funded enterprises was USD 4.620 billion, accounting for 1.66 percent; and the outstanding debt of other institutions was USD 332 million, accounting for 0.12 percent. From January to June 2008, long- and medium-term external borrowing came to USD 19.505 billion, an increase of USD 4.136 billion or 26.91 percent over that during the same period of the last year. The principal repayment was USD 8.773 billion, a decrease of USD 2.232 billion or 20.28 percent over that during the same period of the last year. The interest payment for long- and medium-term debt was USD 1.918 billion, an increase of USD 178 million or 10.23 percent over that during the same period of the last year. 2008-10-07/en/2008/1007/877.html
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At the end of September 2008, China 's outstanding external debt (excluding that of Hong Kong SAR, Macao SAR, and Taiwan Province ) reached USD 441.952 billion, up by 18.29 percent compared with that at the end of 2007. Specifically, the outstanding long- and medium-term external debt reached USD 161.909 billion, up by 5.45 percent compared with that at the end of 2007, accounting for 36.63 percent of the total outstanding external debt. The outstanding short-term external debt totaled USD 280.043 billion, up by 27.24 percent compared with that at the end of 2007, accounting for 63.37 percent of the total outstanding external debt. Of the outstanding registered external debt of USD 288.152 billion, the outstanding sovereign debt borrowed by ministries under the State Council totaled USD 34.550 billion, accounting for 11.99 percent; the outstanding debt of Chinese-funded financial institutions was USD 108.215 billion, accounting for 37.56 percent; the outstanding debt of foreign-funded enterprises was USD 93.214 billion, accounting for 32.35 percent; the outstanding debt of foreign-funded financial institutions in China was USD 47.294 billion, accounting for 16.41 percent; the outstanding debt of Chinese-funded enterprises was USD 4.502 billion, accounting for 1.56 percent; and the outstanding debt of other institutions was USD 377 million, accounting for 0.13 percent. From January to September 2008, long- and medium-term external borrowing amounted to USD 27.38 billion, an increase of USD 1.908 billion, or 7.49 percent, over that in the same period of the last year. The principal repayment was USD 13.784 billion, a decrease of USD 977 million, or 6.62 percent, over the previous year. The interest payment was USD 2.956 billion, an increase of USD 290 million, or 10.88 percent, over that in the previous year(End). 2008-12-26/en/2008/1226/881.html