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To deepen the reform of the foreign exchange administration system, standardize receipts and payments under cross-border guarantees, and promote investment and financing facilitation for enterprises and the convertibility of the capital account in an orderly manner, the State Administration of Foreign Exchange (SAFE) recently issued the Regulations on Foreign Exchange Administration for Cross-border Guarantees (Huifa No. 29 [2014], hereafter referred to as the “Regulations”). Guo Song, director of the SAFE's Capital Account Management Department, provided an interview on the relevant issues. Q: What is the background for introducing the reform of foreign exchange administration for cross-border guarantees at this time? A: The major regulations on foreign exchange administration for cross-border guarantees prior to the reform were developed in the 1990s and they played a positive role in promoting China’s economic and technological cooperation with other countries, supporting the development of foreign trade, facilitating labor service exports, introducing advanced technology, equipment, and funds from other countries, and smoothly conducting external financial activities based on the historical conditions during that time. With the rapid development of China’s foreign-related economy and the expansion in the size of transactions in the balance of payments, cross-border guarantee activities have become increasingly diversified and complex. The previous regulations, which covered external guarantees and domestic loans with only overseas guarantees, are no longer able to satisfy the development requirements of the market. The relevant policies on guarantee management require redundant approval and verification procedures, and this management approach lags behind market demand. Further, these policies impose many limits on the qualifications for cross-border guarantees involved in domestic and overseas financing by enterprises, resulting in high operating costs for enterprises. Therefore, against the macro backdrop of promoting the streamlining of administration and decentralization and the liberalization of the capital account, the SAFE has adjusted the management concept under the guidance of the "five changes” and has introduced the Regulations at a proper time based on an adequate survey and solicitation of opinions during the preliminary phase. In the Regulations, the scope of foreign exchange administration for cross-border guarantees is rationally defined based on the objectives and duties of foreign exchange administration, and all types of cross-border guarantees whose form conforms to the legal requirements, use payments as an approach for performance, and may have a significant influence on the BOP are included in the scope of the policy adjustment, thus significantly liberalizing foreign exchange administration for cross-border guarantees, thus addressing the challenges confronted by domestic enterprises, such as the difficult and costly financing, and promoting the general process of the capital account. Q: What measures have been taken in this reform for streamlining administration and decentralization? A: The Regulations aim to vigorously promote the streamlining of administration and decentralization to significantly improve the investment and financing policy environment for domestic enterprises. All ex-ante approvals related to cross-border guarantees as well as ex-ante verifications for the performance of guarantees and most restrictions on business qualifications are eliminated and replaced by self-discipline and registration management; only “some cross-border guarantees for liabilities or claims of residents to non-residents newly added after the performance of the guarantees” are integrated into the scope of the deal-by-deal registration. Meanwhile, the relevant laws and regulations are streamlined and integrated and 12 normative documents related to foreign exchange administration for cross-border guarantees are abolished, thus improving the transparency of foreign exchange administration policies. Q: How will this reform address the problems of difficult and costly financing of domestic enterprises？ A: The reform will unify treatment for domestic and overseas enterprises, providing more financing facilitation for domestic enterprises. Among the external loans with domestic guarantees, the qualification restrictions on the trading players will be abolished and the differences in management policies between the financing guarantees and the non-financing guarantees, and between the banking institutions and the non-banking institutions, will be removed. Further, under the premise of meeting the relevant restrictions, the practice of ex-ante application to the SAFE for the relevant quota will be abolished and Chinese and foreign-funded enterprises will be allowed to sign contracts without submitting an application. Guarantees can be performed within the amount of one time of the net assets so as to unify and significantly improve the policy on domestic loans with overseas guarantees for Chinese and foreign enterprises in China. With guarantees from overseas institutions, domestic enterprises can raise funds from domestic financial institutions more conveniently and at a relatively low cost, which will reduce their financing difficulties and costs. Q: With the introduction of the Regulations, domestic institutions and individuals will no longer be required to obtain ex-ante approvals when providing external loans with domestic guarantees, and ex-ante verifications will no longer be required when the performance of the guarantee occurs. Will this provide conveniences for domestic institutions and individuals to transfer assets overseas? A: The Regulations abolish or significantly streamline the ex-ante approval and registration procedures for external loans with domestic guarantees, which is conducive to improving the policy environment for overseas investments and financing by Chinese enterprises and facilitating Chinese institutions and individuals to carry out investment and financing activities reasonably and legitimately in other countries. Therefore, the Regulations are aligned with the general requirement of serving the real economy through financial services. Meanwhile, to prevent domestic institutions and individuals from maliciously leveraging the channels for external loans with domestic guarantees to transfer assets overseas, the Regulations make sure that the potential reputational and financial costs of the guarantors due to malicious defaults will be raised substantially by taking an array of measures, such as disclosures of guarantee information, due diligence investigations by banks, verification of trends in the guarantor’s performance, control over new contracts after default, and off-site verifications and foreign exchange inspections, so as to encourage the guarantor to operate with integrity and in compliance with the laws and regulations. According to the Regulations, where the guarantor under external loans with domestic guarantees is a non-banking institution, the guarantor is not allowed to sign new contracts for external loans with a domestic guarantee without the approval of the SAFE before the overseas debtor pays off the debts to the domestic guarantor due to the guarantor's performance of the guarantee. To a certain extent, this will prevent domestic institutions and individuals from transferring assets overseas via the performance of the guarantee. Q: Are domestic organizations allowed to freely sign “other forms of cross-border guarantee” contracts other than those on external loans with domestic guarantees and domestic loans with overseas guarantees? A: According to the Regulations, with the exception that necessary foreign exchange registration formalities must be carried out and some restrictions on the qualifications must be followed for external loans with domestic guarantees and for domestic loans with overseas guarantees, domestic institutions can freely execute other forms of cross-border guarantee contracts. However, it should be noted that the Regulations only cancel the foreign exchange administration restrictions for the signing of the guarantee, which does not mean there are no restrictions on other fields closely related to the content of the guarantee contracts or that the restrictions have been abolished. For example, there are still necessary restrictive stipulations on foreign debt management, cross-border investments, and security interest. Therefore, although compliance situations in foreign exchange administration will not affect the effectiveness of the guarantee contracts, if conflicts occur between the contents of the contracts and the regulations on foreign exchange administration or the restrictive stipulations in other fields, the guarantee contracts may cease to be executable. To make sure the creditor under the guarantee can successfully claim guarantee rights and the guarantor can smoothly perform the guarantee performance obligations, the signing of the guarantee contracts must conform to “the principle of no potential conflict." In other words, unless otherwise expressly stipulated under the Regulations, the signing of cross-border guarantee contracts and possible new cross-border claims and debts relationships and the asset ownership relationship established after the performance of the guarantee contract shall not create potential conflicts with the existing stipulations for the capital account or other restrictive stipulations of the relevant departments. The guarantee contract cannot be performed if there is such a conflict and can only be performed if there is no such conflict. Therefore, this will effectively guard against the signing of cross-border guarantee contracts in violation of the relevant stipulations. Q: How will this reform guard against the risks associated with abnormal fund flows while facilitating cross-border guarantee activities? A: To address the risks incurred by the drastic increase in external claims and debts arising from the concentrated performance of large-amount guarantees and threatening the BOP, the Regulations take the following risk control measures: first, acquiring guarantee contract signing and performance data which may add to the external claims and debts on a deal-by-deal basis; second, restraining cross-border guarantee transactions among all parties involved via self-disciplinary requirements, such as a review of trends in guarantee performance (a due diligence investigation), temporary suspension of new contract signings after a default and a negative list for fund use; third, reinforcing monitoring and disposal of violations of guarantee activities via claims and debt registration, off-site verifications, and foreign exchange inspections; fourth, retaining the SAFE's power to make timely adjustments to the cross-border guarantee management approaches in accordance with the BOP guarantee clauses. With these arrangements, the risks of cross-border fund flows under guarantees will generally remain under control. Q: How can one make sure that all parties involved in the guarantee will earnestly perform their self-disciplinary obligations under the Regulations after the ex-ante approvals and verifications are abolished in an all-round way? A: On the one hand, this reform cancels all restrictive stipulations on foreign exchange administration and ex-ante approvals for contract signing; on the other hand, in order to retain “teeth” and satisfy the risk prevention requirements, a number of self-disciplinary restrictive stipulations which may lead to administrative penalties in cases of violations are retained. The above management approach features both delegation of powers and self-discipline and comes closer to the management concept under a market economy. It has clear self-disciplinary stipulations for relevant entities of cross-border guarantees, such as temporary suspension after defaults, verification of performance trends, restrictions on the use of funds, due diligence investigations, obligations of truthful statements and moral restrictions, and it sets out corresponding penalties so as to achieve the purpose of “ex-ante measures against gentlemen and ex-post measures against villains." Q: Currently, China’s foreign exchange receipts and payments are still under pressure from net inflows. Do the Regulations make any policy arrangements for this? A: With regard to the net inflow pressures on China’s foreign exchange receipts and payments, this reform has adopted differentiated institutional arrangements for different types of cross-border guarantees: the complex management formalities for external loans with domestic guarantees (creating external claims after performance of the guarantee) will be cancelled; proper standards and restrictions will be retained for domestic loans with overseas guarantees (generating external debts after the performance of guarantees) which may cause fund inflows. Q: We have noticed that in 2009 the SAFE put forward the “Five Changes" with respect to the concept of and approaches to foreign exchange administration, and has taken the “Five Changes” as its work priority since the very beginning of this year. How is this effort reflected in this reform? A: The introduction of the Regulations represents a crucial step in implementing the “Five Changes” in capital account management. Specifically, this reform has abolished the approval and verification of cross-border guarantees and has shifted work priority to the monitoring and analysis of cross-border capital flows, thus achieving the change from focusing on “approvals” to focusing on “monitoring and analysis.” While abolishing the quota verifications and approvals on a deal-by-deal basis, ex-post verifications of cross-border guarantee entities and behavior have been strengthened to realize the change from focusing on "ex-ante monitoring" to focusing on "ex-post management." The Regulations have weakened deal-by-deal compliance management for guarantee transaction behavior and have put more emphasis on management of domestic entities for guarantee transactions. While simplifying the standards for classifying the transaction entities, differentiated classified management is conducted for different types of entities. For example, management of banks is more liberalized than that of non-banking institutions, and management of large institutions is more lenient than that of small- and medium-sized institutions, thus achieving the transition from "behavior management" to "entity management." The qualification limitations in the ex-ante verifications for cross-border guarantees are canceled, the registration steps for certain types of guarantees are defined as a “procedural review,” and investigations of the violations are shifted to ex-post off-site verifications and foreign exchange inspections, thus achieving a change from “guilty until proven innocent” to “innocent until proven guilty.” Under the premise of significantly liberalizing cross-border guarantees, a “negative list” is proposed for fund use under the cross-border guarantees, thus achieving the change from a “positive list” to a “negative list.” Q: The Regulations have been officially implemented for over two months; could you please tell us something about their implementation? A: Since the official implementation of the Regulations on June 1, banks and enterprises have embraced this reform. Banks report the reform offers both challenges and opportunities, and Chinese enterprises have seen a remarkably shorter time for the handling of business with the local foreign exchange bureaus. Given the growth in business volume, the cross-border guarantee business has been operating smoothly. Among the external loans with domestic guarantees and domestic loans with overseas guarantees, the two types of cross-border guarantees that have been integrated into the registration management, the guarantee balance of the former is growing faster, with no abnormal growth in the performance of the cross-border guarantees. Q: What measures will the SAFE take to deepen this reform during the next step? A: During the next step, the SAFE will continue to pay close attention to market feedback and further satisfy policy appeals, promote investment and financing facilitation, and earnestly service the real economy. Meanwhile, cross-border guarantee statistical monitoring will be strengthened and off-site inspections and risk management will also be enhanced to lay a solid foundation for further deepening the reform of the foreign exchange administration system and for accelerating the convertibility of the RMB under the capital account. (Reporter: Xu Zhiping) (August 20, Financial News) 2014-10-21/en/2014/1021/1127.html
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The State Administration of Foreign Exchange (SAFE) recently issued the Circular Concerning the Issuance of Provisions on Foreign Exchange Management for Cross-border Guarantees (HuiFa [2014] No. 29) and a person-in-charge at the SAFE accepted an interview with the media on the Provisions on Foreign Exchange Management for Cross-border Guarantees (hereafter referred to as the “Provisions”). I. What is the background to the promulgation of the Provisions? The previous regulations regarding foreign exchange management pf cross-border guarantees included: the Administrative Measures on External Guarantees by Domestic Institutions (YinFa [1996] No. 302), the Rules for Implementation of the Administrative Measures on External Guarantees by Domestic Institutions ([97] HuiZhengFaZi No. 10), the Circular Concerning Issues related to the Management of External Guarantees by Domestic Institutions (HuiFa [2010] No. 39), and the Circular of the State Administration of Foreign Exchange on the Issuance of Administrative Measures for Registration of Foreign Debt (HuiFa [2010] No. 19). During the initial stage after the release of these regulations, they played a positive role in terms of promoting economic and technological cooperation with foreign countries, supporting foreign trade development, facilitating the export of labor services, introducing advanced foreign technologies, equipment, and capital, and smoothly conducting foreign-related financial activities, standardizing the behavior of the external guarantees, and strengthening management of the external guarantees . With the rapid development of China’s foreign-related economy and the ever-expanding scale of transactions in the balance of payments, the behavior of cross-border guarantees has become increasingly diversified and complex. However, the above regulations only cover external guarantees and domestic loans with offshore guarantees and they fail to include other types of cross-border guarantees, so they cannot satisfy our current requirements for market development. Meanwhile, with regard to the relevant guarantee management policies that have been clarified, the relevant approval and verification procedures are complex, and lag behind in terms of the management mode relative to the market requirements and result in relatively high management costs. Therefore, under the guidance of the “Five Transformations,” the SAFE adjusted its thinking about management, promoted the streamlining of administration and delegation of power to lower levels as well as the transformation of functions, and promulgated the Provisions in good time based on adequate investigations and solicitation of opinions at an early stage in order to facilitate cross-border guarantee activities and to promote capital account convertibility under the guarantee item. II. What is the main idea behind this reform in terms of the approach to cross-border guarantee management? The Provisions mainly reflect the following ideas about management: Firstly, streamlining administration and delegating power to lower levels. Cancelling or substantially cutting back on the scope of control over quantity and the scope of registration of cross-border guarantees, with only the part of “partial cross-border guarantees that generate new liabilities or claims by residents to non-residents upon the compliance of the guarantees” subject to registration on a case-by-case basis. Meanwhile, the laws and regulations have been clarified and consolidated, and twelve normative documents related to cross-border guarantees have been abolished. Second, functions are transformed. The boundary between foreign exchange management and regulatory responsibilities for cross-border guarantees is now rationally defined. Based on the objectives and responsibilities of foreign exchange management, the scope of foreign exchange management of cross-border guarantees is rationally defined and cross-border guarantees integrated into foreign exchange management shall have the following features: conforming to the requirements in terms of the forms in a legal sense, guaranteeing compliance with payment methods, determining the relative amount in the balance of payments, and so forth. Meanwhile, by giving due regard to higher law, international practices, and market demand, foreign exchange management shall be disconnected from judgments about the effectiveness of contracts on cross-border guarantee transactions. Foreign exchange registration conducted by the foreign exchange authorities in line with their statutory duties for the balance-of-payments statistics is different from the confirmation registration performed by the relevant authorities of the industry in terms of both purpose and effectiveness, and it cannot be used as collateral or for going against a third party. Third, ex-ante approval is changed to ex-post regulation. All ex-anti approvals have been cancelled and registration has become the major management approach. The ex-ante review and approval procedures for the conclusion and compliance of the guarantee contracts have been cancelled and have been replaced by proportional self- registration management; and most of the business qualification limits have been abolished. Fourth, risk prevention is strengthened. In parallel with streamlining administration and delegating power to lower levels, efforts are made to prevent cross-border guarantees from becoming a channel for abnormal capital flows by means of support systems and regulatory approaches. The monitoring and analysis responsibilities of the foreign exchange authorities are clarified to emphasize off-site verifications, monitoring, and inspections, and to strengthen investigations of violation responsibilities. III. What is the content of this reform in terms of foreign exchange management of external loans with domestic guarantees? In the Provisions, the major content of the management of external loans with domestic guarantees includes: 1. Cancelling the quantity controls for external loans with domestic guarantees. Cancelling the ex-ante approvals or indicator verifications for financing or non-financing of external loans with domestic guarantees of domestic institutions. 2. Cancelling unnecessary qualification limits. Except for general restrictive clauses (e.g., on the use of guarantee funds) universally applicable to all institutions, qualification limits are abolished for specific entities (the requirement of the asset and liabilities ratio of the guarantor and the guarantee, or of related-party relationships) or for specific transactions (e.g., non-financing guarantees). 3. Registration is the major mode of management. Statistics and monitoring shall be conducted on external loans with domestic guarantees within the existing capital account information system. 4. Approvals for the compliance of guarantees are cancelled. Banks can handle the compliance of external guarantees on their own, and non-banking financial institutions and enterprises can handle compliance procedures with the banks based on the registration certificate for the guarantee. 5. Where external claims are generated upon the compliance of the guarantee, registration of external claims shall be handled as per the relevant requirements. IV. What is the content of this reform in terms of foreign exchange management of domestic loans with offshore guarantees? In the Provisions, the major content with respect to management of domestic loans with offshore guarantees includes: 1. Clarifying the business qualifications. The creditors shall be domestic financial institutions, the debtors shall be non-financial institutions, and the guaranteed liabilities can only be common loans or credit lines in the home currency or in foreign currency. 2. Centralized registration of the creditors. The creditors (i.e., domestic financial institutions) shall handle the filing of the statistics with the foreign exchange authorities via the capital account information system in a centralized manner. 3. The creditors shall handle collection of the payment for the compliance of the guarantees on their own. Domestic financial institutions can handle collection of the payment for the compliance of the guarantees directly with the overseas guarantors. 4. Debtors shall handle the external debt registration upon the compliance of the guarantee. Where external debts are generated upon the compliance of the guarantee, external debt registration shall be carried out, but it will not be subject to the quota for common external debts. With regard to external debts incurred by the compliance of domestic loans with offshore guarantees, the balance of the outstanding principal shall not exceed one time the value of the debtor’s net assets. V. According to the Provisions, in addition to external loans with domestic guarantees and domestic loans with offshore guarantees, how shall other cross-border guarantee contracts signed by domestic institutions be managed? According to the Provisions, with the exception of the necessary foreign exchange registration procedures that shall be performed and the certain qualification limits that shall be maintained for external loans with domestic guarantees and for domestic loans with offshore guarantees, domestic institutions can conclude cross-border guarantee contracts in other forms on their own. It should be emphasized that for cross-border guarantee contracts in other forms, the Provisions only abolish the limits on the conclusion of the guarantee contracts in terms of foreign exchange management, and the claim of the guarantee rights by the creditor under the guarantee item and the fulfillment of the guarantee compliance obligations by the guarantor shall still conform to the relevant administrative provisions on the external debt, direct investments, portfolio investments, and so forth. VI. How shall relevant risks be prevented and controlled after this policy reform? In order to address the risks from the sharply rising external claims and debts incurred by the large centralized guarantee compliance resulting from exposure to the international balance of payments, the following major risk control measures are adopted by the Provisions: First, statistics on the conclusion and compliance of the guarantee contract, which may lead to newly-added external claims and debts, shall be collected on a case-by-case basis. Second, cross-border guarantee transaction activities of all parties involved shall be restrained by means of guarantee compliance audit reviews (due diligence review), temporary suspension of contract conclusions after default as well as a negative list approach for capital use and other self-disciplinary requirements. Third, monitoring and disposal efforts will be reinforced for guarantee activities in violation of the regulations by adopting measures such as registration of claims and debts, off-site verifications, and foreign exchange inspections. Fourth, rights to conduct timely adjustments to the cross-border guarantee management patterns will remain with the foreign exchange authorities by means of the balance-of-payments safeguard clause. Through the above arrangements, cross-border fund flow risks under the guarantee item can be kept controllable. VII. In what respects does foreign exchange management reform of cross-border guarantees promote capital account convertibility? Release and implementation of the Provisions will achieve policy consistency in foreign exchange management for cross-border guarantees and a basic convertibility of cross-border guarantees. These are reflected in the following areas: in the field of domestic guarantees with external loans, although ex-ante approvals, approvals for the guarantee compliance, and most of the qualification limits are abolished, this reform maintains case-by-case registration in the contract conclusion process; while in the field of domestic loans with offshore guarantees, under the premise of conforming to the relevant restrictive conditions, Chinese- and foreign-funded enterprises are permitted to conclude contracts on their own and to handle guarantee compliance that is within one time the value of their net assets. Thus the policies on domestic loans with offshore guarantees for Chinese- and foreign-funded enterprises in China are unified and significantly improved. 2014-07-07/en/2014/0707/1117.html
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In order to promote and regulate development of the foreign exchange market and to strengthen its self-regulatory administration, currently, under the guidance of State Administration of Foreign Exchange and organized by China Foreign Exchange Trade System, the interbank foreign exchange market maker has formulated and released the Guidelines on the Professional Ethics and Market Practices in the Interbank Foreign Exchange Market (hereinafter referred to as the Guidelines). The Guidelines are a self-regulatory document aimed at regulating transactions in the interbank foreign exchange market and an effective supplement to the regulatory documents, conducive to promoting the establishment of a new foreign exchange market administration framework, led by industry self-regulation and assisted by government regulation. FILE: Guidelines on the Professional Ethics and Market Practices in the Interbank Foreign Exchange Market 2014-08-18/en/2014/0818/1124.html
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The State Administration of Foreign Exchange (SAFE) recently issued the Circular of the State Administration of Foreign Exchange Concerning Foreign Exchange Administration for Domestic Residents Conducting Overseas Financing and Round-trip Investments via Special Purpose Companies (Huifa No. 37 [2014], hereinafter referred to as the “Circular”) so as to support implementation of the “going-global” strategy, to fully utilize international and domestic resources and markets, to promote the facilitation of cross-border investments and finance, practically serve development of the real economy, and to increase the convertibility of cross-border capital and financial transactions in an orderly manner. The Circular mainly includes the following: First, optimizing the administration process: Rationally defining the scope of foreign exchange administration for round-trip investments based on the role and objectives of foreign exchange administration. Transforming foreign exchange administration of round-trip investments and optimizing the relevant administration process based on the concept of “administering cross-border outflows against overseas direct investments (ODI) and cross-border inflows against foreign direct investments (FDI).” Second, streamlining the administration processes: Adjusting the scope of registration of overseas special purpose companies and only registering those companies directly set up or controlled by domestic residents (first level). Abolishing the established procedures, such as the set-up registration, financing registration, registration for changes in financing of foreign special purpose companies, and simplifying changes in the content of the registration. Third, simplifying the business materials. Domestic residents carrying out foreign exchange registration for outward investments in person are only required to submit a standard application form in a fixed format, a commitment regarding the legitimacy of the funds, and identification and relevant supporting authenticity evidence. Fourth, expanding the channels for capital: Allowing purchases and payments in foreign exchange by domestic residents to be used to establish overseas special purpose companies and overseas working capital and, at the same time, eliminating the restrictions on domestic companies’ overseas lending to special purpose companies. Fifth, relaxing restrictions on the utilization of funds from overseas financing, abolishing the mandatory rules on the repatriation of funds, i.e., “profits, dividends, and foreign exchange earnings brought about by capital changes derived from special purpose companies by domestic residents shall be repatriated within 180 days from the day of receipt,” and allowing funds from overseas financing and other related funds to be retained for overseas use. Sixth, clearly incorporating incentive plans for employee rights and benefits in non-listed special purpose companies into the scope of registration to better satisfy the reasonable individual demands of domestic residents. Seventh, strengthening the idea of risk prevention and control. Intensifying responsibility investigations of violations by putting more efforts into statistics and monitoring and focusing on regulation during the course and ex-post regulation as well as decentralizing to promote the facilitation of cross-border investments and financing. This Circular will be implemented as of the date of issuance. 2014-08-01/en/2014/0801/1123.html
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With the aim of deepening the reform of the foreign exchange management system, promoting the facilitation of trade and investment, advancing convertibility under the capital account in an orderly manner, and regulating receipt and payment activities under cross-border guarantees, the State Administration of Foreign Exchange (SAFE) has, based on extensive solicitation of opinions from the society, released the SAFE Circular Concerning the Issuance of Provisions on Foreign Exchange Management of Cross-border Guarantees (HuiFa [2014] No. 29, hereafter referred to as the “Provisions”). The Provisions mainly cover the following areas: First, vigorous efforts are made to streamline administration and delegate power to lower levels by reforming the foreign exchange management modes for cross-border guarantees. Approval procedures related to cross-border guarantees are cancelled or substantially simplified, and only the part of “partial cross-border guarantees that create new claims or liabilities by residents to non-residents upon the compliance of the guarantees” shall be subject to registration on a case-by-case basis. Second, foreign exchange management of cross-border guarantees has been comprehensively standardized. The scope of foreign exchange management of cross-border guarantees has been rationally defined in line with the objectives and responsibilities of foreign exchange management, and all types of cross-border guarantees that conform to the legal requirements in terms of form, that adopt payments as the guarantee compliance mode, and that can have a significant impact on the balance of payments are included in the scope of the policy adjustment. Third, equal treatment for Chinese-invested and foreign-invested enterprises is realized. With regard to domestic loans with offshore guarantees, under the premise of meeting the relevant restrictive conditions, Chinese- and foreign-invested enterprises are permitted to sign contracts at their own discretion and to conduct guarantee compliances within the amount equivalent to one time their net assets in order to unify and significantly improve policy on domestic loans with offshore guarantees for domestic Chinese- and foreign-invested enterprises. Fourth, the management concept for risk prevention is strengthened. In parallel with streamlining administration and delegating power to lower levels, off-site verifications and foreign exchange inspections are stressed through a support system and a regulatory approach, and investigations of violations of responsibilities have been strengthened. Fifth, laws and regulations are cleared up and consolidated to enhance transparency. The Provisions also annulled twelve relevant normative documents related to cross-border guarantees. The Provisions shall be implemented as of June 1, 2014. 2014-07-07/en/2014/0707/1116.html
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Yi Gang, deputy governor of the People's Bank of China and director of the State Administration of Foreign Exchange (SAFE), recently made a tour of Shenzhen to inspect the demands for and implementation of policies to deepen reform of foreign exchange administration. While on his tour, he spoke with the leaders and department heads of the SAFE Shenzhen Branch and visited Qianhai Shenzhen-Hong Kong Modern Services Cooperation Zone and some MNCs. Director Yi inquired about the implementation, achievements, problems, and suggestions for improvements to the reform measures for foreign exchange administration, and listened to the reports on progress in the development of financial innovations in Qianhai and demands for policies to advance the reforms in key foreign exchange areas. He said that deepening the reform of foreign exchange administration must be based on implementing the spirit of the Third Plenary Session of the 18th CPC Central Committee. With reform innovations leading the way in terms of foreign exchange administration, efforts should be made to promote the "five shifts" in foreign exchange administration, focusing on streamlining administration and delegating power to lower levels and making functional transformations to promote trade and investment facilitation and to serve the real economy on the one hand, and, on the other hand, maintaining our bottom line, preventing risks and stressing post management to improve our capability and level of monitoring and analyzing cross-border capital flows and building a macro-prudential external debt and capital flow management system. These two areas should be given equal importance. In the meanwhile, foreign exchange departments should actively support local economic growth and should encourage some regions where necessary conditions have been met, rather than having all regions carry out early and pilot implementation of some foreign exchange administration policies, so as to highlight their characteristics and advantages, provided that the overall national plan is followed. On his inspection tour, Director Yi inquired about the impact of the reform of foreign exchange administration, especially the pilot policy for centralized operations and management of MNCs' foreign exchange capital for production and operations. He said that one of the core components of deepening the reform of foreign exchange administration is to continue to promote trade and investment facilitation so as to satisfy businesses' rational needs for foreign exchange policies, enabling businesses to fully use "the two resources and the two markets" to enhance their international competitiveness, and to upgrade the Chinese economy. 2014-07-07/en/2014/0707/1118.html
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To adapt to the development of the transfer of cross-border foreign currency banknotes by banks and to further improve management of the transfer of foreign currency banknotes, the State Administration of Foreign Exchange (SAFE) and the General Administration of Customs (GAC) jointly amended the management system for the transfer of cross-border foreign currency banknotes by banks and released the Circular of the SAFE and the GAC on the Issuance of Regulations on Managing Transfers of Cross-border Foreign Currency Banknotes by Banks (HuiFa [2014] No. 24, hereafter referred to as the Circular). The highlights of the Circular are as follows: 1. Simplifying management processes and delegating administrative approval responsibilities to the SAFE branches. 2. Clarifying the processes for adding customs ports, with only the local SAFE branches and the customs’ authority directly under the GAC required to file with the SAFE and the GAC. 3. Allowing other qualified institutions to conduct transfers of cross-border foreign currency banknotes after obtaining approval. 4. Adjusting the name of the “License for the Transfer of Cross-border Foreign Currency Banknotes by Banks” to “Documents of Cross-border Transfers of Foreign Currency Banknotes.” The Circular will come into force on May 1, 2014. 2014-07-07/en/2014/0707/1120.html
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For the purpose of further improving RMB exchange rate mechanism, the People’s Bank of China recently released the Circular of the People’s Bank of China on Relevant Matters Concerning the Management of Exchange Rates for Transactions in Interbank Foreign Exchange Markets and the Listed Exchange Rate of Banks (Yinfa [2014] No. 188, hereinafter referred to as “the Circular”). The major contents of the Circular include: Firstly, the management of the banks over the spread of the listed USD trading of clients is cancelled, and the banks can make independent pricing based on market supply and demand so as to promote the independent pricing of foreign exchange market; Secondly, based on the new development of management of central parity formation approach of RMB against certain currencies and the floating band of transaction price since 2011, transparency of policies have been further improved. The Circular shall take effect as of the date of promulgation.(End.) 2014-07-03/en/2014/0703/1115.html
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Special Topic IV I. China has made active progress in terms of strengthening and improving supervision of cross-border capital flows In recent years, the foreign exchange authorities has been adhering to the risk limits and have continuously strengthened and improved supervision of cross-border capital flows. While adhering to balanced management, the foreign exchange authorities focused on guarding against hot money inflows, made it a priority to slow down the rapid increase in the surplus of foreign exchange settlement and sales by banks and foreign exchange reserves, combined thinning and blocking measures, focused on priorities, simultaneously took numerous measures, and carried out comprehensive policies in order to guard against the impact of cross-border capital flows. This mainly included the following: First, studying, formulating, and timely applying the pre-arranged policies to cope with large-scale cross-border capital inflows. In 2008, the Regulations on Foreign Exchange Administration were revised and implemented, providing legal basis for strengthening supervision of cross-border capital flows. In 2009 and 2010, the pre-arranged policies for coping with unusual outflows and inflows of cross-border capital respectively were formulated. In November 2010 and March 2011, the foreign exchange authorities applied the pre-arranged policies for coping with unusual inflows of cross-border capital, strengthened administration of the foreign exchange business of the banks’ foreign exchange settlement and sales positions, foreign exchange collections and settlement for export, and short-term external debt, and in 2011 further adjusted downward the total scale of the short-term external debt quotas of domestic financial institutions. Second, giving play to foreign exchange inspection methods to rigorously crack down on the arbitrage capital such as hot money. In recent years, the foreign exchange authorities have improved foreign exchange inspection methods and the accuracy and effectiveness of cracking down on hot money. In accordance with the idea of seizing the big and freeing the small, the special inspections on foreign exchange settlement of capital and short-term external debt carried out by the foreign exchange authorities focused on financial institutions and large enterprises. The foreign exchange authorities increased their efforts to circulate information on the irregular activities of market players and as well as information on punishments for irregular activities by some banks, enterprises, and individuals. From 2007 to 2011, the foreign exchange authorities investigated a total of 15,000 cases involved in activities in violation of the foreign exchange laws and regulations and imposed a total of RMB 1.27 billion in administrative fines. In particular, the foreign exchange authorities cooperated with the public security bodies to crack down on a total of 210 cases involving illegal banks, the illegal sale and purchase of foreign exchange, and on-line foreign exchange speculation. Involving an amount in excess of RMB 100 billion, more than 1,000 suspects were apprehended and a total of RMB 160 million in administrative fines was imposed. Third, adhering to the combining of thinning and blocking measures to guide the orderly flow of cross-border capital. While guarding against the inflow of hot money, the foreign exchange authorities continuously simplified and finally cancelled the compulsory foreign exchange settlement and sales system and encouraged foreign exchange purchases and payments with authentic demands for trade and investment. In 2010, the reform of the verification and writing-off system of foreign exchange payments for imports was carried out, making it unnecessary for most of the complying enterprises to handle on-site verification and writing-off procedures for their normal business of foreign exchange payments for imports, significantly reducing the operating costs for the banks and enterprises; a pilot program for overseas deposits of export revenue was launched to encourage enterprises to deposit export revenue overseas and to meet the normal demands of market players to hold and utilize foreign exchange. In 2011, the policy on overseas deposits of export revenue was generalized nationwide, and a pilot reform of the verification and writing-off system for imports and exports was launched. The foreign exchange authorities supported the “Going Out” strategy, lifted limits on the amount of foreign exchange purchased for overseas investments, and allowed outward remittances for early stage expenses for overseas investments. Fourth, improving the capability to analyze and supervise cross-border capital flows in domestic and foreign currency. The foreign exchange authorities strengthened statistics, monitoring, and early warning on the balance of payments, carried out statistics and monitoring of cross-border capital flows in domestic and foreign currency, established a comprehensive statistical system for the banks’ trade financing, and established and improved the monitoring and early warning system for the balance of payments. The foreign exchange authorities improved transparency by providing a comprehensive overview of the cross-border capital flow situation, circulated information on punishments for irregular activities in the handling of foreign exchange business by some banks, enterprises, and individuals, further deterred activities in violation of the laws and regulations, and correctly guided expectations. The foreign exchange authorities gave play to cross-departmental synergies, strengthened information sharing and policy coordination, and created a synergy to suppress the inflow of hot money. In general, the adjustment of the foreign exchange administration policy focusing on reducing the surplus played an active role in guarding against the impact of cross-border capital flows and safeguarding the economic and financial security of the country. From the second half of 2011, in particular the fourth quarter, the foreign exchange situation in China exhibited a noteworthy change, and the RMB exchange rate approached an equilibrium level. Due to early insight, the foreign exchange authorities required the banks to increase foreign exchange positions in advance, which not only relieved the pressures on the central bank to purchase foreign exchange for that period and reduced the currency mismatch risks for banks, but also made the process go smoothly such since the fourth quarter of 2011 the banks have proactively increased their positions and have avoided any significant market fluctuations that might have occurred. II. The new situation and the new stage raised the requirements for supervision of cross-border capital flows in domestic and foreign currency In accordance with increasing the level of opening to the outside and facilitating trade and investment, the pilot cross-border RMB trade settlement has continuously expanded and we have already reached a high level of economic opening. Comprehensively affected by such factors as changes in the economic situation both at home and abroad, the transformation of the pattern of economic development in China, and the fact that macro-control policies are gradually in place, China’s cross-border capital flows in domestic and foreign currency displayed new characteristics, raising the requirements for cross-border capital management during the next stage. (1) The balance of payments approaching a basic equilibrium means that balanced management of cross-border capital flows needs to be strengthened. The proportion of the current account surplus to GDP is an important indicator measuring external imbalances. Since the international financial crisis, the situation of China ’s current account surplus has been improving. According to preliminary estimates, in 2011 the proportion of the current account surplus to GDP will be further reduced to around 3 percent, a decrease of 7 percent since its historic high in 2007. The rapid momentum in the increase of China’s foreign exchange reserves has slowed down. At the end of 2011, China ’s foreign exchange reserves totaled about USD 3.2 trillion, an increase of USD 330 billion compared with the end of the previous year, with the increment decreasing by USD 110 billion compared with the same period of the last year. In general, the balance of payments approaching a basic equilibrium is a type of active change that is consistent with the macro-control direction. However, facing the present complicated and volatile economic and financial environments both at home and abroad, there are still uncertainties in the cross-border capital flow situation. This will require that the foreign exchange authorities accelerate the transformation of the concepts and methods of supervising cross-border capital flows in accordance with the requirements for balanced management, control the two gates for inflows and outflows of cross-border capital, comprehensively apply the economic, legal, and necessary administrative means to continuously improve supervision of cross-border capital flows, guard against massive cross-border capital flows, and safeguard the economic and financial security of China. (2) The increase in the level of financial opening-up in China means that the transformation of the supervisory mode for cross-border capital flows needs to be accelerated. Currently, China is a major economy with a high level of opening-up. In 2009, affected by the spread of the international financial crisis, the total scale of the balance of payments dropped to USD 4 trillion, and the scale of such major trade items as trade in goods and direct investments dropped. In 2010, China ’s foreign economic activities recovered to the same level as that before the financial crisis, the total scale of the balance of payments of the year reached USD 5.6 trillion, again a record high. As China ’s foreign economic exchange expands and foreign-related trade and investment become increasingly active, various economic entities will raise their requirements for relaxing the restrictions on cross-border capital flows, making full use of domestic and international markets and resources. In order to adapt to the development of the new situation, while facilitating trade and investment and steadily promoting convertibility under the capital account, the foreign exchange authorities need to accelerate the transformation of the foreign exchange administration mode by integrating the data and system resources and strengthening the monitoring of cross-border capital flows on the basis of the individual economic entities, to formulate pre-arranged policies for coping with the risks of bidirectional flows of cross-border capital; by utilizing the tools for pre-adjustments and fine adjustments, to reduce the pressures of massive cross-border capital flows; while not leaving any supervisory blind spots, to carry out classified management and to improve the effectiveness of the supervision of cross-border capital flows. (3) The expanding scale of RMB cross-border capital flows means that the capability to carry out fully covered monitoring and analysis of the cross-border capital flows in domestic and foreign currency needs to be further improved. In recent years, the confidence of the international market and the demands for RMB have been increasing, resulting in the scale of cross-border RMB capital flows promptly expanding. In 2011, the amount of RMB cross-border settlements exceeded RMB 2 trillion, a fourfold increase compared with the same period of the last year, and the proportion of RMB cross-border trade in cross-border capital flows increased notably. In light of this new situation, the foreign exchange authorities need to keep in mind the long-term interests, improve the system and mechanism for the supervision of cross-border capital flows in domestic and foreign currency, strengthen the monitoring, analysis, and early warning of cross-border RMB capital flows, strengthen information communication and supervisory cooperation between the regulatory departments, and create a new synergy. III. The main ideas of the supervisory framework for cross-border capital flows in domestic and foreign currency during the next stage The establishment and improvement of the supervisory framework for cross-border capital flows in domestic and foreign currency is a long-term process. For the next period, the foreign exchange authorities should focus on grasping well the following important aspects: First, strengthening analysis of the situation and improving the capability for scientific judgments. The foreign exchange authorities should keep a sharp eye on and closely follow changes in the situation in cross-border capital flows of domestic and foreign currency, place high priority on certain emerging and tendentious problems, deeply study the channels and transmission mechanisms that affect cross-border receipts and payments, search for the core indicators that are highly related to the trends in the cross-border capital flows and establish good predictability and make the judgments on cross-border capital flows more scientific and more accurate. Second, strengthening policy reserves and formulating well pre-arranged policies for coping with the risks of bidirectional flows of cross-border capital. The foreign exchange authorities should adhere to balanced management of cross-border capital flows, improve and enrich the pre-arranged policies that guard against massive net inflows of cross-border capital, do a good job in terms of implementing reserves that guard against central outflows of cross-border capital, and make supervisory policies relevant and forward-looking. Third, adhering to balanced management and focusing on guarding against unusual cross-border capital flows. The foreign exchange authorities should implement the concept of balanced management on the basis of promoting the facilitation of trade and investment, actively explore new ideas, new tools, and new mechanisms for supervising cross-border capital flows, comprehensively apply the economic means, legal means, and necessary administrative means, and limit the space for speculation and arbitrage. Furthermore, the foreign exchange authorities should begin by straightening out the relations between foreign exchange supply and demand, accelerate the cultivation and development of the foreign exchange market, improve the market-making mechanism of market-makers, enhance the capability of the foreign exchange market in terms of self-regulation and self-balancing, and give full play to the fundamental role of market mechanisms for the reasonable allocation of foreign exchange resources. Fourth, optimizing the system and mechanisms, and improving the capability to cope with the impact of cross-border capital flows. The foreign exchange authorities should place high priority on the development of the system and mechanisms for supervision of the cross-border capital flows in domestic and foreign currency, and should strengthen supervisory cooperation. The foreign exchange authorities should establish a transmission mechanism for enterprises, banks, and individuals to improve policy effectiveness. The foreign exchange authorities should strengthen guidance of financial institutions, pay attention to giving full play to the role of the designated foreign exchange banks in the conduct of policy, and improve the capability to control the foreign exchange receipts and payments of economic entities. The foreign exchange authorities should make good use of the inspection methods, maintain tough measures against illegal and irregular funds, such as hot money, rigorously crack down on illegal and criminal activities in regulatory areas, such as underground banks, increase efforts to disclose information on illegal and irregular activities, and improve the deterrent effect against illegal and irregular cross-border capital flows. 2012-03-26/en/2012/0326/1040.html
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Special Topic III In recent years, the overall scale of China ’s foreign trade and overseas investment has been expanding. While strictly examining the authenticity of the trade and investment and firmly cracking down on irregular cross-border capital flows, the foreign exchange authorities continuously improved the management methods and simplified the formalities and procedures for handling foreign exchange business, making them the starting point and the goal of the work to actively promote the facilitation of trade and investment and striving to create a comfortable and convenient environment for the utilization of foreign exchange by enterprises and individuals. I. Transforming the methods, improving efficiency, and effectively meeting the demands for foreign exchange under the current account Actively promoting the reform of the foreign exchange administration system for trade in goods. In May 2010, the foreign exchange authorities implemented the reform of the verification and writing-off system of foreign exchange payments for imports through such methods as the “Pilot before Promotion”; in December 2011, on the basis of a summary of the experience in the verification and writing-off reform, the foreign exchange authorities carried out a pilot reform on the integration of the verification and writing-off system for imports and exports in 7 provinces (cities), such as Jiangsu and Shandong, established a new management mode for trade in goods with such characteristics as aggregate screening, dynamic monitoring, and classified management, simplified the document examination requirements for foreign exchange payments for imports, cancelled the procedures for the verification and writing-off of foreign exchange collections from exports and the online inspections of foreign exchange collections and settlements from exports, and reduced the number of administrative licensing items under trade in goods from six to two. After the reform, the receipts and payments of foreign exchange for imports and exports of enterprises that operate according to the law are not required to handle the procedures for the online inspections and the verification and writing-off on a case-by-case basis, and these can be directly handled by the banks upon the strength of the commercial documents. The operating costs for the enterprises and banks were significantly reduced. Supervision by the foreign exchange authorities is focused on the few enterprises with suspicious and irregular activities, which significantly improves the level and efficiency of supervision. This is widely welcomed and supported by the local governments and the various circles in society. Permitting overseas deposits of export revenue, and actively supporting enterprises to “Go Out.” The policy of overseas deposits of export revenue was implemented for trial in four provinces (cities) such as Beijing and Guangdong from October 1, 2010. On January 1, 2011, the policy was expanded nationwide. At present, qualified enterprises may, after handling certain procedures, deposit export revenue overseas on the basis of their operating needs, for payment of import costs, for certain expenditures under trade in services, and for approved expenditures under the capital account. Implementation of this policy facilitated cross-border capital operations of Chinese enterprises, improved the efficiency of capital utilization, and played an active role in supporting the enterprises to “Go Out.” Facilitating receipts and payments under trade in services, and actively supporting economic structural adjustments. The foreign exchange authorities actively implemented the strategic policy of the State to transform the economic growth mode and to accelerate the development of the services industry, promoted the facilitation of foreign exchange receipts and payments under trade in services, and provided enterprises engaging in industries such as services outsourcing or tourism with policy benefits in such areas as the opening of foreign exchange accounts and fund exchanges. The foreign exchange authorities further improved management of external payments of foreign exchange, defined the scope of transactions for which tax certificates are not required to be submitted, unified the tax certificate form, and facilitated the handling of the procedures for external payments of foreign exchange by enterprises and banks. The foreign exchange authorities accelerated promotion of the reform of the management methods for trade in service. Cancelling the quota management and improving the independence and enhancing the autonomy and convenience in the use of foreign exchange. In 2007, the foreign exchange authorities cancelled the quota management on foreign exchange accounts under the current account of enterprises so that they may reserve foreign exchange revenue under the current account on the basis of their operating needs. This further improved the autonomy and convenience for enterprise in holding and utilizing foreign exchange and helped the enterprises strengthen fund management and improve capital utilization efficiency. II. Proceeding steadily and step by step, making orderly progress, and effectively supporting cross-border investments and financing activities. Simplifying foreign exchange administration procedures for foreign direct investment, and utilizing scientific and technological means to improve the level of service. The foreign exchange authorities simplified the foreign exchange settlement procedures for foreign exchange capital of foreign-invested micro-credit companies and effectively supported the development of small and micro enterprises and the rural economy. The foreign exchange authorities carried out pilots in some regions and permitted foreign-invested enterprises that conform to the industrial incentive policy to independently make arrangements for foreign exchange settlement of foreign exchange capital. The management mode of capital withdrawal for foreign direct investment was changed from an examination and approval system to a registration system. An information system for the administration of foreign exchange with respect to direct investments was developed to facilitate the handling of the relevant business by enterprises through the Internet. A mode of centralized management and operation of foreign exchange funds was established and improved to facilitate improvements in the efficiency of capital utilization by enterprises, to reduce financing costs, and to accelerate the process for China’s financial service industry to reach international standards. Energetically carrying out the reform of foreign exchange administration for overseas investments, and strengthening the support system for financing by overseas investment enterprises. While facilitating the practice of “Inviting In,” the foreign exchange authorities further deepened the “Going Out” development strategy. In 2009, a simple and clear system to manage registration of foreign exchange overseas investments was established. The foreign exchange authorities permitted qualified domestic enterprises to grant overseas loans within a certain quota, simplified the management procedures for external guarantees, relaxed the qualifications and conditions of debtors, cancelled the approval procedures for the performance of external guarantees by banks, supported domestic institutions to carry out overseas direct investments in RMB, and facilitated the subsequent financing of overseas enterprises. Improving external debt policy and supporting the development of the real economy. While implementing moderately tight control over short-term external debt, the foreign exchange authorities continued to support import trade financing of banks and allowed usance letters of credit with a term of 90 days and below and import advance bills by overseas institutions with a term of 90 days and below not to be included in the short-term external debt quotas. The foreign exchange authorities optimized the quota distribution structure for banking financial institutions, appropriately distributed more quotas to small and medium joint-stock banks and local banks whose trade financing business had developed rapidly in recent years, improved the efficiency of quota utilization, and helped solve the “financing difficulty” problems of enterprises. The foreign exchange authorities formulated measures to facilitate Chinese-funded enterprises to borrow short-term external debt, domestic loans with overseas guarantees, and RMB loans with foreign exchange as pledges, gradually narrowed the difference between the financing policy for Chinese-funded enterprises and that for foreign-funded enterprises, and actively supported the financing demands of Chinese-funded enterprises. III. Relying on technology, improving methods, and continuously optimizing foreign exchange information services The foreign exchange authorities comprehensively integrated the information system and data in terms of foreign exchange administration, for example, by cooperating with the reform of the foreign exchange administration system for trade in goods, developing and applying the Foreign Exchange Monitoring System for Trade in Goods, and integrating the original nine operating systems for foreign exchange management business for trade into one system. Furthermore, the foreign exchange authorities changed the situation whereby different foreign exchange business systems dealt with the enterprises and the banks separately, established three major application portals that deal with the foreign exchange authorities, the banks, and the enterprises, realized conditions whereby “accessing the network through one portal, only one login and authentication was required, and one-stop services,” and significantly facilitated the operations of enterprises and banks. The foreign exchange authorities fully developed and made use of the Internet to improve the transparency of management information, which not only improved the efficiency of foreign exchange business for banks and enterprises, but also was beneficial for foreign exchange-related subjects such enterprises and banks to strengthen internal management. The foreign exchange authorities energetically promoted comprehensive information sharing with the customs and tax authorities, and established a joint supervision and service mechanism, which provided an effective means for strengthening the monitoring and analysis of cross-border capital flows and for improving the capability to precisely crack down on unusual transactions. While continuously promoting the facilitation of trade and investment, the foreign exchange authorities actively created a comfortable and convenient environment for the utilization of foreign exchange by individuals. From 2007, a management method based on an annual quota has been implemented for foreign exchange settlement and purchases by domestic individual residents; foreign exchange settlement and purchases by domestic individual residents within USD 50,000 could be directly handled by the banks upon the strength of their identity certificates, significantly simplifying the procedures for foreign exchange settlement and purchases by individuals. Meanwhile, qualified banks are permitted to carry out individual foreign exchange settlement and sales business through E-banks, thereby enriching the channels for individuals to handle their foreign exchange settlement and sales business. In 2012, the foreign exchange authorities will deeply implement the spirit of the Central Economic Work Conference and the National Financial Work Conference, grasp well the general focus of the work for “Steady Development,” energetically promote the facilitation of trade and investment, and actively improve the level of foreign exchange administration to serve economic development premised on controllable risks. The foreign exchange authorities will choose opportunities to expand nationwide the reform of the foreign exchange administration system for trade in goods; promote the foreign exchange administration reform for trade in services and insurance institutions; rely on technological means, continue to streamline administration, institute decentralization, and optimize procedures under foreign direct investment; gradually integrate and optimize the procedures for handling of the foreign exchange management business for capital accounts, such as investments and external debt; and establish and improve the platform for the monitoring and analysis of cross-border capital flows, while also improving the efficiency of supervision of cross-border capital flows and facilitating trade and investment activities. 2012-03-26/en/2012/0326/1039.html