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According to the statistics of the State Administration of Foreign Exchange (SAFE), the Chinese foreign exchange market (excluding foreign currency pairs, the same below) recorded total transactions of RMB 26.99 trillion (equivalent to USD 3.76 trillion) in March 2025. In terms of markets, the transactions volume of client market was RMB 3.77 trillion (equivalent to USD 0.53 trillion), and the transactions volume of interbank market was RMB 23.21 trillion (equivalent to USD 3.24 trillion). In terms of products, the cumulative transactions volume of the spot market was RMB 9.50 trillion (equivalent to USD 1.32 trillion), and that of the derivatives market was RMB 17.49 trillion (equivalent to USD 2.44 trillion). From January to March 2025, a total of RMB 71.23 trillion (equivalent to USD 9.93 trillion) was traded in the Chinese foreign exchange market. 2025-04-25/en/2025/0425/2301.html
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The State Administration of Foreign Exchange (SAFE) recently issued the Regulations on Foreign Exchange Administration of the Overseas Direct Investment of Domestic Institutions (hereinafter referred to as the Regulations). The responsible person of the SAFE was interviewed on the relevant content of the Regulations. Q: What are the context and significance of issuing the Regulations? A: In the context that the world economy and finance are progressively becoming globalized and integrated, there has been a growing demand of domestic enterprises, including private enterprises, to make overseas direct investments, in parallel with a louder voice for streamlining the existing examination and approval procedures for overseas direct investment as well as for providing financing support for enterprises under overseas direct investment. In order to promote the development and expansion of the overseas direct investment of domestic institutions, on the premise of fulfilling the needs for the balanced management of the balance of payments, the SAFE issued successively over the past several years a series of policies and measures with respect to the reform and standardization of foreign exchange administration approaches to overseas direct investment. To systematically straighten out the separate regulatory documents regarding overseas direct investment issued during recent years and to work out a new set of foreign exchange administration regulations that fits with the needs of the current foreign exchange receipt and payment situation as well as with overseas direct investment administration practices, the SAFE has drawn up the Regulations on Foreign Exchange Administration of the Overseas Direct Investment of Domestic Institutions, and has extensively solicited opinions from overseas investment authorities, relevant industry authorities, and all circles of society. The Regulations were formally promulgated on July 13, 2009, and will be implemented as of August 1, 2009. China is currently at the critical stage of coping with the global financial crisis. The overall economic situation is favorable and promising. Further streamlining the foreign exchange administration of overseas direct investment and the launching of foreign exchange administration policy aimed at encouraging the go-global move of enterprises will be conducive for enterprises to better grasp the opportunities of overseas direct investment, to reduce the costs of overseas investment, to promote the facilitation of trade and investment, to promote the opening-up process of cross-border capital transactions in a steady and orderly manner, and to promote a basic equilibrium in the balance of payments of our country. Q: What reform measures are specified in the Regulations? A: First, the sources of foreign exchange funds for overseas direct investment have been expanded. Domestic institutions can make overseas direct investments by use of various fund sources, such as self-owned foreign exchange funds, domestic foreign exchange loans in line with the regulations, foreign exchange purchased with RMB or tangible assets, intangible assets, or profits retained overseas. Second, the examination and verification of foreign exchange fund sources for overseas direct investment have been altered from ex ante examination to ex post registration. Third, domestic institutions are allowed to provide support for follow-up financing of enterprises under overseas direct investment by means of commercial loans and financing guarantees. Fourth, the SAFEs administration of outward remittances of overseas investment funds by domestic institutions has been adjusted from the previous examination and approval system to a registration system. Foreign exchange designated banks can handle the outward remittances of investment funds for domestic institutions after conducting authenticity examinations and verifications of the relevant documents presented by the domestic institutions. Fifth, domestic institutions are allowed to remit outward preceding expenses of a certain proportion of the total amount of investment at the preparatory stage prior to the formal establishment of their overseas projects after obtaining approval from the SAFE. Sixth, the disposal and administration principle for overseas retention or inward remittances of profits of enterprises under overseas investment and earnings from capital variations such as capital reductions, equity transfers, liquidations, and so forth have been clarified. Seventh, a full aperture exchange administration system for overseas direct investment has been established. Besides the traditional domestic non-financial institutions, the foreign exchange administration and applicability of regulations of overseas direct investment of domestic financial institutions have been clarified and standardized. Eighth, by making full use of the foreign exchange management information system for direct investment, a statistical and monitoring mechanism for cross-border fund inflows and outflows under overseas direct investment has been established. Q: What possible risks might occur in terms of foreign exchange administration of overseas direct investment after implementation of the said Regulations? How can we guard against such risks? A: As specified by the Regulations, the previous examination of foreign exchange fund sources for overseas direct investment has been altered to ex post recording for file and registration. In order to guard against possible risks when there are marked changes in the situation of the national balance of payments, the Regulations have made it clear that the SAFE can make adjustments to the relevant policies concerning the scope of the sources and the management modes of the foreign exchange funds for the overseas direct investment of domestic institutions and the overseas retention of profits generated from overseas direct investments of domestic institutions. In practice, the foreign exchange designated banks are required to first examine the situation of the foreign exchange fund sources for overseas direct investments of domestic institutions which are registered with the SAFE, and to handle the outward remittances of overseas investments for the domestic institutions. All in all, risks arising from the change in the examination of the foreign exchange fund sources for overseas investment are limited, and can be prevented through collaboration with other departments as well as through the registration procedures of the SAFE. Q: Which kinds of investment do the overseas direct investments made by banks and non-bank financial institutions belong to? A: The overseas direct investment stated herein refers to acts by banks and non-bank financial institutions through which the said banks and non-bank financial institutions establish subordinate or affiliated institutions outside the territory of China, or make equity acquisitions of overseas banks or non-bank financial institutions so as to acquire the rights and interests of such overseas institutions, including ownership, rights of control, or business management rights. For example, as banks and non-bank financial institutions set up subsidiaries or branches outside the territory of China, they may purchase the equity of former shareholders of overseas banks or non-bank financial institutions and the like. Such kinds of investment are different from the indirect investment made by banks and non-bank financial institutions outside the territory of China, i.e., purchases made by banks and non-bank financial institutions of overseas assets such as products on the overseas capital market or currency market tools after obtaining approval from the relevant authorities of China. Q: What are the foreign exchange administration principles for overseas direct investment by banks and non-bank financial institutions? A: The regulations clarify the legal basis for foreign exchange administration of overseas direct investment of domestic financial institutions, which implement full aperture administration of overseas direct investment of domestic institutions, i.e., both financial institutions and non-financial institutions, if ready to make overseas direct investment, shall complete the foreign exchange registration and exchange procedures in accordance with the Regulations. Currently, the procedures for overseas direct investment of domestic institutions are completed via the foreign exchange management information system for direct investment of the SAFE. Thus, to facilitate the smooth operation of overseas direct investment, financial institutions shall make sure the following tasks are completed after the promulgation of the Regulations: 1. Given that the foreign exchange management information system for direct investment has already been put online, for the purpose of ensuring the completeness and accuracy of the statistical data on cross-border fund inflows and outflows under overseas direct investment as well as guaranteeing the smooth operation of the foreign exchange registration and foreign exchange business for overseas direct investment, financial institutions that have already made overseas direct investments shall, prior to the formal implementation of the Regulations, complete the procedures for additional input of relevant information about their overseas investments at the Foreign Exchange Administrations in their localities, which shall be completed before December 31, 2009. 2. The examination of the foreign exchange fund sources for overseas direct investments of financial institutions has been altered to ex post registration, which requires these financial institutions to complete the procedures for foreign exchange registration for overseas investment at the Foreign Exchange Administrations in their localities and to demonstrate the sources of their foreign exchange funds after obtaining approval from the relevant departments. Q: What are the differences in the administration of outward remittances between preceding expenses and overseas investment funds? A: If domestic institutions need to remit outward a certain amount of preceding expenses prior to the establishment of projects or enterprises under overseas direct investment, the said institutions shall file an application with the Foreign Exchange Administrations in their localities, and shall go through the procedures for outward remittances at the banks by presenting the examination and approval documents issued by the Foreign Exchange Administrations. If the domestic institutions need to remit outward overseas investment funds other than the preceding expenses, the banks shall only ask that the domestic institutions present the approval documents issued by the overseas direct investment authorities and the foreign exchange registration certificate for overseas direct investment, and shall handle the relevant procedures after querying the relevant information in the foreign exchange management information system for direct investment. Q: Do domestic institutions still need to receive a paper-copy foreign exchange registration certificate after the foreign exchange management information system for direct investment is put online? A: The online operation of the foreign exchange management information system for direct investment means that all businesses under direct investment will be processed via the system, thus realizing electronic informational management over overseas direct investment of domestic institutions. As a result, the previous paper copy foreign exchange registration certificate issued by the Foreign Exchange Administrations will be replaced with the IC card for foreign exchange registration, which will facilitate electronic operations and management of the relevant business. 2009-07-15/en/2009/0715/897.html
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Q11: Will China use its foreign exchange reserves as a trump card or as an atomic weapon? A: We have always emphasized our role as a responsible long-term investor. During the investment and operations of our foreign exchange reserves, we will strictly follow the rules of the market and the laws and regulations of the country concerned. Meanwhile, we will use the reserves as a financial investor and will not seek control over those investments. The investment and operations of foreign exchange reserves must be mutually beneficial; therefore, we let things run their natural course, so to speak, which means we will actively cooperate with those countries that welcome our investment. But if any country is doubtful, we will slow down and try to reach agreement through communications. As has been proven by the facts, the above concerns and worries are completely ungrounded. Q12: We know that the US fiscal deficit is surging, but what does that mean for the US dollar? A: Any prediction on trends for the US dollar must be based on the economic situation not only in the US, but also that in other countries. In the wake of the financial crisis, the US launched massive financial bailout initiatives, resulting in a mounting fiscal deficit and worries about a further depreciation of the dollar. However, we must bear in mind that the weakening of the dollar is also related to the currencies of other countries and regions, which have their own problems. Countries in Europe, for example, are deep in debt. As can be seen from recent developments, the US dollar is strengthening against some currencies, including the euro. From the end of 2009 to May 2010, for instance, the US dollar rose 20 percent against the euro. Going forward, whether the dollar will go up or down will depend on the prospects for an economic recovery in the US and the entire world, as well as on the economic policies of the major economies including those of the US. We hope that major global issuers of currency, the US in particular, will adopt responsible policy measures, fully take into account fiscal deficit pressures and threats of inflation, appropriately arrange an exit mechanism for the loose monetary policies, reduce reliance on debt expansionary policies, shoulder the responsibility and obligation to maintain currency stability, and protect the interests of investors. Q13: Will more or less of Chinas foreign exchange reserves go into US treasuries? A: The US treasury market is the largest of its kind in the world. Given its safety, liquidity, large market volume, and comparatively low transaction costs, for a long time it has been favored not by only domestic investors (over 50 percent of government debt is bought within the US), but also by international investors, including the major central banks throughout the world. As Chinas management of its foreign exchange reserves emphasizes safety, liquidity, as well as maintenance and added value, based on our needs and judgments, we tend to diversify our allocation of assets on international financial markets and the US treasury market is an important market. For a long time, there has been speculation whether China will buy more or less US treasuries with her foreign exchange reserves. It has even been stated that Chinas massive holdings of US dollar assets constitute a threat to the US. The truth is that using foreign exchange reserves to buy American treasury bonds is an investment behavior on the market, and the same is true for an increase or decrease in holdings. Fluctuations in economic cycles and changes in supply and demand, among other factors, can lead to ups and downs in treasury debt prices, and changes in other asset prices can also affect the comparative attractiveness of treasuries. Based on these observations, we have been closely following and analyzing various changes in the market and constantly making dynamic optimization and operational adjustments. This should not be interpreted politically. The outbreak of the recent financial crisis prompted the US to adopt monetary and fiscal stimulus policies, resulting in a sharp increase in the fiscal deficit and a greater share of outstanding national debt in GDP, hence producing worries about the safety of assets in the US. Chinas foreign exchange reserves are engaged in long-term diversified investment, with dynamic changes among different assets, in order to effectively control the overall risks, to allow sufficient liquidity, and to achieve overall stability of value. Meanwhile, China has been calling on the US to act as a responsible power by taking concrete measures to safeguard US and global economic sustainability, to protect the interests of investors, and to uphold their confidence. Q14: Are foreign exchange reserves mainly invested in relatively high-grade treasury bond assets? A: Foreign exchange reserves are mainly invested in financial products with relatively stable investment income and low risks, which mainly include assets related to governments, institutions, international organizations, and corporations in the developed and major developing countries, and mutual funds and various other products such as inflation-protected bonds and asset-backed securities. We need to take into consideration many factors in the allocation of our foreign exchange reserves and we do not merely buy products with high-grade investments. China now has more than two trillion dollars of foreign exchange reserves. With so much capital, many factors are taken into consideration when purchasing financial products, such as the market capacity of the invested products. If the treasury bonds of a nation enjoy high credibility and repayment capability, but are only several hundred million or several billion US dollars, and are traded mainly on the domestic market and are seldom available on the international financial market, then such products can hardly satisfy our investment demands. In addition, whether the assets risk-return characteristics and related functions can meet our portfolio investment needs and requirements for risk diversification, and efficiently withstand inflation are all important factors that need to be considered. Our foreign exchange reserves are a stable, responsible, and long-term investment in the international financial market and we never engage in speculation. Active speculators in the international financial market go after arbitrage opportunities, and some of them even take the initiative to create them. In contrast, foreign exchange reserves seek to maintain or increase the value of assets, putting the safety of the reserve assets at top of the agenda. All of these operational ideas are conducive to the stability of the international financial market. Q15: Are foreign exchange reserves invested in higher-risk financial products such as stocks and private equity? What is the size of such investments? A: We have strict investment standards and risk management procedures for the various assets that can be invested with foreign exchange reserves. When choosing varieties of investment, it is imperative to consider their safety, liquidity, long-term and short-term returns on investment, and other characteristics. Meanwhile, it is also necessary to take into account the correlations with other assets. Putting low correlated or negative correlated assets in the same portfolio can offset each other at different stages of the economic cycle, which is conducive to reducing the overall risk and to enhancing the flexibility of asset allocation and risk management. We do not rule out any investment products. But strict risk assessment and control are needed to decide upon which product we should invest in. In other words, according to the above-mentioned standards, it is necessary to determine whether the products are in line with the principles of safety, liquidity, and maintenance and increments of value of the foreign exchange reserves, and whether they can achieve the effect of risk diversification. As soon as they meet these standards, they will be included in our decision-making and risk management procedures. Q16: Is China considering further increasing its gold holdings? And when? A: Gold has many advantages, such as high international recognition, a good capability to maintain value, and an ability to make emergency payments. Meanwhile, investment in gold is subject to certain restrictions, which makes it impossible for gold to become our main channel for foreign exchange reserve investment. First, gold has a very limited market capacity. Annual global gold output is only 2,400 tons, and current demand and supply is basically balanced. If we buy gold on a large scale, the international price of gold will definitely be pushed up. When Chinese people go shopping malls to buy commodities like gold jewelry, they would be faced with rising prices, which would end up hurting the interests of our domestic consumers. Chinas gold price is generally in line with that of the world market. Second, gold prices fluctuate considerably. As the international price of gold is subject to the impact of the geopolitics of interest rates, supply-demand relations, and speculation, they often fluctuate sharply. In addition, gold does not bring interest income and bears the costs of storage, transportation insurance, and so forth. Based on the history of the past thirty years, the risk-return characteristics of gold are not that good. Gold is protected from inflation, but many other assets have this characteristic as well. Last, increasing gold holdings does not have a notable overall effect on the diversification of foreign exchange reserves. During the past several years, China has increased its holdings of gold reserves by over 400 tons, reaching total holdings of 1,054 tons. Even if this were to be doubled, it would only disperse thirty to forty billion US dollars of our foreign exchange reserves, raising the proportion of gold reserves by merely one to two percentage points. In general, we will take a prudent approach when considering whether to increase or decrease our gold reserves according to demand and the market. (To be continued) 2010-07-07/en/2010/0707/939.html
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In order to prevent and crack down on hot money and other kinds of cross-border fund inflows in violation of the regulations, to maintain the healthy and steady operation of the foreign exchange market, and to ensure the economic and financial security of the state, since the latter half of February 2010, the State Administration of Foreign Exchange (SAFE) has launched special campaigns to struggle against hot money and other kinds of fund inflows in violation of the regulations in some provinces (regions and cities) with massive inflows of foreign exchange funds. To date, 197 cases of foreign exchange transactions in violation of the regulations have been disclosed, involving a total amount of USD7.34 billion. At the beginning of October 2010, the SAFE launched a new round of special inspections to combat foreign exchange fund inflows in violation of the laws and regulations. In total, 3 head offices of commercial banks, 33 branches of Chinese-funded banks, and 9 branches of foreign-funded banks have been inspected, covering areas such as foreign exchange settlement and sales, short-term external debt, offshore financing, sources and utilization of foreign exchange funds, and so on. The inspections show that with constant efforts to improve financial services, the majority of the banks have enhanced their awareness of business compliance, and as a result overall compliance has improved. However, it was also found that some banks had operated in violation of the relevant regulations. The major forms of violations include: the amount of the short-term debt exceeding the quota, illegal foreign exchange settlement of capital and settlement and sale of foreign exchange by individuals, fund collections and payments under the current account and the capital account in violation of the regulations on the administration of foreign exchange accounts, failure to conduct authenticity examinations when offering foreign exchange transaction services for clients, and so forth. By complying with the relevant laws, the SAFE has dealt with the said cases in a centralized manner and has imposed severe punishments. Since October 2010, the SAFE has imposed penalties on banks conducting business in violation of the regulations in 20 regions, including Guangdong, Jiangsu, Beijing, Shanghai, and so forth. The entities involved include 79 branches of 16 incorporated banks, such as the Industrial and Commercial Bank of China (ICBC), the Agricultural Bank of China (ABC), the Bank of China (BOC), China Construction Bank (CCB), China CITIC Bank, Shanghai Pudong Development Bank (SPDB), Xiamen International Bank, and Yamaguchi Bank. Penalties have been imposed in the form of fines, suspensions of certain kinds of foreign exchange businesses, punishment of senior management, and so forth. In order to warn and educate the banks and their branches, to further enhance the banks awareness of business compliance, and to create social synergy to struggle against the hot money,the SAFE circulated information about the cases of non-compliance in various batches. The first batch of typical cases, involving banks that illegally conducted foreign exchange business and were penalized, was announced on October 28, 2010. Now information about the second batch of cases is being circulated as follows according to the progress of the relevant inspections: In January 2009, the sub-branch of the ICBC in Yanbu county of Foshan city failed to scrutinize the vouchers for foreign exchange settlement and handled a foreign exchange settlement deal involving capital totaling USD26.32 million for a real estate company in Foshan, which violated the regulations on the administration of foreign exchange settlement of capital. According to the Regulations of the Peoples Republic of China on Foreign Exchange Administration (hereinafter referred to as the Regulations), the SAFE imposed fines on the said sub-branch and suspended its capital settlement business for 3 months. Meanwhile, fines were imposed on two senior managers in the said sub-branch. During the period from January to December 2009, the sub-branch of the ICBC in Hanjiang county of Yangzhou city failed to scrutinize the vouchers for the settlement of foreign exchange and concluded 22 deals of foreign exchange settlement of capital for three foreign-invested enterprises, including a textile company in Yangzhou, involving a total amount of USD19.174 million. Such behavior was deemed to be in breach of the relevant regulations on the administration of foreign exchange settlement of capital. Therefore, the SAFE imposed fines on the said sub-branch and suspended its capital settlement business for 3 months pursuant to the regulations. In November 2009, the Liuli sub-branch of the CCB in Shanghai failed to scrutinize the vouchers for the settlement of foreign exchange and completed one deal of foreign exchange settlement of capital totaling HKD63.1166 million for a shopping company. Furthermore, the inspection revealed that no vouchers were issued for HKD26.7212 million of the total amount. This violated the regulations on the administration of foreign exchange settlement of capital. In light of this, the SAFE imposed fines on the sub-branch and suspended its capital settlement business for 3 months pursuant to the regulations. In September 2009, the Sanyuan sub-branch of the CCB Beijing branch failed to examine vouchers in the amount of USD1.73 million for foreign exchange settlement when handling foreign exchange settlement business for individuals in excess of the annual total limit. Such behavior was deemed to be in violation of the relevant regulations on the administration of foreign exchange settlement of capital. The SAFE thereby imposed fines on the said sub-branch and suspended its foreign exchange settlement and sale business for 6 months pursuant to the regulations. In April 2009, the Baoan sub-branch of the CCB Shenzhen branch settled USD2.3 million-worth of short-term loans in foreign exchange for an instrument company in Shenzhen. Such behavior was deemed to be in violation of the relevant regulations on the administration of foreign exchange settlement under the capital account. The SAFE thereby imposed fines on the sub-branch and suspended its foreign exchange settlement business for capital projects for 3 months according to the regulations. During the period from March 2008 to May 2010, the Fuzhou branch of the Xiamen International Bank handled 33 foreign exchange settlement deals without using the information system for the administration of foreign exchange settlement and sale for individuals, involving a total amount of HKD 17.2842 million. This violated the relevant regulations on the administration of individual foreign exchange. The SAFE thereby imposed fines on the said branch and suspended its foreign exchange settlement business for individuals for 6 months according to the regulations. During the period from February to October 2009, the Zhongxing sub-branch of the SPDB in Ningbo city handled 56 foreign exchange settlement deals for a person surnamed Dong and 55 other domestic individuals by splitting large sums of foreign exchange into smaller parts, involving a total amount of USD2.7659 million. In accordance with the regulations, the SAFE imposed fines on the said sub-branch. In May, July, and August 2010, the business department of the Dalian branch of the China CITIC Bank had USD1.3779 million-worth of capital settled through 3 petty cash deals for a real estate company in Dalian. The department failed to scrutinize the vouchers for the foreign exchange settlement, resulting in a violation of the relevant regulations on the administration of capital settlement business. The SAFE thereby imposed fines on the department and suspended its capital settlement business for 3 months pursuant to the regulations. In December 2009, the Jiangnan Sub-Branch of the ICBC in Yulin city completed 14 foreign exchange settlement deals in cash for individuals by splitting large sums of money into smaller parts, involving a total amount of USD67, 000. In May 2010, the business department of the ICBC Yulin branch concluded 5 deals of spot exchange settlement for individuals by splitting large sums of money into smaller parts, totaling HKD 2.3 million. Such behavior was deemed to be in violation of the relevant regulations on the administration of individual foreign exchange, and the SAFE thereby imposed fines on the said sub-branch and branch and suspended their foreign exchange settlement and sale business for 3 months pursuant to the regulations. The designated foreign exchange banks, as the major channels for conducting foreign exchange business, should firmly embrace the philosophy of scientific development and fulfill their social responsibilities in an earnest manner and in strict compliance with the regulations on foreign exchange administration. The banks referred to in this circular should attach great importance to their violations, examine their business operations, and rectify any acts of non-compliance. Other banking institutions should draw lessons from the above-mentioned cases so as to strengthen their internal management and to operate their businesses according to the laws and regulations. The foreign exchange authorities will continue to improve financial services to facilitate the operation of market entities; meanwhile, they will intensify supervision of the foreign exchange business of banks, enhance the approaches for foreign exchange inspections, and crack down severely on hot money and other kinds of cross-border fund flows that do not comply with the law, thus promoting the healthy development of the foreign-related economy and finance. 2010-12-29/en/2010/1229/973.html
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To ensure the economic and financial security of the state, crack down strongly on the cross-border flow of hot money, and maintain order in the foreign exchange market, on November 1, 2010 the State Administration of Foreign Exchange (hereinafter referred to as the SAFE) announced a first batch of cases involving some enterprises and individuals that carried out illegal foreign exchange transactions and were subjected to penalty. Now a second batch of such cases, based on the progress in the relevant inspections, is announced as follows: From early 2009 to March 2010, Xinya Electronic Technology Co., Ltd. in Dongguan city, Guangdong province, collected 65 advance payments worth USD4.8313 million but the verification and writing-off formalities were six months overdue, which violated the relevant provisions on the administration of the verification and writing-off of export proceeds in foreign exchange. In light of this, the SAFE rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations on the Administration of the Foreign Exchange System of the Peoples Republic of China (hereinafter referred to as the Regulations). In September 2009, Dading Handbags Co., Ltd. in Zengcheng city, Guangdong province, was found holding 2 payments totaling USD1.05 million in foreign exchange for the processing of imported materials, but the verification and writing-off formalities were six months overdue, which violated the relevant provisions on administration of the verification and writing-off of export proceeds in foreign exchange. In addition, the said company overcharged in foreign currency for the processing of imported materials and used some amounts of Renminbi settled thereof for stocks and securities investments. In light of this, the SAFE rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations. In May 2009, Feihua Textiles Co., Ltd. in Haimen city, Jiangsu province, due to a fake purchase and sales contract signed with Meidan Construction Materials Trading Co., Ltd. in Haimen city, had USD3.0679 million-worth of foreign exchange from foreign investors settled through 11 transactions, and Meidan Construction Materials Trading Co., Ltd. in Haimen city transferred the settled capital in the amount of RMB20.9103 million via online banking to the account of a personal debit card. This case was deemed to be in violation of the relevant provisions on the administration of settlement of foreign exchange, and the SAFE thereby rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations. From February to May 2008, Wanrong (Liaocheng) Gardening Engineering Co., Ltd. in Shandong province handled the settlement of USD63.32 million-worth of foreign exchange from foreign investors in payment for a construction project. Of the Renminbi resulting therefrom, the said company transferred RMB147.89 million to the account of its wholly-owned property subsidiary through different channels, used RMB15 million to purchase real estate outside of Shandong province, and lent RMB279.5 million to other domestic enterprises. Such behavior was deemed to be in violation of the relevant regulations on the administration of settlement of foreign exchange, and the SAFE thereby rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations. From September to December, 2009, Qian An VV Lan Shan Building Materials Company in Tangshan city, Hebei province, settled EUR614,400-worth of foreign investment capital based on invalid documents, and then transferred the RMB6 million resulting therefrom to the Renminbi account of Qian An Lanshan Cement Co., Ltd., a shareholder in the Chinese party thereof. Such behavior was deemed to be in violation of the relevant provisions on administration of the settlement of foreign exchange capital, and the SAFE thereby rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations. From November to December 2008, a person surnamed Huang, a local citizen of Jinhua city, Zhejiang province, based on 18 cargo declarations for export, for which the verification and writing-off of the export proceeds in foreign exchange had been completed, handled a settlement of USD1.7485 million through a personal foreign exchange account thereof. Such behavior was deemed to be in violation of the Regulations. According to the Regulations, the SAFE rendered a decision to impose a fine on Huang as an administrative penalty. In December 2006, after having had USD7.5 million worth of capital settled through two transactions, Guangdong Credit Orienwise Guarantee Ltd. used RMB58.6365 million resulting therefrom to purchase funds. Such behavior was deemed to be in violation of the relevant provisions on the administration of settlement of foreign exchange, and the SAFE thereby rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations. In June, 2010, Tianming (Shenyang) Alcohol Co., Ltd. in Liaoning province owed overseas institution(s) SGD37.6 million resulting from the performance of an external guarantee under the item of a domestic loan, but failed to register the foreign debt with the foreign exchange authorities within the prescribed time limit. Such behavior was deemed to be violation of the relevant provisions on the administration of foreign debts, and the SAFE thereby rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations. From February to June 2007, Yestock Technology (Shenzhen) Co., Ltd., based on a fake purchase and sales contract for GPS terminals signed with Shenzhen Chuangtou Electronic Information Technology Co., Ltd., settled HKD10.6495 million through three transactions and injected RMB9.9 million resulting therefrom into the stock market. The companys behavior was deemed to be in violation of the relevant provisions on the administration of settlement of foreign exchange, and the SAFE thereby rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations. On August 13, 2007, Qingmao Paper Industry Co., Ltd. in Shaxian county, Fujian province, settled HKD14.075 million based on a purchase and sales contract for machinery and equipment signed with Fujian Changfa Trading Co., Ltd. Thereafter, the said company required Fujian Changfa Trading Co., Ltd. to remit RMB13.6 million resulting therefrom to Fuzhou Huicheng Real Estate Co., Ltd. under the pretext that it was unable to start up the project immediately. The said companys behavior was deemed to be in violation of the relevant provisions on the administration of settlement of foreign exchange, and the SAFE thereby rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations. When conducting economic activities, all market entities shall foster an awareness of their social responsibilities and develop their business in a sound and scientific manner in strict compliance with all policies concerning the administration of foreign exchange. The penalized enterprises and individuals shall regard this as a warning and shall firmly establish an awareness of law-abiding operations. All other enterprises and individuals shall also draw lessons from the above-mentioned cases to strengthen their self-discipline, and to operate their businesses in strict accordance with the law. The SAFE shall step up efforts to facilitate the process of trade and investment and to enhance a service-oriented awareness so as to meet the legitimate demands of enterprises and individuals for foreign exchange; meanwhile, it shall strengthen supervision and inspection of the compliance of the foreign exchange business conducted by market entities and continue to crack down on hot moneywith intensified efforts, thereby effectively maintaining the safety of China's foreign-related economy and finance. December 10, 2010 2010-12-10/en/2010/1210/970.html
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In Q3 of 2010 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 USD102.3 billion, a year-on-year increase of 103 percent as calculated on a comparable basis (the same below). Specifically, according to the statistical coverage of the balance of payments, the surpluses in goods, income, and current transfers reached USD81.4 billion, USD14 billion, and USD10.8 billion, respectively, whereas the deficit in trade in services amounted to USD3.9 billion. Meanwhile, China's surplus under the capital and financial account totaled USD15.2 billion, a decrease of 65 percent year on year. In particular, the net inflows of direct investments and portfolio investments amounted to USD24.6 billion and USD14.1 billion respectively, whereas the net outflows of other investments reached USD24.5 billion. International reserves assets posted an increase of USD108 billion, a rise of 31 percent. Specifically, transactions in foreign exchange reserves assets registered an increase of USD107.3 billion (exclusive of the influence of changes in the value of non-transaction factors, such as exchange rates and prices) and the reserve position in the IMF registered an increase of USD700 million. In the first three quarters of 2010, China's surplus under the current account totaled USD203.9 billion, an increase of 30 percent year on year; China's surplus under the capital and financial account totaled USD130.1 billion, an increase of 2 percent; and international reserves assets posted an increase of USD286 billion, an increase of 7 percent. Chinas Balance of Payments Statement Q3 of 2010 Unit: USD100 million Items # Balance Credit Debit I. Current Account 1 1,023 5,315 4,292 A. Goods and Services 2 776 4,759 3,983 a. Goods 3 814 4,307 3,493 b. Services 4 -39 452 491 1.Transportation 5 -73 96 169 2.Travel 6 -16 118 134 3.Communication Services 7 0 3 3 4.Construction Services 8 24 38 14 5.Insurance Services 9 -36 6 42 6.Financial Services 10 -2 4 5 7.Computer and Information Services 11 18 25 7 8.Royalties and Licensing Fees 12 -29 2 30 9.Consulting Services 13 20 57 38 10.Advertising and Public Opinion Polling 14 2 7 5 11.Audio-visual and Related Services 15 0 0 1 12. Other Business Services 16 54 95 41 13. Government Services, n.i.e. 17 0 2 2 B. Income 18 140 433 293 1.Compensation of Employees 19 33 37 4 2.Investment Income 20 107 396 289 C. Current Transfers 21 108 123 15 1.General Government 22 -1 0 1 2.Other Sectors 23 108 123 14 II. Capital and Financial Account 24 152 2,717 2,565 A. Capital Account 25 9 9 0 B. Financial Account 26 143 2,708 2,565 1. Direct Investment 27 246 501 254 1.1 Abroad 28 -181 22 203 1.2 In China 29 427 478 51 2. Portfolio Investment 30 141 201 59 2.1 Assets 31 -6 36 41 2.1.1 Equity Securities 32 -3 25 28 2.1.2 Debt Securities 33 -3 10 13 2.1.2.1 Bonds and Notes 34 -3 10 13 2.1.2.2 Money Market Instruments 35 0 0 0 2.2 Liabilities 36 147 165 18 2.2.1 Equity Securities 37 154 158 3 2.2.2 Debt Securities 38 -7 7 15 2.2.2.1 Bonds and Notes 39 -7 7 15 2.2.2.2 Money Market Instruments 40 0 0 0 3. Other Investment 41 -245 2,006 2,251 3.1 Assets 42 -694 64 758 3.1.1 Trade Credits 43 -182 0 182 Long-term 44 -13 0 13 Short-term 45 -169 0 169 3.1.2 Loans 46 -259 1 260 Long-term 47 -138 0 138 Short-term 48 -122 1 122 3.1.3 Currency and Deposits 49 -270 46 316 3.1.4 Other Assets 50 17 17 0 Long-term 51 0 0 0 Short-term 52 17 17 0 3.2 Liabilities 53 449 1,942 1,493 3.2.1 Trade Credits 54 133 133 0 Long-term 55 9 9 0 Short-term 56 124 124 0 3.2.2 Loans 57 140 1,500 1,360 Long-term 58 20 50 31 Short-term 59 121 1,450 1,329 3.2.3 Currency and Deposits 60 177 303 127 3.2.4 Other Liabilities 61 -1 6 7 Long-term 62 -1 0 1 Short-term 63 0 6 6 III. Reserves Assets 64 -1,080 0 1,080 3.1 Monetary Gold 65 0 0 0 3.2 Special Drawing Rights 66 0 0 0 3.3 Reserves Position in the Fund 67 -7 0 7 3.4 Foreign Exchange 68 -1,073 0 1,073 3.5 Other Claims 69 0 0 0 c. Net Errors and Omissions 70 -94 0 94 Note: 1. This statement employs rounded-off numbers. 2. As of the third quarter of 2010, in accordance with international standards, the undistributed profits and the profits that have been distributed but not remitted shall be recorded in the Balance of Payments statement. Chinas Balance of Payments Statement For the First three Quarters of 2010 Unit: USD100 million Items # Balance Credit Debit I. Current Account 1 2,039 13,983 11,944 A. Goods and Services 2 1,555 12,597 11,042 a. Goods 3 1,711 11,370 9,659 b. Services 4 -156 1,227 1,383 1.Transportation 5 -214 247 461 2.Travel 6 -42 337 379 3.Communication Services 7 0 8 8 4.Construction Services 8 61 100 38 5.Insurance Services 9 -101 13 114 6.Financial Services 10 1 8 7 7.Computer and Information Services 11 45 66 21 8.Royalties and Licensing Fees 12 -90 6 96 9.Consulting Services 13 53 159 106 10.Advertising and Public Opinion Polling 14 6 20 15 11.Audio-visual and Related Services 15 -2 1 3 12. Other Business Services 16 129 255 127 13. Government Services, n.i.e. 17 -1 7 8 B. Income 18 182 1,035 853 1.Compensation of Employees 19 84 95 11 2.Investment Income 20 98 940 842 C. Current Transfers 21 302 351 49 1.General Government 22 -2 0 2 2.Other Sectors 23 304 351 47 II. Capital and Financial Account 24 1,301 7,751 6,450 A. Capital Account 25 34 36 2 B. Financial Account 26 1,266 7,715 6,449 1. Direct Investment 27 865 1,449 584 1.1 Abroad 28 -375 52 427 1.2 In China 29 1,240 1,396 157 2. Portfolio Investment 30 68 394 325 2.1 Assets 31 -78 201 279 2.1.1 Equity Securities 32 -77 78 155 2.1.2 Debt Securities 33 -1 123 124 2.1.2.1 Bonds and Notes 34 10 98 88 2.1.2.2 Money Market Instruments 35 -11 25 36 2.2 Liabilities 36 146 193 46 2.2.1 Equity Securities 37 158 186 27 2.2.2 Debt Securities 38 -12 7 19 2.2.2.1 Bonds and Notes 39 -12 7 19 2.2.2.2 Money Market Instruments 40 0 0 0 3. Other Investment 41 333 5,873 5,540 3.1 Assets 42 -1,075 445 1,520 3.1.1 Trade Credits 43 -616 5 621 Long-term 44 -43 0 43 Short-term 45 -573 4 578 3.1.2 Loans 46 -199 126 326 Long-term 47 -198 0 198 Short-term 48 -2 126 128 3.1.3 Currency and Deposits 49 -360 213 573 3.1.4 Other Assets 50 100 101 0 Long-term 51 0 0 0 Short-term 52 100 101 0 3.2 Liabilities 53 1,409 5,428 4,020 3.2.1 Trade Credits 54 583 583 0 Long-term 55 41 41 0 Short-term 56 542 542 0 3.2.2 Loans 57 441 4,183 3,742 Long-term 58 74 178 104 Short-term 59 367 4,005 3,638 3.2.3 Currency and Deposits 60 389 649 260 3.2.4 Other Liabilities 61 -4 13 17 Long-term 62 -4 0 5 Short-term 63 1 13 13 III. Reserves Assets 64 -2,860 0 2,860 3.1 Monetary Gold 65 0 0 0 3.2 Special Drawing Rights 66 -1 0 1 3.3 Reserves Position in the Fund 67 -17 0 17 3.4 Foreign Exchange 68 -2,843 0 2,843 3.5 Other Claims 69 0 0 0 c. Net Errors and Omissions 70 -480 0 480 Note: 1. This statement employs rounded-off numbers. 2. The data for the first three quarters of 2010 are the sum total of the data for Q3 and for H1 of 2010. 3. As of the third quarter of 2010, in accordance with international standards, the undistributed profits and profits that have been distributed but not remitted shall be recorded in the Balance of Payments statement; the data for the previous two quarters have been adjusted accordingly. 2010-12-28/en/2010/1228/972.html
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At the end of September 2010, China's outstanding external debt (excluding that of Hong Kong SAR, Macao SAR, and Taiwan Province) reached USD546.449 billion. Specifically, the outstanding registered external debt reached USD326.549 billion and the balance of trade credit totaled USD219.9 billion. With respect to terms, outstanding long- and medium-term external debt (with the remaining term) was USD177.008 billion, accounting for 32.39 percent of the outstanding external debt. Outstanding short-term external debt (with the remaining term) was USD369.441 billion, accounting for 67.61 percent of the outstanding external debt. Specifically, the outstanding registered short-term external debt (with the remaining term) was USD149.541 billion and the balance of trade credit was USD219.9 billion. In terms of the composition of the debt, trade credit and trade financing (e.g., credit support to foreign trade provided by banks) accounted for 59.52 percent and 18.65 percent of the outstanding short-term external debt 2010 (the remaining term) respectively at the end of September. The trade credit and trade financing accounted for 78.17 percent of the outstanding short-term external debt (the remaining term). The data are closely associated with the dramatic growth of Chinas foreign trade during recent years. Because trade credit and trade financing are conducted against a real foreign trade background, they generally will not result in extra external debt risks. In terms of the types of debtors, the outstanding debt of Chinese-funded financial institutions was USD133.679 billion, accounting for 40.94 percent of the total outstanding registered external debt; the outstanding debt of foreign-funded enterprises was USD101.038 billion, accounting for 30.94 percent; the outstanding debt of foreign-funded financial institutions was USD46.971 billion, accounting for 14.38 percent; the outstanding sovereign debt borrowed by ministries under the State Council was USD38.571 billion, accounting for 11.81 percent; the outstanding debt of Chinese-funded enterprises was USD5.901 billion, accounting for 1.81 percent; and the outstanding debt of other institutions was USD389 million, accounting for 0.12 percent. In terms of the types of debt, the balance of international commercial loans amounted to USD254.591 billion, accounting for 77.96 percent of the outstanding registered external debt, with the proportion rising by 3.54 percentage points compared with that at the end of 2009. The balance of foreign government loans and loans granted by international financial organizations amounted to USD71.958 billion, accounting for 22.04 percent. In terms of the currency structure, debt in US dollars accounted for 71.91 percent of the outstanding registered external debt, representing an increase of 4.15 percentage points compared with that at the end of 2009. Debt in Japanese yen accounted for 10.29 percent, representing a decline of 1.6 percentage points compared with that at the end of 2009. Debt in euro accounted for 4.32 percent, a decline of 2.06 percentage points compared with that at the end of 2009; other kinds of debt, including SDRs and HKD, accounted for 13.48 percent, a decline of 0.49 percentage point compared with that at the end of 2009. In terms of the sectors in which the debts are invested, with reference to the Industrial Classification of the National Economy, USD43.821 billion was invested in the manufacturing sector, accounting for 21.45 percent of the medium- and long-term outstanding registered external debt (based on contract terms); USD25.778 billion was invested in the transportation, warehousing, and postal service sectors, accounting for 12.91 percent; USD17.907 billion was invested in the production and supply of electricity, coal gas, and water, accounting for 8.97 percent; USD12.05 billion was invested in the information technology service sector, accounting for 6.04 percent; USD10.687 billion was invested in the real estate sector, accounting for 5.35 percent. From January to September 2010, medium- and long-term external borrowing totaled USD27.847 billion, an increase of USD14.002 billion or 101.13 percent over that during the same period of 2009; repayment of the principal was USD17.904 billion, a decrease of USD8.055 billion, or 31.03 percent, over that during the same period of 2009. Interest payments totaled USD2.031 billion, a decrease of USD532 million, or 20.76 percent. Addendum: Definition of terms and interpretations Trade credit refers to external liability arising from directly extending credit between the seller and buyer of goods transactions, specifically transactions between residents in Mainland China and foreign non-residents (including non-residents in Hong Kong SAR, Macao SAR, and Taiwan Province), i.e., debt incurred due to the difference between the time of payment and the time of the transfer of ownership of the goods. Trade credit includes credit directly provided by the supplier (e.g., the overseas exporter) for commodity transactions and services, and advance payments by buyers (e.g., overseas importers) for goods, services, and on-going business (or business to be undertaken). Trade financing refers to a loan related to trade extended by a third party (e.g., banks) to an exporter or importer--for instance, a loan extended by a foreign financial institution or an export credit agency to a buyer. Trade-related credit is a broad concept. In addition to trade credit, it also involves other kinds of credit provided for trade activities. As it is defined, trade-related credit includes trade credit, trade financing, short-term notes related to trade, and so forth. 2011-01-19/en/2011/0119/978.html
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In order to regulate foreign exchange receipts and payments associated with cross-border trade of environmental equities such as CO2 emissions reductions, the State Administration of Foreign Exchange recently promulgated the Circular of the General Affairs Department of the State Administration of Foreign Exchange on the Handling of Foreign Exchange Business Associated with the Trade of Environmental Equities Such as Carbon Dioxide Emissions Reductions (Hui Zong Fa [2010] No. 151), hereinafter referred to as the Circular). The Circular will come into force as of the date of promulgation. The Circular mainly covers three areas: (1) When handling the procedures for receipts from cross-border trade of environmental equities, such as carbon dioxide emissions reductions, banks may handle the settlement of foreign exchange for domestic institutions or open a capital account foreign exchange account for the trade of environmental equities to preserve the relevant categories of foreign exchange earnings after examining the materials proving the authenticity of the relevant business according to the regulations and based on the needs of domestic institutions; (2) Domestic institutions such as environmental exchanges, emissions rights exchanges, and forest ownership exchanges may, upon approval of the State Administration of Foreign Exchange, open a foreign exchange account for the collateral of special tradefor deposits of collateral, to-be-paid commissions, and taxes by intended transferees, foreign exchange margins that should be refunded to intended transferees in cases of failure of payment, and collateral transferred to sellers and commissions and taxes deducted by the exchanges after conclusion of the relevant transactions; (3) The relevant requirements for the examination of materials, submission of information, registration of basic information, declaration of BOP statistics, and so forth are specified. Promulgation of the Circular will play an active role in facilitating cross-border trade of environmental interests such as CO2 emissions reductions as well as in promoting the healthy development of a low carbon economy. 2010-12-31/en/2010/1231/976.html
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In order to increase the efficiency of the use of funds by domestic enterprises, to further promote the facilitation of trade, and to support the going globalmove of domestic enterprises, the State Administration of Foreign Exchange recently promulgated the Circular on the Implementation of Administration of Overseas Deposits of Export Proceeds (Hui Fa [2010] No.67, hereinafter referred to as the Circular) in accordance with the relevant provisions in the Regulations of the Peoples Republic of China on Foreign Exchange Administration, in which it is decided that as of January 1, 2011 the SAFE will implement on a nationwide scale the Interim Measures for the Administration of Overseas Deposits of Export Proceeds from Trade in Goods and the instructions for operations based on the results of a pilot operation. The Circular covers four principal areas: (1) implementing an account-opening registration system for overseas deposits of export proceeds by domestic enterprises. Domestic enterprises that meet the requirements regarding the sources of export proceeds, have a need for overseas payments, and have operated in compliance with the foreign exchange administration regulations over the past two years may apply to the local foreign exchange authorities to make overseas deposits of their export proceeds; (2) implementing scaled management of overseas deposits of export proceeds by domestic enterprises. The scale of export proceeds deposited overseas shall be submitted by the domestic enterprises to the local foreign exchange authorities based on their actual needs, and the latter shall register and put on file the relevant scales; (3) streamlining the procedures for export verification and writing-off, online inspections, and so forth, and implementing an ex post reporting system; (4) carrying out off-site monitoring of the receipts and payments in overseas accounts of domestic enterprises, and implementing on-site inspections of abnormal circumstances. The launch of the policy represents a significant move on the part of the SAFE to further satisfy needs for the development of a market-oriented economy, deepen the reform of the foreign exchange administration system, and promote the facilitation of trade. The policy will play an active role in balancing cross-border fund flows under trade, facilitating cross-border fund operations by domestic enterprises, and bolstering the going globalmove by domestic enterprises. The policy will play a positive role for enterprises with frequent receipts and payments from cross-border trade to reduce the costs of cross-border transfers of foreign exchange funds and the costs of currency conversion. The policy will also play a positive role for enterprises to have greater involvement in international competition and stronger ability for group management, to raise the efficiency of the use of funds, lower the costs of overseas fundraising, and further sharpen the competitive edge of enterprises on the international markets. 2010-12-31/en/2010/1231/975.html
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According to the statistical data released by the State Administration of Foreign Exchange (SAFE), in November 2010 the amount of foreign exchange settlements and foreign exchange sales by banks on behalf of clients amounted to USD129.7 billion and USD84.4 billion respectively. The foreign exchange settlement and sales surplus was USD45.3 billion. In the month of November, foreign-related receipts and payments of domestic banks on behalf of clients amounted to USD183.5 billion and USD151.8 billion respectively; and the foreign-related receipts and payments surplus reached USD31.7 billion. 2010-12-24/en/2010/1224/971.html