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Gain a Deep Understanding of the New Economic Trends in China —Learning and Implementing Xi Jinping's Ideas on the Economic New Normal Yi Gang, SAFE Administrator Since the 18th National Congress of the Communist Party of China, President Xi Jinping has summarized the success stories of China's reform and development, shared many of his thoughts and ideas, and made constructive statements and proposed new requirements, thus enriching and developing the theoretical system of socialism with Chinese characteristics. As we are entering a critical period for economic construction and development in terms of the pace of growth, the structural readjustments, and the stimulus policies, Xi proposed that we should adapt to the new normal state featuring the characteristics of the current development stage of the Chinese economy and remain calm while implementing the new strategies. This idea is of great theoretical value and of guiding significance to deepen the economic institutional reform, promote sustainable and healthy economic development, and achieve the two centennial goals (namely, to complete the building of a moderately prosperous society in all respects when the Communist Party of China celebrates its centennial in 2021, and to turn China into a modern socialist country that is prosperous, strong, democratic, culturally advanced, and harmonious when the People's Republic of China celebrates its centennial in 2049) and achieves the Chinese dream of the great renewal of the Chinese nation. Fully understand the grounds for the statement that China's economy is entering a critical period of slower growth, deepening structural readjustments, and absorption of the stimulus policies With an accurate understanding of the overall picture of China's economic growth, the CPC Central Committee led by Secretary General Xi Jinping has stated that in the long term China will see sound fundamentals in its economic and social development, but it is now facing a critical period as its economy is shifting from high-speed growth to mid-to-high-speed growth, its structural readjustments are under great pressures, and the preliminary stimulus policies are being absorbed. This statement shows that the CPC Central Committee is willing to face up to the reform and development challenges and is able to identify the principal contradictions and key links in economic development. Fully understanding the grounds for this statement is a prerequisite for delivering good performance in our economic work. The economic laws determine China's shift to slower economic growth. China's GDP has sustained an astonishing annual average growth rate of nearly 10 percent for more than thirty years since implementation of the reform and opening up, and our economic aggregates reached RMB 56.88 trillion in 2013. As the world's second-largest economy with huge economic aggregates, China is finding that it is difficult to maintain high-speed growth due to the constraints of production factors. Take labor factors as an example. China's population structure and supply and demand for labor have fundamentally changed. The number and share of the labor force dropped for the first time in 2012, and the aging population will continue to grow, making it difficult for China to achieve two-digit growth. International experience shows that economies decelerate to varying extents after reaching a certain stage. Japan and South Korea, for example, witnessed 23 and 36 years of high-rate growth after World War II, with their GDPs growing at an annual average rate of 9.7 percent and 8.02 percent respectively, but then their economies slowed down by nearly one-half. Facing an economic slowdown, we must thoroughly study and follow the economic laws and ensure that the range of adjustments is appropriate for improving the quality and efficiency of economic development. Accelerating the strategic readjustments of the economic structure is a very necessary approach to respond to the profound changes in the economic conditions. The manufacturing industry has long been the engine of China's economic growth and has played an important role in China's economic miracle. But the development model of China's manufacturing industry is relatively extensive, leading to many problems, such as a serious overcapacity. The capacity utilization of manufacturing companies in the first three quarters of 2013 was at the lowest level since 2006 and lower than the internationally recognized normal level. In particular, the capacity utilization of the main products in the iron and steel, cement, electrolytic aluminum, coke, shipping, photovoltaic, and so forth industries was lower than 50 percent. The overcapacity in the manufacturing industry led to decreases in the returns on capital and the marginal output. Moreover, the extensive development of the manufacturing industry has also caused many resource, ecological, and environmental problems, such as high energy consumption per unit of GDP, serious water, air, and soil pollution, and deteriorations in the ecological environment. If we are not determined and courageous today, we will pay a bigger price tomorrow. Given the profound changes in the development conditions, we must accelerate the strategic readjustments in the economic structure and combine economic growth with structural readjustments, improvements in the people's lives, and the construction of an ecological civilization to achieve sustainable development. Absorbing the preliminary stimulus policies is a prerequisite for safeguarding China's economic and financial security. To respond to the global financial crisis, China introduced a package of stimulus policies during the past few years, which contributed greatly to China's sound economic growth and the recovery of the world economy. However, these policies also had some negative effects, such as financial capital being off to a virtual reality, too many company debts, and the accumulation of potential risks in some areas and links, such as local financing platforms. Developing a high liability ratio and a high leverage ratio will compromise our future and may potentially endanger sustainable economic development. Therefore, we must take the initiative in economic development and properly handle the relationship between ensuring growth and guarding against risks to improve the efficiency and quality of economic development. Accurately understand the meaning of the economic new normal in China "China's development is entering a period of strategic importance. We must consolidate confidence to adapt to the new normal state featuring the characteristics of the current development stage of the Chinese economy and remain calm while making strategies," said Xi. This is a scientific analysis of the long-term economic trends in China, based on, among other things, a comprehensive analysis of China's economy during a period when economic growth is slowing down, structural readjustments are under great pressures, and the preliminary stimulus policies are being absorbed. We should accurately understand the meaning of the economic new normal, acquire good knowledge about the new economic trends, and promote the economy, reform, and development well to make sure that we will complete the building of a moderately prosperous society in all respects by 2020 and go on to fulfill further goals. China's economy is shifting from high-speed growth to mid-to-high-speed growth. After undergoing two-digit growth over the past thirty-plus years, China's economy is now gradually slowing down to mid-to-high-speed growth, which is an important sign of the new normal economic state. Such a speed is sustainable. "We must understand the relationship between sustainable and healthy development and GDP growth in an all-round way," stressed Xi. Ending the blind pursuit of high-speed economic growth is favorable for the optimization of resource allocations and for full utilization of resources, and for improvements in the quality and efficiency of economic development to ensure that the people can share in the fruits of the economic development. An economic slowdown means relatively slow economic growth compared with the previous high-speed growth, but this speed is still much higher than that in the developed economies and many emerging markets and this growth is more comprehensive, coordinated, and sustainable, featuring a more stable and rational structure. It is foreseeable that China's economic growth will contribute even more to global economic growth in the coming decade. The leading position of the manufacturing industry in the industrial structure is being shifted to the services industry. With its level being a key sign that measures the level of economic development in a modern society, the services industry is an important sector of the Chinese economy. But China's services industry was relatively immature in the past. The added value of this industry accounted for 46 percent of China's GDP in 2013, which outperformed that of the manufacturing industry for the first time, but it was still far behind the 70 percent which is the typical percentage of the services industry in GDP in the developed countries, indicating the boosting of the services industry on China's economic growth has yet to be unleashed. Under the new normal economic state, the position of the services industry in the industrial structure will further pick up. Since what we need is an economic growth speed that ensures improvements in the people's lives and full employment, the development of the services industry that can provide more job opportunities than the manufacturing industry is conducive to achieving the goal of full employment, enriching the provision of daily necessities, improving the people's lives, and achieving the growth of humanity. The development concept is being transformed from one-sided pursuit of GDP growth to humanitarian and environmental protection. Under the new normal economic state, efforts will be made to expand the reforms and to promote development based on the people-first philosophy and the principle of serving the fundamental interests of the overwhelming majority of the people rather than to seek GDP growth as the ultimate goal. "A good ecological environment is the fairest public good that is most beneficial to general well-being," Xi pointed out. The central government has been implementing an innovation-driven development strategy in recent years and regards energy-savings and emissions reductions as restrictive indicators for economic and social development to promote green, circular, and low-carbon development. People-first economic development means equal access to basic public services in urban and rural areas will be promoted at a faster pace, with an elimination of the urban-rural dual economic structure. China's urbanization has been accelerated in recent years. Its urban population exceeded its rural population for the first time at the end of 2011, accounting for 53.7 percent of the total population at the end of 2013, nearly equal to the world’s average. More and more migrant workers have access to basic urban public services. Meanwhile, new rural areas are being built, urban and rural development is becoming more balanced, and gaps between the rural and urban areas are being narrowed, indicating the fruits of development are being shared by more people in a more equitable way. Promote stable economic growth under the new normal state by deepening the reforms The critical period featuring slower economic growth, deepened structural readjustments and absorption of the stimulus policies, and the economic new normal are both an opportunity and a challenge. "To meet the people's new expectations, we must consolidate confidence in the reforms and promote the reform and opening up with more political courage and wisdom and more effective measures and methods," Xi stressed. During this critical period of strategic importance, we should remove the institutional and structural contradictions in economic development by deepening the reforms, give the market a decisive role in allocating resources by promoting the reforms in key areas and links, and allow the government to play a better role in the promotion of the sustainable and healthy development of the Chinese economy. Carrying out market-oriented reforms. First, streamline administration and delegate power to lower levels. Efforts should be made to minimize permissions, approvals, and qualification evaluations and to motivate market players to start businesses so as to continuously vitalize economic transformation. Second, accelerate improvements in the modern market system. We should develop open and transparent market rules and unified market access rules by formulating a negative list. We should deepen the reform of the factors market and establish a price system that can reflect scarcities and the supply-demand relationship to combine improving the efficiency of resource allocations and promoting economic growth. Third, energize micro units. We should ensure that diverse forms of ownership participate in competition in an open, fair, and just way and we should encourage non-public ownership to move into the services sector and high-technology areas. Fourth, expand internal and external opening up. We should promote bidirectional opening up of the capital market to increase the convertibility of cross-border capital and financial trade in good order. We should combine "inviting in" and "going out" to encourage foreign capital to participate in domestic M&As and integration, ease restrictions on domestic residents' overseas investments and establish the principal positions of companies and individuals in overseas investments. Carrying out innovation-oriented reforms. First, deepen the education reform to accelerate accumulation of human resources. We should make full use of the role of human resources as a source of innovations to a lay a solid foundation for the upgrading of the traditional industries and the development of industries such as new generation IT, new energy, and high-end equipment manufacturing and then to improve labor productivity and total factor productivity. Second, improve the systems and mechanisms of technology innovation. We should deepen the reform of technology systems and establish an open and transparent evaluation mechanism for national technological resource management and projects. We should uphold market-oriented technology innovations, strengthen the principal position of companies in technology innovations, and improve venture capital investment mechanisms and business models to promote the transformation of technology innovations into the dynamism of economic development. Third, promote the integration of technology and finance. We should increase the use and protection of intellectual property rights to make full use of the capital market to support innovations and the starting of businesses. Carrying out sustainability-oriented reforms. First, accelerate the building of mechanisms and systems for sustainable economic development. We should build a scientific indicator system, an assessment system, and a monitoring system for energy savings and emissions reductions, implement a target responsibility system regarding energy savings and emissions reductions and stress the restrictive roles of the indicators. Second, develop a green and circular economy. We should promote low-carbon technology, develop new and renewable energies, and enhance prevention and control of water, air, and solid waste pollution and traffic congestion. Third, protect the ecological environment. We should actively respond to global warming and continue to push ahead with ecological projects, such as natural forest protection, conversion of farmland to forests, and conversion of farmland to pastures, to promote coordinated development of the economy and the environment. Carrying out reforms that benefit all. First, build a reasonable and orderly income allocation pattern. We should adjust the distribution pattern of the national income by further increasing the proportion of labor remuneration in the initial distribution to synchronously enhance labor remuneration and labor productivity. We should improve the minimum wage and wage payment guarantee systems to bridge the income gaps between the rural and urban areas, between regions, and between industries. Second, establish a fair and sustainable social security system. We should integrate the basic pension and medical insurance systems for rural and urban residents, coordinate the minimum standard of living scheme for rural and urban residents, and accelerate the building of a basic public services system for all people. We should learn lessons from other countries regarding welfare policies and build a social security system that is appropriate for the level and stage of social and economic development in China, while avoiding welfare problems caused by overly high welfare or a failure to guarantee a minimum standard of living due to excessively low welfare. (The original text was released on page 7 of the People's Daily, dated November 3, 2014) 2014-11-26/en/2014/1126/1135.html
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In 2014, the State Administration of Foreign Exchange (SAFE) received and processed in 2014 52 proposals and motions in total from the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC), which mainly involved operations and administration of foreign exchange reserves, trade and investment facilitation, support of companies going global, overseas investments by individuals, and foreign exchange administration policies for special economic regions. The SAFE attached great importance to the processing efforts, arranged relevant work, and made great efforts to carry out the related tasks. As a result, the processing of the relevant proposals and motions for 2014 was completed successfully, which can be attributable to the following aspects: first, close attention from the leadership and thoughtful arrangements. With the significance of the proposals and motions processing stressed by the SAFE's Party Leadership Group, the leaders in charge of this processing effort convened a special meeting to make arrangements and raise requirements for the processing. Second, improved systems and standardized processing. A special measure has been developed to make sure the processing is institutionalized and standardized. Third, good coordination and communication to enhance the processing level. The SAFE took various measures to communicate with the delegates and further listened to their opinions and suggestions to ensure the quality of the processing. Fourth, strengthened training and rigorous overseeing. Intensive training was provided for the persons processing the proposals and motions and supervision was improved to make sure every proposal and motion was replied. After the completion of the processing, a wrap-up meeting was held to identify and summarize the experience gained and good practices in this processing effort. The year 2015 is a critical year in deepening the reforms in China in an all-round way, the first year in fully promoting the rule of law in China as well as the last year of the Twelfth Five-Year Plan period. The SAFE should take the processing effort of 2015 as a touchstone for the implementation of the gist of the 18th CPC National Congress, the Third and Fourth Plenums of the 18th CPC Central Committee and the Central Economic Work Conference and continue to improve its work styles, so as to do well in the processing of the proposals and motions from the NPC and CPPCC in 2015. 2015-03-11/en/2015/0311/1149.html
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To enhance internal control and external supervision of banks, the State Administration of Foreign Exchange (SAFE) has recently printed and distributed a circular that it would carry out a special inspection of 7 banks for foreign exchange compliance. This special inspection is designed to identify the typical problems and hidden risks in banks' foreign exchange business, understand banks' deficiency in implementing foreign exchange administration policies and regulations, promote banks to enhance their foreign exchange compliance and curb foreign exchange incompliance and illegalities. The focus of this inspection will be on the rectification of problems identified in previous inspections, internal controls of banks, their implementation of service principles, and their foreign exchange compliance. This inspection will be carried out in three phases. The first phase, starting from January 2015 and ending on February 9, is about self-check by banks and offsite inspection by foreign exchange authorities. Banks are required to conduct a full-scale self-check and foreign exchange authorities will carry out offsite inspection at the same time. The second phase, lasting from February 10 to mid-March 2015, will be focused on onsite inspection of some bank branches and sub-branches which are selected by the foreign exchange authorities. The third phase will be a bank rectification phase. Banks will be required to complete rectification of violations identified in their self-check and the inspection by foreign exchange authorities by the end of May 2015. According to the Circular, banks are required to conduct self-check in their systems by building a level-based accountability system and introducing comprehensive measures without any ignorance, making sure their self-checks are fruitful; they also should report their violations and illegalities, identify causes, conduct rectification and build and improve a long-term mechanism on foreign exchange compliance. To strengthen organization and leadership, the SAFE has established a special inspection leadership team to make decisions and offer guidance on key issues, and coordinate progress and problems to be solved during this inspection. 2015-02-06/en/2015/0206/1146.html
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In order to promote the construction of a credit system in the field of foreign exchange, strengthen penalties for dishonesty, and urge foreign exchange market players to operate in compliance with the laws, the Department of Management and Inspection of the State Administration of Foreign Exchange (SAFE) and the Credit Information Center of the People’s Bank of China signed a Memorandum of Cooperation regarding the collection of information on foreign exchange violations to be included in the basic database on financial credit information (the “Memorandum of Cooperation”). According to the Memorandum of Cooperation, starting from January 1, 2015, information on foreign exchange violations by enterprises and public institutions which have been involved in substantial violations and have received administrative penalties for evasion of foreign exchange controls, illegal purchases of foreign exchange, inward remittances in violation of the regulations, illegal settlements of foreign exchange, arbitrary changes in the use of foreign exchange funds or foreign exchange settlement funds, and illegal trading of foreign exchange will be included in the basic database on financial credit information of the People’s Republic of China (the “Credit Information System”). The relevant information on the foreign exchange violations will be added to the Credit Information System on a quarterly basis and will remain displayed in the system for five years. The goal of the inclusion of information on foreign exchange violations in the Credit Information System is to implement the relevant requirements of the Outline for the Planning of the Construction of a Social Credit System (2014–2020) (Guofa No. 21 [2014]), to promote the exchange and sharing of credit information of the financial regulatory authorities, to expand the application of foreign exchange credit information, to strengthen the imposition of penalties for dishonesty in the field of foreign exchange, and to promote operations by foreign exchange market players that are in full compliance with the laws. All foreign exchange market players shall seize this opportunity to further enhance their awareness of operations in compliance with the laws, strengthen internal controls, enhance their level of management, and standardize operational behavior in terms of their foreign exchange business. 2014-12-17/en/2014/1217/1141.html
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The State Administration of Foreign Exchange (SAFE) recently held in Beijing the 2014 high-level seminar for branch heads to convey the spirit of the Seminar for Presidents of the PBC Branches and Sub-branches, summarize and study foreign exchange administration practices in recent years, and open a new chapter in the foreign exchange administration reforms. Yi Gang, administrator of the SAFE, delivered a speech at the opening ceremony of the seminar. Also present were the deputy administrators, the head of the discipline inspection group, the chief economist, and the chief accountant from the SAFE, as well as the principals from the SAFE branches (Foreign Exchange Departments) and other departments of the SAFE. According to Yi Gang, as the economic and financial situations have undergone changes both at home and abroad, and the domestic reforms have deepened and been implemented in an all-round way since the first half of 2014, net inflows of foreign exchange receipts and payments have come within a balanced range, the supply and demand of foreign exchange have been improved, the capability to actively balance the BOP has been enhanced, and all foreign exchange administration reforms have been steadily promoted, thus creating a favorable environment for stimulating economic restructuring and transformation and upgrading. Yi Gang pointed out that since the "five changes" in the concepts and approaches to foreign exchange administration were first proposed by the SAFE Party Leadership Group in 2009, a series of fruits of reform that can withstand the test of time have been achieved through exploration and practice during the past five years . First, the change from administrative approval to monitoring and analysis has produced positive results. A substantial number of administrative approval items have been slashed. Since 2002 65 foreign exchange administration approval items, or nearly 80 percent of all approval items, have been removed, of which 27 have been canceled during the past five years. Regulatory integration, streamlining, and the delegation of powers have been accelerated, with more than 700, or over 60 percent, of the regulatory documents cancelled or declared invalid in recent years. The monitoring systems and institutions have been optimized, monitoring and capability building for analysis have been improved significantly, and monitoring and analytical products have been enriched. Second, there have been breakthroughs in the change from prior regulation to interim and ex post management. A multifaceted approach has been introduced to improve regulatory effectiveness through the use of multiple means and mechanisms. By introducing the system of interviewing company heads, a risk notification system has been implemented, classified management has been adopted, and the focus of regulation has been changed from more than 500,000 import and export companies to 80,000 90,000 key companies, especially the more than 4,000 class B and class C companies since the implementation of the reform of trade in goods. Special inspections have been carried out of key channels and players, such as entrept trade and banks, to clamp down on illegal behavior such as underground banks. Between 2011 and 2013 9,617 cases were investigated and dealt with, and fines in the amount of RMB 1.35 billion were imposed, more than double the amount between 2008 and 2010. Third, progress has been achieved in changing behavioral regulation to regulation of market players. Efforts have been made to explore new concepts, such as centralized receipts and payments of foreign exchange under the current account and centralized use of external debt limits via pilots for the centralized operation of MNC foreign exchange funds, to accumulate experience in regulating market players in an all-round way. The pilot program was promoted to regulate market players in good order in the branches and sub-branches of the SAFE, and "one-stop" services in the front office with comprehensive monitoring and inspections, integrated assessments and classified management in the middle and back offices, were introduced to build a regulatory service model that integrates analysis, regulation, and services for key players within the jurisdiction. Fourth, the positive list was changed to a negative list and "presuming guilty" was changed to "presuming innocent" and this has achieved preliminary results. An innovative "compliance confirmation" system was introduced, requesting that enterprises make commitments to operate according to the law, with the SAFE providing adequate ex ante conveniences. In recent policies, efforts have been made to explore and practice the management approach of a "negative list," such as for settlement of foreign exchange under capital funds and external debts, cross-border guarantees, and centralized operations of MNC foreign exchange funds. Yi Gang stressed that the entire society has reached a consensus to promote reform with respect to the direction and approaches of the foreign exchange administration reform to be well aligned with the requirements of the central government, and the reform concepts, such as slashing the administrative approval items and enhancing the interim and ex post regulation as well as the negative list. With liberated minds, we are less passive and more proactive in conducting the reform, thus laying a solid theoretical and practical foundation for deepening the reform. However, we should be clearly aware that the current accomplishments do not mark the end of the reform, but a new start for a further deepening of the reform. In face of the arduous task to reform foreign exchange administration, we must calmly and carefully think over the conditions and environment for foreign exchange administration from an international and holistic perspective and continue to deepen the challenging reforms by implementing the strategies and plans of the CPC Central Committee and the State Council. As the foreign exchange administration reform enters a "deep water zone," we should first promote the overall reform while making breakthroughs in key links. The overall reform plan and the top-level design, with a clear logic and definite measures, should be developed and implemented scientifically. Starting from in-depth issues such as the systems and mechanisms and based on the BOP situation, the priorities of the reform should be promoted step by step so as to unleash institutional bonuses via the overall reform. Second, regulation and deregulation should be carried out based on the market so as to enhance the effectiveness of foreign exchange administration, primarily by intensifying statistical monitoring and interim and ex post regulation. Third, we should systematically streamline and summarize the lessons from the previous reforms, based on the principle of practice being the sole criterion of truth, so as to identify a reform model that can be reproduced and promoted. As Yi Gang proposed, motivated by implementation of the spirit of the 18th CPC National Congress and the Third Plenum of the 18th CPC Central Committee and guided by the "five changes," efforts should be made to steadily promote an institutional reform and mechanism innovations, vigorously advance trade and investment facilitation, and enhance the ability of the foreign exchange administration to guard against risks and to serve the real economy during the next stage, with the aim of promoting an equilibrium in the BOP. First, deepening the reform, streamlining administration, and delegating more power to lower-level governments, promoting interim and ex post management, vigorously developing the foreign exchange market, and effectively managing and using the foreign exchange reserves. Second, guarding against risks, accelerating improvements in the monitoring, warning, and risk response mechanisms for cross-border capital flows, establishing a cross-border capital flow management system under a macro-prudential framework, and increasing the relevance and effectiveness of the foreign exchange inspections. Third, strengthening the foundation, improving the collection and comprehensive use of data, accelerating the construction and integration of the monitoring and analysis system, enhancing the development of officials and personnel to promote a management transformation, improving system building, and performing the administrative duties according to the law. At the seminar, four modules, including reform of the current account, reform of the capital account, regulation of market players, and integration of data, were specifically discussed and relevant experts and scholars were invited to present lectures. 2014-08-22/en/2014/0822/1126.html
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A recap meeting on carrying out the CPC's mass line campaign was recently held by the State Administration of Foreign Exchange (SAFE) to study the spirit of the speech delivered by General Secretary Xi Jinping at the CPC meeting for summarizing the first stage of the mass line campaign and for making plans for the second stage, and to sum up the SAFE's efforts in carrying out the campaign and to make plans for implementation of the "two programs and one plan," i.e., The Rectification and Implementation Program for Carrying Out the CPC's Mass Line Campaign by the Party Leadership Group of the NDRC, The Special Rectification Program for Carrying Out the CPC's Mass Line Campaign by the Party Leadership Group of the NDRC, and The Plan for Developing Systems for Carrying Out the CPC's Mass Line Campaign by the Party Leadership Group of the NDRC. Yi Gang, secretary and administrator of the Party Leadership Group and group leader of the Educational Practice Group, chaired the meeting and, on behalf of the SAFE Party Leadership Group, summed up the SAFE's efforts in implementing the campaign. The twenty-ninth Supervisory Team of the CPC's mass line campaign attended the meeting. Zhang Geng, head of the Supervisory Team, confirmed the achievements made by the SAFE in implementing the campaign and offered guidance on carrying out the spirit of Xi's speech and on further rectifying and carrying out the campaign. Also present were deputy administrators, heads of the discipline team, chief economists, chief accountants, and CPC members and officials, as well as heads of public institutions directly under the SAFE. It was agreed by the participants that Xi's profound speech is thought-provoking, relevant, and instructive, and is of significance for guiding the SAFE to sum up the mass line campaign. The meeting pointed out that under the guidance of the twenty-ninth Supervisory Team, CPC organizations at all levels, and CPC members of the SAFE, while focusing on building a progressive and clean government, have worked pragmatically for the people, have studied the CPC's mass line theories, have examined and corrected undesirable work styles, including formalism, bureaucracy, hedonism, and extravagance, have carried out rigorous criticisms and self-criticisms, and have worked hard to ensure verification and implementation, thus realizing obvious improvements in terms of awareness, reform and practice, and system building. As a result, CPC cadres and members have secured their ideals and beliefs, and their thinking and understanding have improved significantly. To be specific, the SAFE carried out “five shifts” in the concept and methodology of foreign exchange administration, straightened out the laws and regulations and streamlined administration, delegated power to lower levels more rigorously, deepened the results of the reform of the institutional mechanisms, and worked very hard to clean up undesirable work styles so as to achieve practical results. The meeting stressed that CPC organizations at all levels and CPC members of the SAFE must comply with the requirements of the twenty-ninth Supervisory Team of the CPC's mass line campaign to learn and implement the spirit of General Secretary Xi’s speech and align their thoughts and actions with the plans of the central government so as to perform their tasks well. Specifically, efforts should be made to improve the political life of the CPC by drawing on the valuable experiences of the first stage of the campaign, to clean up undesirable work styles as a long-term task, and to advance implementation of the "two programs and one plan" by focusing on verification and implementation and strengthening systemic construction, and especially rigorously combating formalism, bureaucracy, hedonism, and extravagance. As required by the meeting, all branches and sub-branches of the SAFE should participate in the second stage of the campaign under the leadership of the local branches of the People’s Bank of China. Drawing on the experiences of the first stage of the campaign, they are expected to improve their across-the-board capabilities to perform their tasks, enhance the cleaning up of undesirable work styles in the spirit of reform and innovation, and gather strength from the results of correcting undesirable work styles for deepening the reforms in an all-round way and with the aim of driving foreign exchange administration to a new high. 2014-01-24/en/2014/0124/1104.html
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A briefing on the inspection of the banks’ foreign exchange was recently held by the SAFE. The heads of the relevant businesses of 21 Chinese-funded banks and 11 foreign counterparts attended the meeting. It was pointed out at the meeting that in 2013 the SAFE earnestly implemented the decisions and arrangements of the CPC Central Committee and the State Council, rigorously promoted facilitation of trade and investment, carefully prevented risks arising from cross-border capital flows, increased efforts to inspect the banks, as the major channel of cross-border capital flows, seriously investigated foreign exchange–related violations by banks and actively warned the banks of the risks of foreign exchange operations so as to encourage the banks to improve their compliance with foreign exchange operations. Based on the findings, on a whole the banks’ compliance with foreign exchange operations has been improved, but violations still exist as banks put an emphasis on business expansion and neglect administration of internal controls. The meeting provided information on foreign exchange–related violations by banks, revealing a total of 439 cases discovered during 2013. The violations mainly included: 1. not handling foreign exchange settlements and sales in accordance with the relevant regulations. For example, some banks failed to create foreign exchange settlement and sale items separately and failed to handle their own foreign exchange settlement and sale business in compliance with the relevant regulations; while some banks handled foreign exchange capital settlements for companies and foreign exchange settlements and sales for individuals in violation of the relevant rules. 2. Failing to review the authenticity and consistency of the capital receipts and payments on the current account in accordance with the relevant regulations. For instance, some banks handled the balance of foreign exchange generated through trade in goods for unlisted companies, and some banks failed to review the retained data during the handling of capital receipts and payments for trade in goods (transit trade included) in compliance with the relevant regulations and provided receipts and payments business for Class B and Class C companies which is in violation of the relevant rules. 3. Violating the relevant regulations to provide capital receipts and payments on the capital account. Some banks failed to make timely foreign payments using the capital (RMB) acquired by handling foreign exchange capital settlements and sales in accordance with the relevant regulations. 4. Not complying with the relevant regulations to make statistical declarations on the balance of payments and to submit the relevant data. In addition, internal control systems were not improved, authenticity reviews were mere formalities, and some banks engaged in arbitrage by taking advantage of inbound and outbound linkages and avoiding the regulations by means of off-balance-sheet business innovations. All these issues require more attention. It was requested at the meeting that all banks should enhance their macro awareness, handle the relationship between individual benefits and the policy orientation in a correct manner, actively conduct their foreign exchange business in a rational way, enhance a sense of responsibility, practically carry out “understanding your customers,” seriously fulfill their duty of authenticity reviews, improve compliance awareness, strengthen internal control administration and system construction, and further improve the operational level of compliance to create a sound environment for the foreign exchange market. It was stressed at the meeting that in 2014 the SAFE will, in accordance with the decisions and operations of the CPC Central Committee and the State Council, continue to decentralize and further improve the level of facilitation of trade and investment, promote growth of the real economy, and, at the same time, closely monitor cross-border capital flows, prevent shocks from two-way capital flows across borders, maintain the bottom line in avoiding systemic and regional financial risks, and continuously reinforce and improve inspections of the foreign exchange business of financial institutions, such as banks, to encourage the finance industry to better serve the real economy and maintain foreign-related economic and financial security. 2014-04-23/en/2014/0423/1112.html
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A meeting was recently held by the State Administration of Foreign Exchange (SAFE) on broadening theoretical studies among the central teams of the party leadership group. The meeting was convened to convey the spirit of the Third Plenum of the 18th CPC Central Commission for Discipline Inspection (CCDI) and to formulate a plan for implementation of the relevant measures. Yi Gang, administrator and secretary of the Party Leadership Group of the SAFE, chaired the meeting. It was agreed by the participants that Xi Jinping, general secretary of the CPC Central Committee, had provided in his speech an overview of current circumstances regarding the construction of a clean government and the fight against corruption, offering in-depth insights into the significant theoretical and practical issues related to the building of a clean government and putting forward the general ideas and major assignments for combating corruption and for upholding integrity both in the present and in the foreseeable future. This is of far-reaching significance to the spirit of reform in CPC self-discipline by Party members, in the rigorous enforcement of Party discipline, and in the advancement of the building of a clean government and an anti-corruption campaign . The meeting will require that all participants carry out the spirit of Xi's speech as a current key political task. Officials and staff members under the administration of the SAFE are required to acquire a deep understanding of Xi's speech, align both thoughts and actions with the strategic planning of the CPC Central Committee, and implement the relevant measures to meet the needs of the foreign exchange administration. They are required to make innovations in the current mechanisms for combating corruption, implement relevant measures including institutional guarantees, strictly enforce CPC political, organizational, and financial discipline, earnestly carry out the eight-point guidelines issued by the CPC leadership, and persistently rectify undesirable work styles, including formalism, bureaucratism, hedonism, and extravagance. The use of power by officials will be placed under stricter scrutiny, with intensified efforts to combat corruption. A system of punishment and prevention of wrongdoings will be introduced to promote the building of a system and a mechanism to prevent the risks of corruption. Efforts will be intensified to combat corruption and to uphold integrity in a more scientific manner, thus making more significant contributions to the building of a clean government and to the implementation of the anti-corruption campaign. It was decided at the meeting that in the near future the SAFE will hold a working conference on construction of Party conduct and construction of honest and clean government, with the aim of conveying and studying the theory of the Third Plenum of the 18th CPC Central Commission for Discipline Inspection, and formulating a plan for implementation of the relevant measures. 2014-01-17/en/2014/0117/1101.html
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A working conference on cracking down illegal and criminal activities related to the illegal trading of foreign exchange was held recently by the State Administration of Foreign Exchange (SAFE) and the Ministry of Public Security (MPS). At the conference, the joint efforts by the SAFE and the MPS in 2013 to crack down on illegal and criminal activities related to the illegal trading of foreign exchange were summarized and relevant work for 2014 was arranged. In addition, advanced groups and individuals in terms of combating illegal and criminal activities related to the illegal trading of foreign exchange in 2013 were commended. It was pointed out at the conference that the foreign exchange authorities and the public security organs at all levels have tightened cooperation and have jointly carried out investigations according to the arrangements of the CPC Central Committee and the State Council, uncovering in 2013 more than forty cases involving foreign exchange –related illegal and criminal activities including the illegal trading of foreign exchange in an amount over RMB50 billion and more than one hundred criminal suspects were captured on site. Great achievements were made and foreign exchange–related illegal and criminal activities of all kinds were successfully deterred. It was emphasized at the conference that fluctuations in cross-border capital flows have been increasing since 2013. Therefore, there is a heavy responsibility to prevent unusual foreign exchange capital flows. The foreign exchange authorities and public security organs at all levels are required to strengthen study and judgments about the situation, make innovations in terms of the means of investigation, and improve the relevance and effectiveness of cracking down on foreign exchange–related illegal and criminal activities. Efforts shall be made to increase regional cooperation and to consolidate centralized governance in key regions in due time so as to build joint forces for cracking down on foreign exchange–related illegal and criminal activities. Meanwhile, upstream and downstream crimes related to the illegal trading of foreign exchange shall be pursued based on available clues, crime networks shall be thoroughly investigated, in particular criminal activities including money laundering and activities transferring hidden illegal money. In addition to investigating the criminal responsibility of the operators of underground money shops, administrative penalties shall be imposed on the participants in underground money shop transactions to increase punishment for illegal and criminal activities, such as the illegal trading of foreign exchange. In addition, investigations and research shall be strengthened in order early on to discover and to prevent new types of foreign exchange–related illegal and criminal activities. It was requested at the conference that the foreign exchange authorities and public security organs in 2014 should continue to deepen their cooperation, upgrade the means of investigations, and continue to maintain high pressure and to crack down on foreign exchange–related illegal and criminal activities so as to safeguard the healthy development of China’s foreign-related economy and finance. 2014-07-07/en/2014/0707/1119.html
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In 2013 the State Administration of Foreign Exchange (SAFE) received and handled 61 proposals from the NPC and the CPPCC. These proposals mainly involved areas such as the facilitation of trade and investment, support for enterprises “going-global,” and management of foreign exchange reserves. The SAFE attached great importance to the handling of these proposals, arranged relevant work, and made great efforts to carry out the related tasks. As a result, the handling of the relevant proposals for 2013 was completed successfully. The leadership placed great emphasis on the handling of the proposals and made detailed plans for the relevant tasks. The leading Party group of the SAFE also attached great importance to the handling of the proposals; the leadership of the Party branches held special meetings to make plans for the relevant work and to complete the specific requirements. Efforts were made to make institutional improvements to standardize the relevant work. A series of measures was formulated to ensure that the relevant work would be implemented in a systematic and standardized manner. The SAFE also managed to enhance coordination and communicationsso as to improvethe effectiveness and efficiency of the handling of the proposals. Various measures were taken to communicate with the delegates through a number of channels and to listen to comments and suggestions from the delegates in order to ensure the quality of the handling of the proposals. Efforts were intensified to provide training to relevant personnel and to enhance supervision. Relevant personnel who handle proposals from the NPC and the CPPCC were trained in a focused way, and supervision was enhanced so that there would be a response to each task. After the handling of the proposals, meetings were held to sum up the experience and good practices. The year 2014 is the first year that the SAFE has carried out the spirit of the Third Plenary Session of the 18th Central Committee of the CPC and it is an important year to fulfill the objectives of the 12th Five-Year Plan. The SAFE will make conscientious efforts to handle the 2014 proposals from the NPC and the CPPCC, which will be regarded as a benchmark for assessing implementation of the eight-point regulations of the Party Central Committee and for making efforts to carry out the mass line educational campaign. In 2014 the SAFE will further improve its work style, fulfill the relevant tasks in a pragmatic manner, and endeavor to achieve good performance with regard to the handling of the relevant proposals. 2014-02-27/en/2014/0227/1110.html