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Following the work plans of the CPC Central Committee and the State Council, the State Administration of Foreign Exchange (SAFE) was committed to clearing up market disorder, cracking down on violating behaviors and imposing strict penalties on foreign exchange irregularities in 2016. In accordance with the Regulations of the People’s Republic of China on the Disclosure of Government Information (Decree No. 492 of the State Council), the typical cases of enterprises and individuals violating foreign exchange regulations are notified as follows, in a bid to promote market players to raise their awareness of carrying out foreign exchange activities in compliance with regulations, and sustain the healthy and benign order in the foreign exchange market. I. Cases of enterprises violating foreign exchange regulations Case No. 1: Wuhan Yanzhi Property Management Co., Ltd. helped domestic individuals illegally transfer funds overseas under the guise of outbound investment From September 2014 to December 2015, Wuhan Yanzhi Property Management Co., Ltd. illegally transferred funds overseas for domestic individuals many times under the guise of outbound investment. It charged 22 domestic individuals RMB 71.9249 million in total. Then it bought foreign exchange worth a total of RMB 67.3817 million in 23 transactions to help individuals illegally transfer the money overseas under the guise of outbound investment. The company obtained RMB 4.5432 million from the deals. Such behavior violates Article 2 and 4 of the Regulations for Foreign Exchange Administration of Overseas Direct Investments by Domestic Institutions (Huifa No. 30 [2009]) and is considered an evasion of foreign exchange. In accordance with Article 39 of the Regulations of the People's Republic of China on Foreign Exchange Administration, the SAFE imposed a fine of RMB 3.369 million upon the company as an administrative penalty. Case No. 2: Evasion of Foreign Exchange by Jiangxi Ganzhou Sichuang Trading Co., Ltd. On April 2, 2015, Jiangxi Ganzhou Sichuang Trading Co., Ltd. applied to the bank for USD 9.6249 million in a working capital loan due within one year. Then the company counterfeited contracts and business invoices, altered the information on the bill of lading without permission, and even fabricated entrepot trade, based on which the company remitted all the loan to Hong Kong under "payments for entrepot trade". This behavior violates Article 14 of the Regulations of the People's Republic of China on Foreign Exchange Administration, and Article 3 of the Guidance on Foreign Exchange Administration under Trade in Goods (Huifa No. 38 [2012]) and is considered an evasion of foreign exchange. In accordance with Article 39 of the Regulations of the People's Republic of China on Foreign Exchange Administration, the SAFE imposed a fine of RMB 650,000 upon the said company as an administrative penalty. Case No. 3: Evasion of Foreign Exchange by Guangxi Qinzhou Yongjiashun Trading Co., Ltd. Between June and July 2015, Guangxi Qinzhou Yongjiashun Trading Co., Ltd. handled payments of foreign exchange worth USD 10.3688 million in 11 transactions with a bank, by presenting its import contracts and the Customs list of entry records, and did so with another bank through repeated presentation of the same instruments. This behavior violates Article 12 of the Regulations of the People's Republic of China on Foreign Exchange Administration, and Article 3 of the Guidance on Foreign Exchange Administration under Trade in Goods (Huifa No. 38 [2012]) and is considered an evasion of foreign exchange. In accordance with Article 39 of the Regulations of the People's Republic of China on Foreign Exchange Administration, the SAFE imposed a fine of RMB 1.2996 million upon the said company as an administrative penalty. Case No. 4: Evasion of Foreign Exchange by Shandong Longyang Chemical Co., Ltd. Between June and August 2015, Shandong Longyang Chemical Co., Ltd. fabricated import deals many times. By counterfeiting or altering import contracts, invoices, bills of lading and Customs Declaration Forms of Imported Goods, the company handled 4 transactions for the payment of foreign exchange of USD 4.0765 million in total with 3 banks, thus illegally transferring the funds overseas. This behavior violates Article 12 of the Regulations of the People's Republic of China on Foreign Exchange Administration, and is considered an evasion of foreign exchange. In accordance with Article 39 of the Regulations of the People's Republic of China on Foreign Exchange Administration, the SAFE imposed a fine of RMB 282,000 upon the said company as an administrative penalty. II. Cases of individuals violating foreign exchange regulations Case No. 1: A Mr. Wu illegally traded foreign exchange through underground banks From March to December 2014, a Mr. Wu, native of Zhejiang, transferred a total of USD 30.4337 million for 118 times through an offshore account (OSA) it controlled to an offshore USD account controlled by an underground bank in accordance with the order of a Mr. Ji, owner of the underground bank, so as to obtain illegal interests. Such behavior violates Article 32 of the Regulations for the Administration of Settlement and Sales of and Payment in Foreign Exchange (Yinfa No. 210 [1996]) and is considered illegal trading of foreign exchange. In accordance with Article 45 of the Regulations of the People's Republic of China on Foreign Exchange Administration, the SAFE imposed a fine of RMB 2.125 million upon Mr. Wu as an administrative penalty. Case No. 2: A Mr. Su evaded foreign exchange through split-out Between July and August 2015, a Mr. Su, native of Tianjin, remitted RMB 11.8811 million in total into 39 individual accounts in a split-out way and purchased foreign exchange worth CAD 2.4675 million on an ATM using the bank cards of the 39 individuals. Later he remitted CAD 2.4675 million into a Hong Kong account he controlled using the ID cards and bank cards of the 39 individuals under study abroad, thus illegally transferring the money overseas. Such behavior violates Article 7 of the Measures for the Administration of Individual Foreign Exchange (Decree No. 3 [2006] of the People's Bank of China) and Article 1 of the Circular of the State Administration of Foreign Exchange on Further Perfecting the Administration of Foreign Exchange Settlement and Sales for Individuals (Huifa No. 56 [2009]) and is considered an evasion of foreign exchange. In accordance with Article 39 of the Regulations of the People's Republic of China on Foreign Exchange Administration, the SAFE imposed a fine of RMB 120,000 upon Mr. Su as an administrative penalty. Case No. 3: A Mr. Wang evaded foreign exchange through split-out From July to August 2015, a Mr. Wang, native of Shanxi, transferred his funds into the accounts of 30 employees of his company，who then purchased foreign exchange under study abroad and remitted the money totaling the equivalent of USD 1.4463 million into Wang's overseas individual account in 30 transactions. Such behavior violates Article 7 of the Measures for the Administration of Individual Foreign Exchange (Decree No. 3 [2006] of the People's Bank of China) and is considered an evasion of foreign exchange. In accordance with Article 39 of the Regulations of the People's Republic of China on Foreign Exchange Administration, the SAFE imposed a fine of RMB 90,000 upon Mr. Wang as an administrative penalty. Case No. 4: A Mr. Huang illegally traded foreign exchange through an underground bank On November 17, 2016, a Mr. Huang, native of Guangdong, contacted a Mr. Ruan, owner of an underground bank, to illegally exchange RMB for the equivalent of HKD 140,000 for overseas gambling. Such behavior violates Article 45 of the Regulations of the People's Republic of China on Foreign Exchange Administration and is considered illegal trading of foreign exchange. In accordance with Article 45 of the Regulations of the People's Republic of China on Foreign Exchange Administration, the SAFE imposed a fine of RMB 25,000 upon Mr. Huang as an administrative penalty. 2017-04-24/en/2017/0424/1260.html
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On June 22, 2017, Pan Gongsheng, administrator of the State Administration of Foreign Exchange (SAFE), headed a delegation to Shenzhen for Inspections and held a seminar there to listen to the ideas, opinons and suggestions of relevant institutions on the conditions of China's foreign exchange market and the foreign exchange administration policies. According to Pan, since the beginning of this year, along with the accelerated upgrading and transformation of the economic structural adjustment, and in-depth advances of the supply-side reform, China has borne witness to steady and promisig economic growth at a mid-to-high speed. The foreign exchange market has performed stably, market expectations have remained stable, while foreign exchange reserves and RMB exchange rate have stayed steady, and cross-border capital flows and supply and demand in the foreign exchange maket have found a basic equilibrium. The cross-border trade and investment facilitation shall be further enhanced to better serve the real economy and openign up, Pan emphasized. Under the principle of the current account convertibility, efforts shall be made to duly support and ensure authentic and complying international payments and transfers under the current account, in a bid to enhance cross-border trade facilitation. The two-way liberalization of the finanical market shall be boosted in a stable and orderly manner, and the capable enterprises who meet the conditions shall be supported to be invovled in autheitc outward investments in compliance with regulations, so as to support Chinese enterprises to go global. The sound foreign exchange administration policy environment shall be built to support Chinese enterprieses to participate in the Belt and Road Initiative. Foreign exchange authorities are required to further deepen the foreign exchange administration reform and strengthen the building of their regulatory capabilities, according to Pan. The macro-prudential administration of cross-border capital flows and micro-market regulatory system shall be established to intensify ongoing and ex-post regulation. The monitoring and early warning of cross-border capital flows shall be refined and irregularities such as underground banks shall be cracked down on to safeguard the health and stability of the foreign exchange market and China's economic and financial security. As the frontier of China's reform and opening up, Shenzhen boasts a vibrant market, with market participants sensitive to policies and market signs. It is Pan's wish that Shenzhen Branch of the SAFE and participants in the foreign exchange market could break new ground and make innovations to continue to play a leading role in the new round of the reform and openning up and deliver reproducible and promotable experience with regard to the deepening of foreign exchange administration reform and the optimization of services. 2017-06-22/en/2017/0622/1319.html
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The General Administration of Customs (GAC), the State Administration of Taxation (SAT) and the State Administration of Foreign Exchange (SAFE) have recently signed the Framework Agreement on Cooperation Mechanism for Joint Regulation Based on Information Sharing (the Framework Agreement) in Beijing. On the same day, the GAC signed with SAT and SAFE the MOU on Advancing Joint Regulation Based on Information Sharing between the General Administration of Customs and the State Administration of Taxation, and the MOU on Advancing Joint Regulation Based on Information Sharing between the General Administration of Customs and the State Administration of Foreign Exchange respectively, as the implementation mechanisms of the Framework Agreement. According to the Framework Agreement, the three parties agree that they will accelerate the cross-department mutual information exchange, mutual regulation recognition, and mutual help in law enforcement, in a bid to improve ongoing and ex-post regulation, enhance management efficiency, and reduce management costs while guarding against and cracking down on smuggling, defrauding of export tax refunds, tax frauds and evasion, so as to ensure the national Customs, taxation and foreign exchange policies are effectively carried out. The three parties have defined their areas of cooperation and roles and responsibilities by signing the MOUs on advancing joint regulation based on information sharing. By stepping up information sharing, the three parties will be committed to improving the ongoing and ex-post regulatory system, pressing ahead with comprehensive law enforcement and enhancing management efficiency. They will push forward with comprehensive cooperation through inspection and feedback, and joint regulation among their branches and sub-branches to jointly implement incentives and punishments. Enhancing information sharing and performing joint regulation among the three authorities are the significant measures to implement theReformPlan of Implementing "Three Mutuals" to Advance Customs Clearance,which was issued by the State Council, and the bases and levers for joint governance among them and therefore have great implications for better guarding against and cracking down on smuggling, defrauding of export tax refunds, tax frauds and evasion. Going forward, the customs, taxation and foreign exchange authorities will continue to strengthen cooperation, and further improve the regulation of law enforcement within their respective jurisdiction to create management synergies, so that they can better serve the building of the social credit system and the healthy and sustainable economic development in China. 2017-04-21/en/2017/0421/1257.html
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Today bank cards have become the top tools for payments by individuals for overseas transactions. Statistics show that the total amount of the overseas bank card transactions by individuals surpassed USD 120 billion in 2016. In China, the statistics of balance of payments for overseas bank card transactions are collected on an aggregate basis. As the requirements against money laundering, terrorist financing, and BEPS rise in international collaboration, the collection of statistics on cross-border bank card transactions needs further enhancement in terms of financial transaction transparency and statistical quality. To improve the statistics on and safeguard the order of overseas bank card transactions, the State Administration of Foreign Exchange (SAFE) has recently published the Circular of the State Administration of Foreign Exchange on Reporting Overseas Bank Card Transactions by Financial Institutions (Huifa No. 15 [2017], hereinafter referred to as the Circular"). Pursuant to the Circular, domestic card issuing financial institutions shall report to the SAFE the information on all the overseas withdrawals and single deals worth the equivalent of more than RMB 1,000 via domestic bank cards starting from September 1, 2017. Collection of the information on overseas bank card transactions does not concern the adjustments of foreign exchange administration policies for overseas bank card transactions. The SAFE will continue to support and ensure the legal and convenient use of bank cards for overseas transactions by individuals under the current account. The information on overseas bank card transactions shall be reported by the card issuing financial institutions, and individuals need not declare otherwise. With no cost for using bank cards by individuals increasing, the SAFE will work to ensure the information security of cardholders in accordance with the law. The Circular will come into force as of the date of promulgation. 2017-06-02/en/2017/0602/1316.html
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On May 19, 2017, the State Administration of Foreign Exchange (SAFE) holds a seminar with foreign-funded enterprises. The seminar was chaired by Pan Gongsheng, administrator of the SAFE, and attended by many foreign-funded enterprises such as Ericsson, Caterpillar, Alps, Thyssenkrupp, Dell, ABB, Mars, and Johnson Controls. Representatives present introduced the operations of their enterprises and provided constructive ideas on foreign exchange administration based on their practices. According to Administrator Pan, China's cross-border capital flows are recovering with a good momentum for growth and finding an equilibrium. A stable and benign foreign exchange market is favorable for foreign-funded enterprises' operations in China, while maintaining the stability of the foreign exchange market requires the cooperation and concerted efforts of regulators and the market. Foreign exchange authorities will persevere in reform and opening up, and enhancing cross-border trade and investment facilitation to better serve the real economy, while guarding against risks arising from cross-border capital flows, and maintaining the stability of the foreign exchange market, so as to provide a healthy and benign market environment for market participants. 2017-05-19/en/2017/0519/1268.html
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On April 18, Pan Gongsheng, administrator of the State Administration of Foreign Exchange (SAFE) met with a delegation headed by Lee Theng Kiat, CEO of Singapore-based Temasek International in Beijing. The two sides had friendly dialogue and exchanged ideas on the investment strategy of Temasek in China, China's economic development and the opportunities to invest in the countries along the Belt and Road. 2017-04-19/en/2017/0419/1255.html
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On March 16, 2017, Pan Gongsheng, deputy governor of the People's Bank of China and administrator of the State Administration of Foreign Exchange (SAFE), met Martin Wolf, chief economics commentator at the Financial Times, the UK. Mr. Wolf held a lecture at the SAFE on the evolution of globalization and its impact on China. 2017-03-17/en/2017/0317/1253.html
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On December 11, 2016, the Bank for International Settlements (BIS) announced that China had officially started to report to the BIS locational banking statistics (LBS) under the international banking statistics (IBS) and released China's data on its website, which shows that the quality of China's balance of payments statistics has been internationally recognized again, thanks to continuous improvement on transparency. Joining LBS is another key progress China has made to achieve the targets of the G20 Data Gaps Initiative (DGI) since implementing the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6) and participating in the IMF's Coordinated Portfolio Investment Survey (CPIS). Expanding the IBS-reporting population has been one of the targets of the G20 Data Gaps Initiative (DGI). China's joining takes the number of LBS-reporting countries to 46. A total of 12 EMEs now report to the LBS, along with 12 offshore financial centers and 22 advanced economies. At end-June 2016, banks in China reported outstanding cross-border claims of USD 778 billion and liabilities of USD 918 billion. This makes China the 10th largest cross-border creditor in the international banking market. Turning to the currency composition of the cross-border claims and liabilities, at end-June 2016 banks in China were net lenders of US dollars, with dollar claims of USD 549 billion and dollar liabilities of USD 274 billion, resulting in net claims of USD 275 billion. However, USD 358 billion of Chinese banks' cross-border liabilities were denominated in Renminbi, while Renminbi-denominated cross-border claims of banks in China stood at USD 73 billion, leading to USD 285 billion in net cross-border liabilities. The BIS text is available on its official website at www.bis.org/publ/qtrpdf/r_qt1612s.htm. 2016-12-13/en/2016/1213/1229.html
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Pan Gongsheng, Deputy Governor of the People's Bank of China and Administrator of the State Administration of Foreign Exchange (SAFE), has recently met with William Conway, Co-founder and Co-CEO of The Carlyle Group in Beijing. The two sides exchanged ideas on global economic and financial trends and the exchange rate movements of major economies. According to Administrator Pan Gongsheng, the currencies of major developed and emerging markets have depreciated recently on the rising expectations of the Fed's interest rate hikes. So has the RMB exchange rate against the USD. Nevertheless, the RMB exchange rate has stayed stable compared with other international reserve currencies and currencies of emerging market economies, falling slightly at the global level. Further, the RMB has appreciated against a basket of multilateral exchange rates. China's economy has been operating steadily, featuring positive progress in restructuring, faster growth of the new economic dynamics and stable financial markets. Under such circumstances, the RMB exchange rate will remain stable at a reasonable and even level, and there are no grounds for continuous depreciation. 2016-10-31/en/2016/1031/1213.html
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On the afternoon of December 9, Mr. Zhu Min, former vice president of the IMF, was invited to give a lecture entitled "Global Economic and Financial Trends" at the SAFE. The lecture was chaired by Pan Gongsheng, deputy governor of the People's Bank of China (PBC) and administrator of the State Administration of Foreign Exchange (SAFE), and attended by relevant officials from the PBC and the SAFE. Mr. Zhu briefed the audience on the relationship between the world economy and finance, the spillovers of the world economy and finance, future trends of the global economy and the orientation of the US economic policies. He also interacted and exchanged ideas with the audience on the monetary and exchange rate policies, the future movements of the US exchange rate and the impact on China's economy, as well as China's balance of payments. 2016-12-12/en/2016/1212/1228.html