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At the end of June 2011, China’s outstanding external debt (excluding that of the Hong Kong SAR, Macao SAR, and Taiwan Province) reached USD642.528 billion. Specifically, the outstanding registered external debt reached USD402.828 billion and the balance of trade credit was USD239.7 billion. With respect to the term structure, the outstanding long- and medium-term external debt (with the remaining term) was USD180.417 billion, accounting for 28.08 percent of the outstanding external debt. The outstanding short-term external debt (with the remaining term) was USD462.111 billion, accounting for 71.92 percent of the outstanding external debt. Specifically, the outstanding registered short-term external debt (with the remaining term) was USD222.411 billion and the balance of trade credit was USD239.7 billion. In terms of the composition of the short-term external debt, at the end of June 2011 the balance of trade-related credit was USD348.221 billion, accounting for 75 percent of the outstanding short-term external debt (with the remaining term). Specifically, trade credit and trade financing accounted for 52 percent and 23 percent respectively of the outstanding short-term external debt. As trade-related credit is mainly based on real import and export trade, its growth is basically consistent with that of China’s import and export trade. Therefore, the increase in the proportion of the short-term external debt will not affect the security of China’s external debt. In terms of types of debtors, the outstanding debt of Chinese-funded financial institutions was USD182.852 billion, accounting for 45.39 percent of the outstanding registered external debt; the outstanding debt of foreign-funded enterprises was USD122.379 billion, accounting for 30.38 percent; the outstanding debt of foreign-funded financial institutions was USD52.418 billion, accounting for 13.01 percent; the outstanding sovereign debt borrowed by ministries under the State Council was USD39.353 billion, accounting for 9.77 percent; the outstanding debt of Chinese-funded enterprises was USD5.679 billion, accounting for 1.41 percent; and the outstanding debt of other institutions was USD147 million, accounting for 0.04 percent. In terms of the types of debts, the balance of international commercial loans amounted to USD334.641 billion, accounting for 83.07 percent of the outstanding registered external debt, representing a 3.09-percentage-point increase compared with that at the end of 2010. The balance of foreign government loans and loans granted by international financial organizations amounted to USD68.187 billion, accounting for 16.93 percent. In terms of the currency structure, debt in U.S. dollars accounted for 78.27 percent of the outstanding registered external debt, representing an increase of 7.86 percentage points compared with that at the end of 2010. Debt in Japanese yen accounted for 7.99 percent, representing a decline of 0.57 percentage point compared with that at the end of 2010. Debt in euro accounted for 4.09 percent, representing a decline of 0.32 percentage point compared with that at the end of 2010; and other kinds of debt including SDRs and HKD accounted for 9.65 percent of the outstanding registered external debt, a decline of 6.97 percentage points compared with that at the end of 2010. In terms of industrial sectors in which the debt is invested, with reference to the Industrial Classification of the National Economy, USD50.292 billion was invested in the manufacturing sector, accounting for 23.79 percent of the medium- and long-term outstanding registered external debt (based on contract terms); USD26.496 billion was absorbed by the transportation sector, the warehousing sector, and the postal-service sector, accounting for 12.53 percent; USD17.133 billion went to the production and supply of electric power, and the coal, gas, and water sectors, accounting for 8.1 percent; USD8.13 billion was absorbed by the IT services sector, accounting for 3.85 percent; and USD10.626 billion was channeled to the real estate sector, accounting for 5.03 percent. From January to June 2011, the long- and medium-term external debt totaled USD19.579 billion, a year-on-year decrease of USD197 million, or 1 percent. Repayment of the principal was USD11.412 billion, a year-on-year decrease of USD983 million, or 7.93 percent. Payment of interest was USD1.107 billion, a year-on-year decrease of USD336 million, or 23.28 percent. 2011-09-16/en/2011/0916/1014.html
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The SAFE recently released the revised data on China’s Balance of Payments Statement for the second quarter and the first half of 2011. In Q2 of 2011 the current account and the capital and financial account continued to post a "twin surplus" and international reserves maintained a growing momentum. The surplus under the current account totaled USD59 billion. Specifically, according to the statistical coverage of the balance of payments, the surpluses in goods and current transfers reached USD66.9 billion and USD6.5 billion, respectively, whereas the deficit in trade in services and income amounted to USD11 billion and USD3.3 billion respectively. Meanwhile, China’s surplus under the capital and financial account totaled USD97.7 billion. In particular, net inflows of direct investments, portfolio investments, and other investments amounted to USD47.9 billion, USD11.1 billion, and USD37.3 billion respectively. International reserves registered an increase of USD142.5 billion (exclusive of changes in the value of non-transaction factors such as exchange rates and prices). Specifically, foreign exchange reserve assets posted an increase of USD143 billion. In the first half of 2011, China’s surplus under the current account totaled USD87.8 billion. The ratio of the surplus under the current account to GDP during the same period was 2.8 percent. Meanwhile, China’s surplus under the capital and financial account totaled USD183.9 billion. China’s international reserve assets posted an increase of USD283.7 billion. In addition, the BOP Analysis Team of the SAFE released China’s Balance of Payments Report for the first half of 2011 so as to facilitate understanding of the data and analysis of China’s balance of payments among all groups in society. 2011-09-30/en/2011/0930/1016.html
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The SAFE recently released the Preliminary Data on China’s Balance of Payments Statement for the Third Quarter of 2011. The current account and the capital and financial account posted a “twin surplus” in Q3 of 2011, and international reserves maintained their growing momentum. In Q3, the surplus under the current account totaled USD57.8 billion. Specifically, according to the statistical coverage of the balance of payments, the surpluses in goods and current transfers reached USD85.3 billion and USD6.9 billion respectively, whereas the deficit in trade in services and income amounted to USD20.2 billion and USD14.1 billion respectively. Meanwhile, China’s surplus under the capital and financial account (including net errors and omissions) totaled USD33.9 billion. In particular, net inflows of direct investments amounted to USD35.9 billion. International reserve assets posted an increase of USD91.7 billion. Specifically, transactions in foreign exchange reserve assets registered an increase of USD92.1 billion (exclusive of the influence of non-transactional changes in value such as changes in the exchange rates and prices), the reserve position in the IMF registered a decline of USD300 million, and special drawing rights registered a decline of USD100 million. In the first three quarters of 2011, China’s surplus under the current account totaled USD145.6 billion and the ratio of the surplus under the current account to GDP was 3.0 percent. Meanwhile, this year China’s surplus under the capital and financial account totaled USD229.8 billion (including net errors and omissions). China’s international reserve assets posted an increase of USD375.4 billion. 2012-01-04/en/2012/0104/1019.html
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The SAFE recently released China ’s International Investment Position as of the end of June 2011. The statistics reveal that at the end of June 2011 China’s external financial assets hit USD4615.2 billion, external financial liabilities reached USD2630.1 billion, and external net financial assets totaled USD1985.1 billion. Among the external financial assets, direct investments abroad amounted to USD329.1 billion, portfolio investments USD260.4 billion, other investments USD755.1 billion, and reserve assets USD3270.6 billion, accounting for 7 percent, 6 percent, 16 percent, and 71 percent respectively. In terms of external financial liabilities, foreign direct investments totaled USD1583.8 billion, portfolio investments USD230.9 billion, and other investments USD815.4 billion, accounting for 60 percent, 9 percent, and 31 percent of external financial liabilities respectively. The International Investment Position (hereinafter referred to as the IIP) is a statistical statement reflecting the stocks of financial assets and liabilities of one country or region to other countries or regions in the world at one specific point; together with the Balance of Payments Statement (BOP Statement) it constitutes the complete international accounts system, indicating the country’s or region’s trade flows. FILE: China's International Investment Position(2011Q2) 2011-10-19/en/2011/1019/1017.html
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According to statistical data released by the State Administration of Foreign Exchange (SAFE), in August 2011 the amount of foreign exchange settlement and sales by banks on behalf of clients amounted to USD144.4 billion and USD106.5 billion respectively. The surplus of foreign exchange settlement and sales by banks on behalf of clients amounted to USD37.8 billion. For the first eight months of 2011, the cumulative amount of foreign exchange settlements and foreign exchange sales by banks on behalf of clients amounted to USD1068.6 billion and USD713.9 billion respectively. The foreign exchange settlement and sales surplus was USD354.8 billion. In August 2011, foreign-related receipts and payments by domestic banks on behalf of clients amounted to USD211.9 billion and USD185.8 billion respectively, and the surplus of foreign-related receipts and payments reached USD26 billion. For the first eight months of 2011, the cumulative foreign-related receipts and payments of banks on behalf of clients amounted to USD1500.9 billion and USD1264.9 billion respectively; and the surplus of foreign-related receipts and payments reached USD236 billion. 2011-09-28/en/2011/0928/1015.html
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According to the statistical data released by the State Administration of Foreign Exchange (SAFE), in September 2011 the amount of foreign exchange settlements and sales by banks on behalf of clients amounted to USD142.6 billion and USD116.6 billion respectively. The surplus of foreign exchange settlements and sales by banks on behalf of clients amounted to USD26 billion. For the first nine months of 2011, the cumulative amount of foreign exchange settlements and sales by banks on behalf of clients amounted to USD1211.2 billion and USD830.5 billion respectively. The surplus of foreign exchange settlement and sales was USD380.7 billion. In September 2011, foreign-related receipts and payments by domestic banks on behalf of clients amounted to USD209 billion and USD197 billion respectively, and the surplus of foreign-related receipts and payments reached USD12 billion. For the first nine months 2011, the cumulative foreign-related receipts and payments of banks on behalf of clients amounted to USD1700.9 billion and USD1461.9 billion respectively; and the surplus of the cumulative foreign-related receipts and payments reached USD248 billion. 2011-10-31/en/2011/1031/1018.html
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According to statistical data released by the State Administration of Foreign Exchange (SAFE), in October 2011 the amount of foreign exchange settlement and sales by banks on behalf of clients amounted to USD115.2 billion and USD112.1 billion respectively. The surplus of foreign exchange settlement and sales by banks on behalf of clients amounted to USD3.2 billion. For the first ten months of 2011, the cumulative amount of foreign exchange settlement and sales by banks on behalf of clients amounted to USD1326.5 billion and USD942.6 billion respectively. The surplus of foreign exchange settlement and sales was USD383.9 billion. In October 2011, foreign-related receipts and payments of domestic banks on behalf of clients amounted to USD186.8 billion and USD175.9 billion respectively; and the surplus of foreign-related receipts and payments reached USD10.9 billion. In the first ten months 2011, the cumulative foreign-related receipts and payments of banks on behalf of clients amounted to USD1896.7 billion and USD1637.8 billion respectively; and the surplus of the cumulative foreign-related receipts and payments reached USD258.9 billion. 2012-01-04/en/2012/0104/1021.html
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Question 1: What have the foreign exchange authorities done about cracking down on illegal and irregular capital inflows during the past five years? Answer: In recent years, facing the complicated and volatile economic and financial situations both at home and abroad, the State Administration of Foreign Exchange (SAFE), in accordance with the decisions and arrangements of the CPC Central Committee and the State Council, deeply implemented the scientific outlook on development, adhered to the principle of “expanding domestic demand, making structural adjustments, reducing the surplus, and promoting the balance of payments,” strengthened the monitoring and management of cross-border capital flows, increased efforts to carry out foreign exchange inspections on the basis of developments in the change of situation, improved foreign exchange inspection methods, rigorously cracked down on illegal and irregular flows of foreign exchange funds, and effectively guarded against the impact of cross-border capital flows. From 2007 to 2011, the foreign exchange authorities investigated a total of over 15,000 cases of activities in violation of the foreign exchange laws and regulations, and imposed a total of RMB 1.27 billion in administrative fines. In 2007, the SAFE carried out a “Comprehensive Inspection of the Inflow and Settlement of Foreign Exchange Funds” in ten coastal areas, such as Guangdong, whose total amount of foreign exchange receipts and payments accounted for more than 50% of China’s total, basically determining the channels for the inflow of illegal and irregular foreign exchange funds, such as those in the guise of foreign direct investment and trade in goods. In 2008, China ’s surplus of foreign exchange settlement and sales continued to expand, and the situation worsened in terms of the surplus of foreign exchange settlement and sales in trade in goods exceeding the surplus of customs imports and export trade. The SAFE carried out special inspections and investigations in five regions, such as Jiangsu, of the situation of importing without foreign exchange payments and making foreign exchange payments without foreign exchange purchases, and determined the reason for such a situation in terms of the trade in goods and its impact on the sharp increase in the surplus of foreign exchange settlement and sales. In 2009, the SAFE carried out special inspections of foreign-invested enterprises in ten regions, such as Liaoning, and discovered violations of the regulations on foreign exchange administration, e.g., some foreign-invested enterprises handled the procedures for profit remittances by making use of false vouchers, and for the foreign exchange settlement of capital by making use of false materials, and willfully changed the use of funds after conversion. In 2010, the SAFE organized and carried out special actions for dealing with and cracking down on hot money in 13 provinces (cities) with a large volume of foreign exchange business, carried out a comprehensive inspection of the foreign exchange inflows by such key channels as trade in goods and foreign direct investments, and rigorously cracked down on irregular cross-border capital flows. In 2011, the SAFE promoted throughout the country special actions for dealing with and cracking down on hot money. During the year, the foreign exchange authorities investigated and handled a total of 3,488 cases involving activities in violation of the regulations on foreign exchange administration, collected RMB 503 million in penalties and confiscations, and made outstanding achievements in dealing with and cracking down on the inflows of hot money. Question 2: What achievements have the foreign exchange authorities made in recent years in terms of cracking down on major activities in violation of the foreign exchange laws and regulations, such as illegal banks? Answer: The SAFE pays much attention to investigation of major cases in violation of the foreign exchange laws and regulations involving large amounts, wide regions, and many participants. The major cases involved a huge volume of funds, caused great damage to domestic macro-controls and market stability, and had an adverse social impact. From 2007 to 2011, the SAFE overcame difficulties and gathered its forces together to deal a crushing blow to the illegal activities. During that period, the foreign exchange authorities investigated a total of 23 major cases, involving RMB 31.937 billion; cooperated with the public security bodies to ferret out 65 cases involving illegal banks, 26 cases involving online foreign exchange speculation, and 119 cases involving illegal sales and purchases of foreign exchange, with a total amount of over RMB 100 billion; apprehended more than 1,000 suspects, and imposed a total of RMB 160 million in administrative fines; and rigorously cracked down on the arrogance of the offenders and criminals violating the laws on foreign exchange administration and effectively safeguarded the economic and financial order of China. While rigorously cracking down on the major activities in violation of the laws and regulations, such as the illegal banks, the SAFE implemented measures based on a combination of dredging and blocking principles, improved regulatory measures, further improved the convenience of services, satisfied the reasonable demands of the society for cross-border payments, and put pressure on the space for illegal foreign exchange trade. Question 3: What are the key targets of inspection in the foreign exchange authorities’ crack down on the illegal and irregular cross-border flows of foreign exchange funds? Answer: The SAFE firmly focused on the key link of cross-border capital flows, i.e., the financial institutions, such as the banks, in its inspections, and deeply carried out special inspections of financial institutions. In 2007, the foreign exchange authorities carried out special inspections of the foreign exchange collection and settlement and the short-term external debt in 208 banks and branches in four regions, such Beijing . In 2008, the foreign exchange authorities carried out special inspections on implementation of the management policy for the foreign exchange settlement of capital by the designated foreign exchange banks in ten regions, including Guangdong and Fujian . In 2009, the foreign exchange authorities carried out comprehensive inspections of foreign exchange business compliance of the head offices and nine branches of two joint-stock banks. In 2010, in consideration of such problems as the rapidly expanding scale of the inflows of foreign exchange funds through the banks, the foreign exchange authorities intensified their efforts to inspect the banks’ foreign exchange business. In 2011, the foreign exchange authorities further increased the frequency of inspections. While carrying out special inspections of the head offices of Chinese- and foreign-funded banks, the foreign exchange authorities carried out sample inspections in return visits to 26 banks that had been inspected in 2010 and effectively consolidated the achievements of these inspections. Question 4: In recent years, the foreign exchange authorities’ achievements in the investigation of cases involving illegal and irregular capital such as hot money have significantly improved. What is the main reason for this? Answer: As the scale of foreign exchange receipts and payments continuously expands, the foreign exchange trade methods become more complicated, and the illegal and irregular flows of foreign exchange funds, such as hot money, become more complicated and secretive, consequently, the traditional foreign exchange inspection methods that rely on manpower and manual work can no longer meet the work requirements of the situation. In order to improve the inspection efficiency and precisely crack down on illegal and irregular funds such as the hot money, the SAFE energetically elevated and improved the off-site inspection methods. In 2010, the SAFE developed the Off-site Foreign Exchange Inspection System. The system has wide coverage and a strong search ability for information, can rapidly and accurately lock the subjects in violation of the laws and regulations and their violation activities, strengthened the ability of the foreign exchange authorities to deeply search for clues about illegal and irregular capital flows, changed the past working mode that was based upon extensive screening, and played an important role in improving the accuracy, initiative, and effectiveness of cracking down on illegal and irregular flows of foreign exchange funds, such as the hot money. Question 5: The special actions dealing with and cracking down on hot money contribute to deterring flows in violation of the foreign exchange laws and regulations. In addition, what measures do the foreign exchange authorities have to enhance the law-abiding awareness of market players? Answer: Based upon regulatory practices in recent years, most of the market players carried out lawful foreign exchange operations, most of the demand to use foreign exchange and transactions had authentic bases, and part of the activities in violation of the regulations on foreign exchange administration were due to a lack of knowledge of the policy adjustments and regulatory changes in foreign exchange administration. Therefore, in recent years, while rigorously cracking down on activities in violation of the foreign exchange laws and regulations, the SAFE placed high priority on foreign exchange policy propaganda and alertness education and actively took a variety of measures to promote lawful operations by foreign exchange business operators. First, increasing efforts on positive propaganda, and reducing unintentional irregular activities. One the one hand, the foreign exchange authorities spread the foreign exchange administration policies through a variety of media, such as television, newspapers, and networks; on the other hand, the foreign exchange authorities introduced foreign exchange administration knowledge and business handling procedures through such means as on-site consultations and the distribution of brochures so as to actively help foreign-related enterprises and the public better acknowledge and understand foreign exchange administration policies and regulations and the specific handling procedures, and to reduce unintentional irregular activities by foreign exchange transaction participants. Second, increasing efforts for the disclosure of information on illegal and irregular activities to deter activities in violation of the laws and regulations. From 2007 to 2011, the SAFE provided the public with services for searching and disclosing information on illegal and irregular activities in a total of 9,775 enterprises. In 2010 and 2011, the SAFE publicly exposed some major irregular activities, and disclosed, in 6 batches, typical cases of activities in violation of the foreign exchange laws and regulations involving 17 bank violators, 26 enterprise violators, and 13 individual violators. Question 6: What arrangements do the foreign exchange authorities have this year to crack down on illegal and irregular cross-border capital flows? Answer: In 2012, the SAFE will thoroughly implement the spirit of the Central Economic Working Conference and the National Financial Working Conference, grasp well the general keynote of the work for “Steady Development,” continuously enhance the sensitivity and prospects of inspection work, and increase efforts to monitor and crack down on unusual cross-border capital flows, such as hot money; give full play to the advantages of the Off-site Foreign Exchange Inspection System, and carry out special inspections and investigations; strengthen resource integration and interdepartmental cooperation, and continue to increase efforts to crack down on illegal and criminal activities with respect to foreign exchange, such as illegal banks; actively improve the inspection methods, perfect the inspection means, and improve the relevant and effectiveness of foreign exchange inspection work; seriously punish activities in violation of the foreign exchange laws and regulations in accordance with the law, create a stable, harmonious, and sound market environment for foreign exchange reform and development, and effectively safeguard the economic and financial security of China. 2012-06-07/en/2012/0607/1053.html
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On May 16, 2012, the 37th annual meeting of the International Organization of Securities Commissions (IOSCO) convened in Beijing . The China Securities Journal conducted an interview with M SunLujun, head of the Capital Account Administration Department of the SAFE, on issues related to the QFII system. Q1: This year marks the 10th year since China launched the QFII system. How do you regard implementation of the system during the past ten years? A: Ten years have past since the QFII system was launched in China at the end of 2002. It is an institutional arrangement under such circumstances that foreign investors are granted limited access to China ’s capital market, and the RMB capital account remains nonconvertible. This arrangement allows qualified foreign institutional investors living up to certain standards to make portfolio investments in China 's capital market within verified investment quotas. Implementation during the past ten years shows that the QFII system is an important move by the government to promote the opening-up of the capital market and the convertibility of the RMB capital account. The involvement of QFIIs in the domestic stock market has played an important role in improving the framework of the system, investment philosophy, corporate government, risk control, and technical level of the capital market, as well as enhancing the services of domestic custodians and investment banks. It also stimulates cooperation between domestic and foreign financial institutions, facilitates the standardization and internationalization of the capital market, and provides practical experience for further reform and development of the capital market. Q2: From the perspective of the assignment of responsibilities, the CSRC is currently responsible for examining and approving the qualification and market admittance of QFIIs, while the SAFE is responsible for examining and approving the QFII quota to invest in the domestic stock market. Could you briefly describe the procedures for QFII quota examination and approval? A: According to the relevant laws and regulations of the QFII system, QFII institutions shall, upon receipt of portfolio investment business licenses from the CSRC, submit through trustees, within one year, investment quota applications to the SAFE. The SAFE implements a collective examination mechanism to examine the investment quotas. A quota examination committee is established consisting of the heads of the SAFE departments to examine QFIIs that have submitted complete and regulatory compliant applications. A meeting is held once a month to examine the applications. This mechanism has played an active role in enhancing the transparency, fairness, standardization, and timeliness of the QFII quota examination. The SAFE has maintained close communications and coordination with the relevant CSRC departments. An effective information-sharing mechanism has been established to facilitate communications. Q3: Could you say something about examination and approval of the QFII quota in recent years? A: Since implementation of the QFII system, the SAFE has worked closely with the CSRC in controlling the pace of the quota examination and in increasing the scale of investments by QFIIs. This has been achieved in accordance with the government target to support and promote the reform and development of the capital market, and based on the circumstances of the BOP conditions and the development of the stock market. As of May 16, 2012, the SAFE had approved an investment quota of USD26.013 billion for 138 QFIIs (excluding three institutions with nullified quotas due to changes in the investment entities and the approved relevant quotas). In general, the pace of the quota examination is consistent with the demand of the QFIIs. For instance, during the initial period of QFII implementation and the expansion of the global financial crisis in 2008, the amount of the approved quota was relatively small due to fewer applications submitted by the QFIIs; during periods when the QFII system was steadily carried out, the SAFE approved average quotas of USD3-3.5 billion each year. It should be noted that in 2011 the country faced great pressures from cross-border fund inflows. In response, the SAFE properly slowed the pace of QFII quota examination, with a total amount of USD1.92 billion approved for the whole year. Since the beginning of 2012, China ’s balance of payments has moved toward equilibrium. In order to further promote the reform and development of the capital market, the SAFE timely adjusted and accelerated the pace of the QFII quota examinations. As of May 16, 2012, USD4.373 billion had been granted to 38 QFIIs, nearly equal to the total investment quota approved in 2010 and 2011. Q4: We noticed that the CSRC recently released data showing that by the end of April 2012, 163 overseas institutions had been granted QFII qualifications. According to data newly released by the SAFE, as of May 8, 2012, only 141 QFIIs had been granted investment quotas. What is the source of this discrepancy? A: The CSRC gathered and released data on QFII qualifications, and the SAFE gathered and released data on QFII investment quotas. The discrepancy is due to three factors: (1) some QFIIs did not submit the applications to the SAFE on time; (2) some QFIIs had to alter their submitted applications due to fundraising reasons or adjustments to the investment schedule; (3) some QFIIs asked to defer the approval of the quotas due to fundraising difficulties. Excluding the above reasons, the SAFE has maintained a pace consistent with that of the CSRC in QFII examination and approval. Q5: Recently, the CRSC said that it will take measures to further promote the development of the QFII system, such as the lowering of the threshold for QFII admittance, further introducing overseas long-term funds, and so forth. Does the SAFE have similar plans? A: During formation and implementation of the QFII system, the SAFE has established close communications and coordination with the CSRC. The two authorities have also established a mechanism for smooth data-sharing. The SAFE has taken steps to promote the facilitation, standardization, and transparency of foreign exchange administration relating to the QFII system by revising the policies and regulations, establishing a quota examination committee, providing window guidance, and so forth, and by responding actively to the rational policy demands of the QFIIs. With respect to the quota examination and exchange policies, the SAFE has played a role similar to that of the CSRC in providing preferential policies on quota approval to a single QFII institution, a lock-up period for the principal, and so forth, in compliance with the policy orientation that mid- and long-term investors (overseas pension funds, insurance funds, donation funds, and so forth) should be further encouraged. Q6: Recently, the total quota for QFIIs was increased to USD80 billion upon approval of the State Council. What plan does the SAFE have for examining the increased quota? A: The State Council recently approved an increase in the QFII investment quota to USD80 billion. To facilitate the reform and development of the domestic stock market, the SAFE has made active adjustments to the investment quota and exchange administration, such as actively facilitating quota examination and approval, providing rapid access to the quota examination for mid- and long-term funds, including overseas pension funds and insurance funds, providing preferential policies for the amount of the initial investment quotas, increasing the initial approval amount for the aforesaid QFIIs, and properly streamlining the processes for managing the exchange accounts and RMB accounts of the QFIIs. Looking toward the future, the SAFE will continue to bolster the reform and development of the domestic capital market, maintain close communications and coordination with the CSRC, carry out policies for encouraging mid- and long-term overseas investment funds, further improve the quota examination mechanism for QFIIs, and increase the efficiency of the quota examination, thus further satisfying the quota needs of the QFIIs to invest in the domestic stock market and promoting the reform and development of the QFII system and the capital market. 2012-07-13/en/2012/0713/1057.html
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The SAFE recently released China ’s International Investment Position for year-end 2011 and the revised data for the end of 2009 and 2010. The statistics reveal that at the end of 2011, China’s external financial assets hit USD4718.2 billion, external financial liabilities USD2943.4 billion, and external net financial assets USD1774.7 billion. Among the external financial assets, direct investments abroad came to USD364.2 billion, portfolio investments USD260 billion, other investments USD838.2 billion, and reserve assets USD3255.8 billion, accounting for 8 percent, 6 percent, 18 percent, and 69 percent respectively. In terms of external financial liabilities, foreign direct investments totaled USD1804.2 billion, portfolio investments USD248.5 billion, and other investments USD890.7 billion, accounting for 61 percent, 9 percent, and 30 percent respectively. The International Investment Position (hereinafter referred to as the IIP) is a statistical statement reflecting the stocks of financial assets and liabilities of one country or region to other countries or regions in the world at one specific point; together with the Balance of Payments Statement (BOP Statement) it constitutes the complete international accounts system, indicating the trade flows of the country or region. Compilation Principles and Indexes for the IIP I. Compilation Principles for the IIP In accordance with the standards of the Balance of Payments Manual (Fifth Edition) published by the International Monetary Fund (IMF), the IIP is a statistical statement which reflects at a specific point the stocks of financial assets and liabilities of one country or region to those of other countries or regions in the world. Changes in the IIP can be caused by changes in transactions, prices, or exchange rates, as well as by other adjustments during the specific period. The IIP is consistent with the BOP statement with regard to the principles of valuation, measurement, and conversion, and together with the BOP Statement constitutes a complete international accounts system of the country or region. China ’s IIP is a statistical statement which reflects at a specific point the stocks of China ’s financial assets and liabilities (excluding that of Hong Kong SAR, Macao SAR, and Taiwan Province ) to other countries or regions in the world. II. Explanation of the Major IIP Indexes According to IMF standards, items on the IIP are categorized according to assets and liabilities. Assets are divided into China ’s direct investments abroad, portfolio investments, other investments, and reserve assets, and liabilities are divided into foreign direct investments, portfolio investments, and other investments. The net position refers to external assets minus external liabilities. The items are specifically defined as follows: 1. Direct investment refers to external investment whereby an investor of one country operates an enterprise located in another country with the aim of acquiring effective control over the enterprise. It consists of direct investment abroad and foreign direct investment. Direct investment abroad includes the stocks of the direct investment abroad conducted by China’s non-financial sectors, the stocks of the capital and working capital allocated by domestic banks to set up branches overseas, as well as the stocks of loans between the parent companies and the subsidiaries both in China and abroad and the stocks of other receivables and payables. Foreign direct investment includes the stocks of foreign direct investment absorbed by China’s non-financial sectors, the stocks of direct investment overseas absorbed by the financial sectors (including foreign investment attracted by branches of foreign financial sectors and Chinese-funded financial sectors, and investments by foreign parties in joint financial sectors), as well as the stocks of loans between the parent companies and the subsidiaries both in China and abroad and the stocks of other receivables and payables. 2. Portfolio investment includes some kinds of investments such as shares, long- and medium-term bonds, and money market instruments. Portfolio investment assets refer to negotiable securities, such as shares, bonds, money-market instruments, and derivative financial instruments, which are held by Chinese residents but issued by non-resident enterprises. Portfolio investment liabilities refer to shares and bonds held by non-resident enterprises but issued by resident enterprises. 2.1 Equity securities mainly comprise those securities in the form of stocks. 2.2 Debt securities include long- and medium-term bonds, short-term (one year or less) bonds, and money-market instruments or transferable debt instruments, such as short-term treasury notes, commercial papers, and large-sum short-term negotiable certificates of deposits. 3. Other investment refers to all financial assets and liabilities, including trade credits, loans, currency, and deposits, as well as other assets and liabilities, but excluding direct investments, portfolio investments, and reserves assets. Long term refers to a contract period for the relevant financial assets/liabilities that is longer than one year, whereas short term refers to a contract period that is one year or less. 3.1 Trade credit refers to the direct business credit arising from the import and export of goods between China and other countries. Assets refer to the receivables of China ’s exporters and the advance payments by China ’s importers, and liabilities refer to the payables of China ’s importers and the advance receipts of China ’s exporters. 3.2 As to loans, assets refer to the external assets held by domestic institutions by providing loans to overseas institutions; and liabilities refer to loans borrowed by domestic institutions, such as loans from foreign governments, loans from international institutions, loans from foreign banks, and sellers’ credits. 3.3 As to currency and deposits, assets refer to the funds deposited abroad and the foreign cash in stock held by China’s financial institutions; and liabilities refer to the overseas private deposits and short-term funds from foreign banks attracted by China’s financial institutions, as well as other short-term funds, for instance loans from foreign exporters and individuals. 3.4 Other assets/liabilities refer to investments other than trade credits, loans, currency, and deposits, for example, non-equity capital paid of international institutions and other receivables and payables. 4. Reserves assets refer to external assets that can be used at any time and are effectively controlled by the PBOC, consisting of monetary gold, special drawing rights (SDRs), the reserves position in the Fund, and foreign exchange. 4.1 Monetary gold refers to the gold held by the PBOC as reserve. 4.2 SDR is a kind of ledger assets, which is allocated by the IMF according to the capital share of its members; it can be used to repay the debt to the IMF and to make up for the deficit in the balance of payments between the governments of member countries. 4.3 Reserves positions in the Fund refer to assets that are in the ordinary accounts of the IMF and that can be used freely. 4.4 Foreign exchange refers to current assets and liabilities that are retained by the PBOC and that can be used as a means of international compensation. 2012-06-07/en/2012/0607/1054.html