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Hu Xiaolian, Deputy Governor of the People's Bank of China and Administrator of the State Administration of Foreign Exchange (SAFE), recently visited Dalian , Suzhou , and Wuhan to carry out onsite investigations on the current foreign exchange situation and on work to strengthen supervision over cross-border capital flows. Taking part in the investigations were comrades from the Ministry of Commerce, the General Administration of Customs, and other relevant departments. Ms.Hu held individual study meetings with the foreign exchange administrative departments in Northeast China, East China, and Central China . She also held informal discussions with import and export enterprises and conducted a field survey of foreign-related enterprises. Ms.Hu pointed out that although the domestic economy maintained rapid development this year, uncertainties are increasing and the macro-control situation remains serious, thus requiring adherence to the guideline of the "Two Preventions and One Tightening Measure," as set out by the central government to implement its instructions on strengthening supervision over cross-border capital inflows and outflows in foreign exchange administrative work and to improve the status of the balance of payments, thus ensuring China's economic and financial security. As a result of the aftermath of the U.S. subprime lending crisis and the impact of the currency adjustments in the major countries, the world economy witnessed a recession this year, with international financial markets becoming increasingly unstable. The changing exchange rates of the major currencies and prices of international energy and grain have had an extensive effect on the direction and scale of international capital flows. China 's efforts to avoid the impact of international short-term speculative capital and to safeguard the security of the national economy face greater challenges. In order to improve the performance of national macro-control, measures should be taken to strengthen the management of cross-border capital flows; one major action is to prevent speculative money from being transferred across borders through trade, commercial credits, and other channels. We should strengthen and improve verification of the authenticity and consistency of foreign exchange receipts and expenditures under the current account and actual trade deals and focus on enhancing control and management over short-term external debt by improving management of trade-related foreign exchange collection and sales and trade credits. Ms.Hu emphasized that improvements in the management of trade-related foreign exchange collection and sales and trade credits will promote convenient trade by adopting advanced information technology to fully achieve the effects of management, to simplify procedures, to raise efficiency, and to carry out various and proper measures for different industries and enterprises. She also pointed out that the policy adjustments according to the changing situations to ensure the authenticity of cross-border capital flows and its consistency with trade deals will help foster a good business environment for enterprises and will promote the smooth development of China 's economy and finance. During the investigation, Hu fully affirmed the efforts made by local foreign exchange administrations to carefully implement the requirements by the central government to strengthen supervision over cross-border capital flows. She added that the current work to facilitate the balance of payments equilibrium still faces great challenges and every foreign exchange administrative department at all levels should work hard to fulfill its duties and to enhance the overall level of foreign exchange administration. 2008-06-24/en/2008/0624/870.html
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To implement the newly revised Regulations on the Foreign Exchange System of the People's Republic of China (hereinafter referred to as the "Regulations"), the State Administration of Foreign Exchange (SAFE) recently held a system-wide teleconference, which was presided over by Hu Xiaolian, administrator of the SAFE, and was attended by Song Dahan, deputy director of the Legislative Affairs Office of the State Council, who gave a speech. Song Dahan first introduced the legislative background, principles, main content, and other items regarding the Regulations. He pointed out that aiming to facilitate trade and investment activities and to promote an equilibrium in the balance of payments and the healthy development of the national economy, the Regulations provide balanced management of capital inflows and outflows of foreign exchange, perfect the RMB exchange rate formation mechanism and the administrative systems for the foreign exchange business of financial institutions, establish an emergency security system for the balance of payments, intensify monitoring of cross-border capital flows, and improve exchange regulatory means and other measures and make clear the corresponding legal responsibilities. The revisions and implementation of the Regulations are specific measures to carry out the spirit of the 17th National Party Congress and the government work report and have great significance to facilitate trade and investment, strengthen and improve foreign exchange administration, promote an equilibrium in the balance of payments, maintain sustained, steady, and rapid economic development, and guard against international economic and financial risks. Hu Xiaolian made arrangements for the deployment of the next implementation-related work. She required that foreign exchange administrations at all levels unify their thinking, enhance understanding, and strengthen the initiative and consciousness to implement the Regulations. They should focus on the following points during studying and carrying out the Regulations: the first is to properly handle the relationship between promoting facilitation of trade and investment and intensification of management; the second is to advance with the times and focus on resolving the principal contradictions and main issues which currently affect the steady and rapid development of the national economy, macro-control effects, and the equilibrium in the balance of payments, especially with regard to settling the long-standing situation in the past of weak management of foreign exchange inflows so as to achieve balanced management; the third is all along to prevent international economic risks, in particular, to prevent those activities that harm the healthy development of Chinas national economy through exchange channels and BOP channels; and the fourth is to adhere to administration by law and inclusion of management of services according to the basic requirements of the administrative system reform. (End) 2008-08-11/en/2008/0811/875.html
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The State Administration of Foreign Exchange (SAFE), the Ministry of Commerce, and the General Administration of Customs recently jointly promulgated the Measures for the Online Inspection of Foreign Exchange Collection and Settlement of Export Proceeds for the purposes of strengthening supervision of cross-border capital flows and improving inspection of the authenticity and conformity of export transactions and the involved foreign exchange settlement. According to the Measures, the online inspection will be carried out on the foreign exchange collection and settlement of export proceeds beginning on July 14, and the registration management system for enterprises' trade credit will also become operational. At the beginning of the trial operation of the system, two deputy administrators of the SAFE, Li Dongrong and Deng Xianhong, respectively visited banks and enterprises in Beijing to investigate the trial run and onsite operations of the system, and they answered questions from banks and enterprises. It is known that on the whole so far the new system has functioned smoothly, and some enterprises have successfully carried out related business according to the new stipulations. As the director of the SAFE has pointed out, the Central Committee of the Party and the State Council attach great importance to strengthening supervision of cross-border capital flows, and on numerous occasions specific requirements have been proposed. The online inspection of foreign exchange collection and settlement of export proceeds and the registration management of enterprises' trade credit are of great significance for substantially preventing abnormal inflows of foreign exchange via trade, for maintaining normal trade order, and for safeguarding the economic and financial security of the state. Facing strict time limitations and a tough assignment, the banks are working on the frontline to enforce this policy, and are shouldering a huge responsibility to supervise the abnormal inflow of foreign exchange. The banks should maintain sound operations of the system, reinforcing the training of personnel, understanding the essence of the policy as soon as possible, mastering operations, and spreading the policy to enterprises as well as providing timely tracking and feedback on new issues and problems. The SAFE will pay close attention to implementation of the policy. Moreover, the leaders of the SAFE will visit various regions in the near future to investigate and to provide onsite instructions to banks and enterprises so as to discover and solve problems in a timely manner, and then to perfect the policy and to facilitate the legal operations of enterprises while restraining the abnormal inflows of foreign exchange. In order to further simplify the procedures and to facilitate operations by the enterprises, the foreign exchange administration is working with the taxation and other departments to study a way to carry out verification while also inspecting the foreign exchange collection of export proceeds. 2008-07-15/en/2008/0715/873.html
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For the purpose of improving tax collection and administration as well as examination management of the authenticity of foreign exchange payments under the services trade, income and current transfers, etc., the State Administration of Foreign Exchange (SAFE) and the State Administration of Taxation (SAT) recently jointly distributed the Circular on Issues Concerning the Submission of Tax Certificates for External Payments under the Services Trade and Other Accounts (hereinafter referred to as the Circular") to further regulate the requirements for submitting tax certificates for external payments under the services trade and other accounts. Since 1999, the SAFE and the SAT have carried out joint supervision over external payments under the services trade and other accounts and have stipulated that domestic institutions and individuals shall submit relevant tax payment certificates when making external payments under the services trade and other accounts. This not only enhanced the effectiveness of the examination of the authenticity of transactions, but also greatly facilitated national foreign-related tax collection and administration work. As a result, over the years tax revenue arising therefrom amounted to tens of billions of yuan. In recent years, due to the rapid development of China's trade in services, the corresponding foreign exchange payments have experienced a year-by-year expansion, the services trade and other types of transactions have continued to increase, and tax collection and administration have witnessed an ever-increasing complexity, causing certain difficulties for the banks to conduct examinations and to a certain extent also affecting the external payments by enterprises. To facilitate the banksexamination of foreign exchange receipts and payments under the services trade and other accounts and to provide more conveniences for enterprises to make external payments, the SAFE and the SAT jointly released the Circular. The Circular mainly includes the following contents: the first is to unify the format of the tax certificates and a variety of the original tax certificates into the Tax Certification for External Payments under the Services Trade, Income, Current Transfers, and Partial Capital Account" (hereinafter referred to as the Tax Certification); the second is to further clarify the accounts under which no tax certification is required for external payments, and to specify that domestic institutions or individuals do not need to handle and submit the Tax Certification when paying for travel expenses, meetings, office expenses, as well as individual study and tours abroad; the third is to unify the standard rate below which there is an exemption for the Tax Certification for external payments. With respect to the designated services trade, income, current transfers, and some transactions under the capital account, domestic institutions and individuals need not apply for a Tax Certification when a single outbound payment does not exceed the equivalent of USD 30,000. The Circular will come into effect as of January 1, 2009(End). 2008-12-02/en/2008/1202/880.html
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April 24, 2007 - The SAFE held the 2007 Work Conference on Science and Technology in Guangdong to summarize the application of science and technology to foreign exchange administration in recent years and to make arrangements for 2007. Deputy Administrator Li Dongrong attended the meeting and delivered a speech. The SAFE, under the guidance of the concept of scientific development, in recent years has actively applied science and technology to its work in accordance with the requirements of national informatization construction. The SAFE worked out the Eleventh Five-year IT Plan on Foreign Exchange Administration; built an online platform to facilitate enterprises and banks; promoted management systems for individual foreign exchange settlement and sale and upgraded the foreign exchange account system to guarantee the smooth implementation of policies; and reinforced the construction of infrastructure to lay a solid foundation for safe and stable operations of the information system. The meeting pointed out that the SAFE would, based on the main work of the State Informatization Leading Group in 2007 and the tasks defined in the Eleventh Five-year IT Plan on Foreign Exchange Administration, continue to strengthen fundamental informatization construction, guarantee network and information safety, step up efforts to consolidate and utilize foreign exchange data, promote the construction of e-government affairs and resource sharing, and improve public services. Li emphasized that the complicated and volatile international and domestic economic and financial situations present both challenges and opportunities for the application of science and technology. He set forth the following requirements to successfully achieve the tasks of 2007. First, to study and grasp the gist of the Central Economic Work Conference and the National Financial Work Conference, seeking unity of thinking, setting a clear direction, fully recognizing the complexity and difficulty of achieving an equilibrium in the balance of payments, and guiding the application of science and technology to foreign exchange administration. Second, to honorably, responsibly, and urgently apply science and technology, energetically and diligently serving the reform of foreign exchange administration, promoting economic development, and contributing to an equilibrium in the balance of payments. Third, to strengthen the construction of a skilled team to provide sufficient manpower for system construction, operation and maintenance, and technological management, etc. 2007-04-24/en/2007/0424/837.html
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March 26, 2007 - In recent years, a number of lawless individuals and organizations have been setting up investment funds via the Internet and tempting the public to invest overseas by promising huge returns. Such activities, a kind of pyramid selling, are deceptive and harmful. Such illegal overseas financing activities can be generally described as using the Internet as its stage, overseas funds as its camouflage, illegal pyramid selling as its method, huge returns as its bait, and racketeering money as its object.The following methods are frequently used. 1) Collecting money in the name of a private equity fund and promising investors that the company will manage the money and they will receive bonuses if they entrust their money to the company. 2) In the name of buying products or enlarging membership, investors will reap profits via enrolling new members. 3) Selling to investors the stocks of companies that plan to go public overseas by promising that the investors will earn huge profits by selling the stocks after the company is listed. However, once there are insufficient subsequent funds, the capital chain will immediately split, resulting in irreversible losses to the investors. To satisfy individual demands for overseas investment, the SAFE recently introduced a succession of policies. The Measures for the Administration of Individual Foreign Exchange issued at the end of 2006 specify that individuals in China can directly purchase B-shares, or entrust domestic commercial banks to invest in overseas financial products, or directly invest abroad after obtaining approval of the administrative authorities for overseas investment. It is suggested that investors remain alert to overseas investment, especially to such scams as investment funds, and that they conduct financial transactions through legal channels to guarantee the safety of their property. 2007-03-26/en/2007/0326/833.html
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The State Administration of Foreign Exchange (SAFE) has recently released the data on banks' foreign exchange sales and settlement and their foreign exchange receipts and payments for clients for July 2018. The SAFE press spokesperson answered media questions on recent cross-border capital flows. Q: What would you say about China's cross-border capital flows in July? A: The supply and demand of China’s foreign exchange market maintains overall stability and the foreign-related transaction behaviors of market players are rational and orderly. First, the balance of foreign exchange reserves has risen steadily. The balance stood at USD3,117.9 billion at the end of July, up by USD5.8 billion from the end of June. Second, the deficit of banks’ settlement and sales of foreign exchange and cross-border receipts and payments narrowed year on year. In July, the deficit of banks’ foreign exchange settlement and sales was USD9.4 billion, down by 39% year on year. Specifically, the deficit of foreign exchange settlement and sales by banks for clients reached USD400 million, indicating that enterprises and individuals tend to become more balanced in foreign exchange settlement and sales. The deficit of foreign-related receipts and payments of domestic enterprises and other non-banking sectors stood at USD12 billion, down by 45% year on year. Third, the willingness of market players for foreign exchange settlement has risen month on month, witnessing slight increase of foreign exchange sales rate. In July, the ratio of foreign exchange settlements by bank clients to the foreign-related foreign exchange receipts was 73%, up by 5 percentage points month on month, which was the highest since July 2015; while the ratio of foreign exchange purchases by bank clients to the foreign-related foreign exchange payments was 67%, up by 3 percentage points, which is still low in recent years. The opening-up policy continued to play its role, with overseas capital flowing in continuously, and the foreign exchange purchase by enterprises and individuals maintained stable. On the one hand, cross-border capital inflows under direct investment and securities investment etc. increased on the whole. In July, foreign-related receipts under direct investment reached USD34.5 billion, up by 46% year on year and up by 87% cumulatively since the beginning of this year; foreign-related receipts under securities investment stood at USD23 billion, up by 1.6 times year on year and up by 1.5 times cumulatively since the beginning of this year. Under this circumstance, foreign exchange settlement under direct investment and securities investment has also presented an upward trend as compared with the same period last year. On the other hand, the foreign exchange purchase by market players through major channels remained stable on the whole. In July, foreign exchange purchase under enterprises’ ODI and investment income both registered year-on-year decline, and the net foreign exchange purchase of individuals decreased by 12% and 13% on year-on-year and month-on-month basis respectively. Since the beginning of this year, the international financial market has witnessed considerably increasing volatility. However, due to the overall stable operation of domestic economy and steady progress of opening-up, China’s cross-border capital flows have maintained the development trend of overall stability and basic equilibrium, and the elasticity of RMB exchange rate has been further strengthened. In the future, the fundamentals of China’s economy in strong resilience and adaptability as well as ample room for maneuver will remain unchanged and will continue to serve as the basis for the stable operation of foreign exchange market. Meanwhile, China will adhere to the objective of reform and opening-up. As relevant measures are pressed ahead with and cross-border capital flow management framework is continuously improved, the activity and stability of China’s cross-border capital flow will be further strengthened, which is conducive to maintaining the independent equilibrium of balance of payments and adapting to the development and changes of market environment. 2018-08-17/en/2018/1115/1474.html
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The State Administration of Foreign Exchange (SAFE) recently released data on foreign exchange settlement and sales by banks as well as banks' foreign-related receipts and payments for customers for August 2018. The SAFE press spokesperson answered media questions on recent cross-border capital flows. Q: Could you brief us on China's cross-border capital flows for August 2018? A: China's foreign exchange market supply and demand continues to stay stable. At the end of August 2018, China's foreign exchange reserve balance was USD 3109.7 billion, down by USD 8.2 billion from the end of July, a drop of 0.26%. In August, Banks registered a deficit of USD 14.9 billion in foreign exchange settlement and sales, and an accumulated deficit of USD 10.5 billion so far this year, down by 91% year-on-year. The deficit in foreign-related receipt and payment of non-bank sectors such as domestic enterprises was USD 4.4 billion, narrowed by 63% month-on-month. The wider opening of the capital market to the outside world continues to attract international capital into China, and the purchase of foreign exchange by enterprises and individuals is rational and orderly. First, the net inflow of cross-border capital under portfolio investment increased rapidly. In August, the portfolio investment posted a surplus of USD 17.5 billion in foreign-related receipt and payment, rose by 2.9 times month-on-month. The portfolio investment registered a surplus of USD 4.3 billion in foreign exchange settlement and sales, which is the highest since July 2015. Second, the import trade financing of enterprises continued to increase. In August, the balance of cross-border financing for import trade such as refinancing and forward L/C grew by USD 2.3 billion month-on-month, and increased by USD 16.9 billion cumulatively so far this year. Third, the deficit in forward foreign exchange settlement and sales contracts narrowed down. In August, the deficit in forward foreign exchange settlement and sales contracts was USD 5.4 billion, down by 65% month-on-month. In addition, foreign exchange purchase under returns of investment fell due to seasonal factors, down by 33% month-on-month; individuals' purchases of foreign exchange picked up in the summer overseas travel season and the period before the back-to-school season, but fell by 2% year on year. At present, international trade frictions are intensifying, geopolitical tensions are rising, and economic and financial turmoil in some emerging market countries is expanding. However, China's foreign exchange market has still maintained overall stability in adverse external environment. In the future, although there still will be many external uncertainties, along with the transformation and upgrade of industries as well as the steady and thorough advancement of China's opening up, China's economic operation will continue to maintain in a reasonable range, the two-way fluctuation of RMB exchange rate is expected to become increasingly resilient, and the measures for macro-prudential management of cross-border capital flow will continue to play a role in counter cyclic adjustment. Therefore, China can effectively cope with external shocks, and safeguard the smooth operation of foreign exchange market. 2018-09-20/en/2018/0920/1463.html
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The State Administration of Foreign Exchange (SAFE) recently released the Balance of Payments (BOP) for the second quarter of 2018 and the International Investment Position (IIP) as of the end of June, 2018. A press spokesperson of the SAFE answered media questions on relevant issues. Q: Could you brief us on China’s balance of payments for the second quarter of 2018? A: Based on the balance of payments, China's current account and financial account (excluding reserve assets) recorded a "twin surplus" for the second quarter of 2018. The balance of reserve assets rose and the balance of payments remained basic equilibrium. First, in the current account surplus, the surplus of trade in goods increased while the deficit of trade in services was stable. In the second quarter of 2018, the current account recorded a surplus of USD 5.3 billion, among which trade in goods registered a surplus of USD 103.6 billion in the balance of payments, which doubled that of the previous quarter. A deficit of USD 73.7 billion was recorded under trade in services, flat quarter-on-quarter. Travel, transport and intellectual property fees remain major deficit items. Second, the financial account (excluding reserve assets) continued to show surplus, and the cross-border capital continued its trend of net inflow. In the second quarter of 2018, the financial account (excluding reserve assets) registered a surplus of USD 30 billion, with cross-border capital continuing the trend of net inflows since the first quarter of 2017. The breakdowns are as follows: Direct investment recorded a net inflow of USD 24.8 billion, which are relatively high in both directions. To be specific, ODI recorded a net outflow of USD 27.9 billion, and FDI, a net inflow of USD 52.7 billion. The net inflow of portfolio investments reached USD 61 billion, hitting a quarterly record high. Of this, the net outflow of external portfolio investment was USD 4.3 billion while the net inflow of portfolio investment in China hit USD 65.2 billion. Third, reserve assets rose. In the second quarter of 2018, China's reserve assets rose by USD 23.9 billion as a result of the BOP transactions (excluding the impact of non-transaction factors such as exchange rate and price), among which, foreign exchange reserves increased by USD 22.9 billion. Q: Could you brief us on China's international investment position for the second quarter of 2018? A: According to the international investment position statement, China's overall international investment position remained robust at the end of June 2018. China recorded USD 1.7402 trillion in net external assets, up by 10.7% from the end of March, and the reserve asset size remained the first place in the world. The main characteristics are as follows: First, external financial assets increased to a record high. China's external assets reached USD 7.0377 trillion at the end of June 2018, up by 0.2% from the end of March. To be specific, ODI assets rose by 1.7% to USD 1.5222 trillion. External portfolio investment totaled USD 518.3 billion, up by 0.7%. Other external investments amounted to USD 1.7801 trillion, up by 0.8%. Second, external liabilities have decreased. At the end of June 2018, China's external liabilities reached USD 5.2975 trillion, down by 2.8% from the end of March, mainly affected by exchange rate changes and value revaluation. To be specific, China's direct investment liabilities were USD 2.9507 trillion, down by 3.8%. External portfolio investment liabilities stood at USD 1.1287 trillion, down by 2.1%; while other external investment liabilities amounted to USD 1.2113 trillion, down by 1.4%. 2018-09-28/en/2018/0928/1462.html
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The State Administration of Foreign Exchange (SAFE) has recently disseminated China’s external debt data as at the end of June 2018, and an official from the SAFE answered media questions on recent situations of China’s external debt. Q: Could you brief us on China's external debt for the second quarter of 2018? A: China's external debt continued to grow in the second quarter of 2018. As at the end of June 2018, China's full-scale outstanding external debt registered USD 1.8705 trillion (in both domestic and foreign currencies), up by USD 27 billion or 1.5% quarter on quarter, primarily driven by the fact that overseas non-resident institutions continued to increase holdings of domestic RMB bonds. Q: What would you say about China’s external debt situations? A: Overall, China's external debt for the second quarter was steadily rising, and its structure was further optimized. First, as the domestic bond market has been further liberalized, the demand of foreign institutional investors to allocate China's domestic RMB bonds, especially medium - and long-term treasury bonds, continues to increase. According to relevant statistics, by the end of June 2018, the proportion of foreign institutions in China's treasury bond market had reached 7.28%, up by 2.31 percentage points so far this year, reaching a record high. Second, more than 70% of China's full-scale outstanding external debt increase for the second quarter was driven by medium - and long-term external debt, and the structure of external debt has been further optimized. By the end of June 2018, the ratio of China's short-term external debt to foreign exchange reserves was 38%, far below the international warning line. Looking ahead, uncertainties and destabilizing factors in the international financial and economic environment are obviously on the rise. However, with the constant transformation of old and new drivers of growth, China's economy will maintain the fundamentals of resilience, adaptability and ample room for maneuver, which will help promote the basic equilibrium of cross-border capital flows. The SAFE will continue to pay close attention to the changes in the international and domestic situations, constantly improve the management system of external debt and capital flow under the framework of macro-prudential management, and attach equal importance to serving the real economy and preventing financial risks, so as to promote sustainable and sound economic development. 2018-09-28/en/2018/0928/1461.html