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In accordance with the Law of the People’s Republic of China on Anti-Money Laundering (Decree No. 56 of the President of the People’s Republic of China) and Regulations of the People’s Republic of China on Foreign Exchange Administration (Decree No. 532 of the State Council of the People’s Republic of China), the State Administration of Foreign Exchange (SAFE) has strengthened foreign exchange market regulation, and severely cracked down upon false and fraudulent foreign exchange transactions, in a bid to maintain the healthy and benign order in the foreign exchange market. In accordance with the Regulations of the People's Republic of China on the Disclosure of Government Information (Decree No. 711 of the State Council of the People's Republic of China) and other relevant regulations, a selection of typical cases involving violations of foreign exchange regulations are notified as follows: Case 1: Case of foreign exchange payment for false entrepot trade by Bank of Nanjing Shanghai Pudong Subbranch From February to March 2016, Bank of Nanjing Shanghai Pudong Subbranch handled foreign exchange payment for entrepot trade with false bills of lading of enterprises. The bank violated Article 12 of the Regulations of the People's Republic of China on Foreign Exchange Administration. In accordance with Article 47 of the Regulations on Foreign Exchange Administration, it was fined RMB 800,000. Case 2: Case of foreign exchange payment for false entrepot trade by Agricultural Bank of China Ningbo Branch From September 2016 to September 2017, the Agricultural Bank Ningbo Branch handled the foreign exchange payment for entrepot trade with the invalid bills of lading or repeatedly used documents presented by the enterprises, and failed to handle foreign exchange receipts and payments under entrepot trade at the same bank outlet in accordance with regulations. The bank violated Article 12 of the Regulations on Foreign Exchange Administration and Article 5 of the Circular of the State Administration of Foreign Exchange on Further Promoting Trade and Investment Facilitation and Improving Authenticity Review. In accordance with Article 47 of the Regulations on Foreign Exchange Administration, the bank was ordered to rectify and fined RMB 644,800. Case 3: Case of foreign exchange payment for false entrepot trade by ICBC Nanchang Beijingxilu Subbranch From September 2016 to October 2017, ICBC Nanchang Beijingxilu Subbranch handled foreign exchange payment for entrepot trade with false bills of lading of enterprises. The bank violated Article 12 of the Regulations on Foreign Exchange Administration. In accordance with Article 47 of the Regulations on Foreign Exchange Administration, the bank was ordered to rectify and fined RMB 1,115,400. Case 4: Onshore guarantees by Industrial Bank Taizhou Branch for offshore loans against regulations From April 2015 to May 2016, Industrial Bank Taizhou Branch failed to fulfill verification responsibilities when handling contracting of onshore guarantees for offshore loans and performing foreign exchange payment, and failed to conduct due diligence and inspection as required, with regard to the purposes of the loans, expected sources of repayment, possibility of performing the contracts for onshore guarantees and relevant transaction background. The bank violated Article 12 and 28 of the Regulations on Foreign Exchange Administration for Cross-border Guarantees. In accordance with Article 47 of the Regulations on Foreign Exchange Administration, the bank was ordered to rectify and fined RMB 953,100. Case 5: Split-up sales and payments of individual foreign exchange by China Merchants Bank Hangzhou Branch From January to November 2016, China Merchants Bank Hangzhou Branch used the annual quotas of 303 individuals in China to buy foreign exchange and split up sales and payments of foreign exchange for its clients in violation of regulations. The bank violated Article 7 of the Measures for the Administration of Individual Foreign Exchange. In accordance with Article 47 of the Regulations on Foreign Exchange Administration, the bank was ordered to rectify and fined RMB 1 million. Case 6: Evasion of foreign exchange by Shandong Qingyuan Group Co., Ltd. In May 2016, Shandong Qingyuan Group Co., Ltd. made external foreign exchange payment of USD 9.555 million by using false contracts, invoices and bills of lading, and fabricating trade background. The company violated Article 12 of the Regulations on Foreign Exchange Administration and was involved in foreign exchange evasion. In accordance with Article 39 of the Regulations on Foreign Exchange Administration, the company was fined RMB 3,097,400. Relevant penalty information has been included in the credit information system of the People’s Bank of China. Case 7: Evasion of Foreign Exchange by Guangzhou Yangfan Trading Co., Ltd. From May 2016 to June 2017, Guangzhou Yangfan Trading Co., Ltd. made external foreign exchange payment of USD 92.858 million by using false bills of lading and fabricating trade background. The company violated Article 12 of the Regulations on Foreign Exchange Administration and was involved in foreign exchange evasion. In accordance with Article 39 of the Regulations on Foreign Exchange Administration, the company was fined RMB 37.34 million. Relevant penalty information has been included in the credit information system of the People’s Bank of China. Case 8: Evasion of foreign exchange by Country Style Cooking (Chongqing) Investment Co., Ltd. From November 2016 to March 2017, the actual controller of Country Style Cooking (Chongqing) Investment Co., Ltd. did not handle the registration of foreign exchange and alteration registration for overseas investment in accordance with the regulations, and remitted profits to the overseas parent company in violation of the regulations, with a total amount of USD 8,859,900. The company violated Article 16 of the Regulations on Foreign Exchange Administration and was involved in foreign exchange evasion. In accordance with Article 39 of the Regulations on Foreign Exchange Administration, the company was fined RMB 3.02 million. Relevant penalty information has been included in the credit information system of the People’s Bank of China. Case 9: Evasion of foreign exchange by Ningbo Huili International Trade Co., Ltd. From February 2017 to March 2018, Ningbo Huili International Trade Co., Ltd. made external foreign exchange payment of USD 15,656,200 by using false bills of lading and fabricating trade background. The company violated Article 12 of the Regulations on Foreign Exchange Administration and was involved in foreign exchange evasion. In accordance with Article 39 of the Regulations on Foreign Exchange Administration, the company was fined RMB 5,098,400. Relevant penalty information has been included in the credit information system of the People’s Bank of China. Case 10: Evasion of foreign exchange by Beijing Xinhuayang Trade Co., Ltd. In May 2017, Beijing Xinhuayang Trade Co., Ltd. made external foreign exchange payment of USD 6.19 million by using invalid bills of lading and fabricating trade background. The company violated Article 12 of the Regulations on Foreign Exchange Administration and was involved in foreign exchange evasion. In accordance with Article 39 of the Regulations on Foreign Exchange Administration, the company was fined RMB 2,136,500. Relevant penalty information has been included in the credit information system of the People’s Bank of China. Case 11: Evasion of foreign exchange by Tellhow Sci-Tech Co., Ltd. In May 2017, Tellhow Sci-Tech Co., Ltd. made external foreign exchange payment of EUR 2 million by using false bills of lading and fabricating trade background. The company violated Article 12 of the Regulations on Foreign Exchange Administration and was involved in foreign exchange evasion. In accordance with Article 39 of the Regulations on Foreign Exchange Administration, the company was fined RMB 800,000. Relevant penalty information has been included in the credit information system of the People’s Bank of China. Case 12: Illegal trading of foreign exchange by Mr. Liu from Sichuan From June 2014 to August 2015, Mr. Liu remitted inward HK$ 7,671,700 in 12 deals through underground banks. He violated Article 30 of the Measures for the Administration of Individual Foreign Exchange and was considered breaking the laws on the purchases and sales of foreign exchange. In accordance with Article 45 of the Regulations on Foreign Exchange Administration, he was fined RMB 491,400. The SAFE exercised the “Watch list” management on Mr. Liu, and included him into the credit information system of the People’s Bank of China. Case 13: Illegal trading of foreign exchange by Mr. Cao from Hubei From July 2015 to March 2016, Mr. Cao conducted 34 deals of illegal trading of Hong Kong dollars via underground banks, with a total amount of RMB 8,993,200. He violated Article 30 of the Measures for the Administration of Individual Foreign Exchange and was considered getting involved in the illegal trading of foreign exchange. In accordance with Article 45 of the Regulations on Foreign Exchange Administration, he was fined RMB 719,500. The SAFE exercised the “Watch list” management on Mr. Cao, and included him into the credit information system of the People’s Bank of China. Case 14: Illegal trading of foreign exchange by Mr. Peng from Chongqing From September to December 2015, Mr. Peng purchased US dollars via underground banks in 16 deals to remit overseas, with a total amount of RMB 13,835,800. He violated Article 30 of the Measures for the Administration of Individual Foreign Exchange and was considered getting involved in the illegal trading of foreign exchange. In accordance with Article 45 of the Regulations on Foreign Exchange Administration, he was fined RMB 968,500. The SAFE exercised the “Watch list” management on Mr. Peng, and included him into the credit information system of the People’s Bank of China. Case 15: Illegal trading of foreign exchange by Mr. Zhang from Anhui From January 2017 to April 2018, Mr. Zhang conducted illegal trading of Hong Kong dollars several times via underground banks, with a total amount of RMB 3,762,400. He violated Article 30 of the Measures for the Administration of Individual Foreign Exchange and was considered getting involved in the illegal trading of foreign exchange. In accordance with Article 45 of the Regulations on Foreign Exchange Administration, he was fined RMB 452,000. The SAFE exercised the “Watch list” management on Mr. Zhang, and included him into the credit information system of the People’s Bank of China. Case 16: Purchases and sales of foreign exchange by Mr. Hong from Zhejiang, without permission From February 2011 to October 2015, Mr. Hong paid RMB 312 million to another people's account, and purchased foreign exchange privately for the overseas purchase of real estate. He violated Article 30 of the Measures for the Administration of Individual Foreign Exchange by getting involved in the purchases and sales of foreign exchange without permission. In accordance with Article 45 of the Regulations on Foreign Exchange Administration, he was fined RMB 24.97 million. The SAFE exercised the “Watch list” management on Mr. Hong, and included him into the credit information system of the People’s Bank of China. Case 17: Evasion of foreign exchange by Mr. Sun from Guangdong through split-up From January 2016 to July 2017, Mr. Sun split up his personal funds, used the annual quotas of 34 individuals in China to buy foreign exchange and transferred the foreign exchange into overseas account. The funds thus transferred illegally amounted to USD 2,446,200 in total, which is used for overseas investment. He violated Article 7 of the Measures for the Administration of Individual Foreign Exchange and was considered getting involved in the evasion of foreign exchange. In accordance with Article 39 of the Regulations on Foreign Exchange Administration, he was fined RMB 830,000. The SAFE exercised the “Watch list” management on Mr. Sun, and included him into the credit information system of the People’s Bank of China. 2019-05-20/en/2019/0520/1515.html
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In accordance with the Law of the People’s Republic of China on Anti-Money Laundering (Decree No. 56 of the President of the People’s Republic of China) and Regulations of the People’s Republic of China on Foreign Exchange Administration (Decree No. 532 of the State Council of the People’s Republic of China), the State Administration of Foreign Exchange (SAFE) has strengthened foreign exchange market regulation, and severely cracked down upon false and fraudulent foreign exchange transactions and other irregular behaviors, in a bid to contain money laundering and relevant illegal and criminal activities, and maintain the healthy and benign order in the foreign exchange market. In accordance with the Regulations of the People's Republic of China on the Disclosure of Government Information (Decree No. 492 of the State Council of the People's Republic of China) and other relevant regulations, a selection of typical cases involving violations of foreign exchange regulations are notified as follows: Case 1: The false entrepot trade case of Xiamen Branch, PingAn Bank From September 2015 to September 2016, Xiamen Branch of PingAn Bank handled foreign exchange payment for entrepot trade with false contracts and bills of lading of enterprises. Such behavior violates Article 12 of the Regulations on Foreign Exchange Administration. In accordance with Article 47 of the Regulations on Foreign Exchange Administration, a penalty of RMB 2.80 million was imposed on the bank. Case 2: The false entrepot trade case of Haikou Branch, China Everbright Bank From December 2015 to May 2016, Haikou Branch of China Everbright Bank handled foreign exchange payment for entrepot trade with false contracts and bills of lading of enterprises. Such behavior violates Article 12 of the Regulations on Foreign Exchange Administration. In accordance with Article 47 of the Regulations on Foreign Exchange Administration, a penalty of RMB 800,000 was imposed. Case 3: Handling of prepayment by Guangzhou Branch of Bank of East Asia in violation of regulations From February to May 2016, Guangzhou Branch of Bank of East Asia failed to perform verification responsibilities, and handled foreign exchange payment for prepayment in violation of regulations when there were multiple obvious inconsistencies between the import contracts and the invoices of enterprises. Such behavior violates Article 12 of the Regulations on Foreign Exchange Administration. In accordance with Article 47 of the Regulations on Foreign Exchange Administration, a penalty of RMB 500,000 was imposed. Case 4: Handling of onshore guarantees for offshore loans by Dalian Branch of Minsheng Bank in violation of regulations From July 2015 to March 2016, Dalian Branch of Minsheng Bank failed to fulfill verification responsibilities when handling contracting of onshore guarantees for offshore loans and performing foreign exchange payment, and failed to conduct due diligence and inspection on sources of expected repayment funds and relevant trading background. Such behavior of the Bank violated Articles 12 and 28 of Provisions on Foreign Exchange Administration for Cross-border Guarantee. In accordance with Article 47 of the Regulations on Foreign Exchange Administration, a penalty of RMB 3.073 million was imposed. Case 5: Evasion of foreign exchange by Jishan County Kangshengda Preserved Foods Co., Ltd. From October 2014 to November 2015, Jishan County Kangshengda Preserved Foods Co., Ltd. failed to collect foreign exchange for exported goods, involving an amount of USD 4.6647 million. Such behavior violated Article 12 of the Regulations on Foreign Exchange Administration and Article 14 of the Guidance on Foreign Exchange Administration under Trade in Goods, and was considered evasion of foreign exchange. In accordance with Article 39 of the Regulations on Foreign Exchange Administration, a penalty of RMB 2.0859 million was imposed. Relevant penalty information has been included in the credit information system of the People’s Bank of China. Case 6: Evasion of foreign exchange by Ningbo Minghui Mining Co., Ltd. In February and March 2017, Ningbo Minghui Mining Co., Ltd. fabricated trade background with invalid documents and made external foreign exchange payment of USD 2.7371 million. Such behavior violated Articles 12 and 14 of the Regulations on Foreign Exchange Administration, and was considered evasion of foreign exchange. In accordance with Article 39 of the Regulations on Foreign Exchange Administration, a penalty of RMB 924,000 was imposed. Relevant penalty information has been included in the credit information system of the People’s Bank of China. Case 7: Evasion of foreign exchange by Ningbo Shiding Import & Export Co., Ltd. In September 2017, Ningbo Shiding Import & Export Co., Ltd. forged marine bill of lading, fabricated trade background and made external foreign exchange payment of USD 3.881 million. Such behavior violated Articles 12 and 14 of the Regulations on Foreign Exchange Administration, and was considered evasion of foreign exchange. In accordance with Article 39 of the Regulations on Foreign Exchange Administration, a penalty of RMB 1.273 million was imposed. Relevant penalty information has been included in the credit information system of the People’s Bank of China. Case 8: Evasion of foreign exchange by Jiangsu Wuyang Group Co., Ltd. In September 2017, Jiangsu Wuyang Group Co., Ltd. forged import contracts, fabricated trade background and made external foreign exchange payment of USD 2.0007 million. Such behavior violated Article 12 of the Regulations on Foreign Exchange Administration and Article 3 of the Guidance on Foreign Exchange Administration under Trade in Goods, and was considered evasion of foreign exchange. In accordance with Article 39 of the Regulations on Foreign Exchange Administration, a penalty of RMB 654,000 was imposed. Relevant penalty information has been included in the credit information system of the People’s Bank of China. Case 9: Illegal trading of foreign exchange by a Mr. Zhou from Hong Kong From August 2014 to August 2016, Mr. Zhou conducted illegal trading of Hong Kong dollars several times via underground banks, involving an amount equivalent to RMB 14.0121 million. Such behavior violates Article 32 of the Regulations for the Administration of Settlement and Sales of and Payment in Foreign Exchange and was considered illegal trading of foreign exchange. In accordance with Article 45 of the Regulations on Foreign Exchange Administration, a penalty of RMB 1.4012 million was imposed. The SAFE exercised the “Watch list” management on Mr. Zhou, and included him into the credit information system of the People’s Bank of China. Case 10: Illegal trading of foreign exchange by a Mr. Yang from Guangdong From May 2015 to April 2016, Mr. Yang conducted illegal purchase of US dollars several times via underground banks, involving a total amount equivalent to RMB 4.5307 million. Such behavior violated Article 30 of the Measures for the Administration of Individual Foreign Exchange and Article 32 of the Regulations for the Administration of Settlement and Sales of and Payment in Foreign Exchange, and was considered illegal trading of foreign exchange. In accordance with Article 45 of the Regulations on Foreign Exchange Administration, a penalty of RMB 317,100 was imposed. The SAFE exercised the “Watch list” management on Mr. Yang, and included him into the credit information system of the People’s Bank of China. Case 11: Illegal trading of foreign exchange by a Mr. Xu from Jiangsu From October 2017 to April 2018, Mr. Xu conducted illegal trading of Hong Kong dollars at Macau casinos several times via underground banks, involving an amount equivalent to RMB 2.6598 million. Such behavior violated Article 30 of the Measures for the Administration of Individual Foreign Exchange and Article 32 of the Regulations for the Administration of Settlement and Sales of and Payment in Foreign Exchange, and was considered illegal trading of foreign exchange. In accordance with Article 45 of the Regulations on Foreign Exchange Administration, a penalty of RMB 320,000 was imposed. The SAFE exercised the “Watch list” management on Mr. Xu, and included him into the credit information system of the People’s Bank of China. Case 12: Illegal trading of foreign exchange by a Mr. Feng from Liaoning From December 2017 to May 2018, Mr. Feng conducted illegal trading of Hong Kong dollars at Macau casinos several times via underground banks, involving an amount equivalent to RMB 10.8179 million. Such behavior violated Article 30 of the Measures for the Administration of Individual Foreign Exchange and Article 32 of the Regulations for the Administration of Settlement and Sales of and Payment in Foreign Exchange, and was considered illegal trading of foreign exchange. In accordance with Article 45 of the Regulations on Foreign Exchange Administration, a penalty of RMB 1.30 million was imposed. The SAFE exercised the “Watch list” management on Mr. Feng, and included him into the credit information system of the People’s Bank of China. Case 13: Evasion of foreign exchange through split transactions by a Mr. Zhou from Shanghai From January to December 2015, to illegally transfer assets overseas, Mr. Zhou used the annual quotas of 21 domestic individuals for foreign exchange purchase to purchase foreign exchange and transfer personal funds split to overseas accounts, illegally transferring funds of USD 1.0496 million in total. Such behavior violated Article 7 of the Measures for the Administration of Individual Foreign Exchange and was considered evasion of foreign exchange. In accordance with Article 39 of the Regulations on Foreign Exchange Administration, a penalty of RMB 330,000 was imposed. The SAFE exercised the “Watch list” management on Mr. Zhou, and included him into the credit information system of the People’s Bank of China. Case 14: Evasion of foreign exchange through split transactions by a Mr. Shen from Shanghai From January to July 2016, to illegally transfer assets overseas, Mr. Shen used the annual quotas of 34 domestic individuals for foreign exchange purchase to purchase foreign exchange and transfer personal funds split to overseas accounts for purchasing overseas house properties, illegally transferring funds of CAD 2.04 million in total. Such behavior violated Article 7 of the Measures for the Administration of Individual Foreign Exchange and was considered evasion of foreign exchange. In accordance with Article 39 of the Regulations on Foreign Exchange Administration, a penalty of RMB 510,000 was imposed. The SAFE exercised the “Watch list” management on Mr. Shen, and included him into the credit information system of the People’s Bank of China. Case 15: Evasion of foreign exchange through split transactions by a Mr. Sui from Jilin From November 2017 to April 2018, to illegally transfer assets overseas, Mr. Sui used the annual quotas of 173 domestic individuals for foreign exchange purchase to purchase foreign exchange and transfer personal funds split to overseas accounts for purchasing overseas house properties, illegally transferring funds of CAD 12.0565 million in total. Such behavior violated Article 7 of the Measures for the Administration of Individual Foreign Exchange and was considered evasion of foreign exchange. In accordance with Article 39 of the Regulations on Foreign Exchange Administration, a penalty of RMB 3.009 million was imposed. The SAFE exercised the “Watch list” management on Mr. Sui, and included him into the credit information system of the People’s Bank of China. 2018-12-06/en/2018/1206/1478.html
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In order to implement the gist of the 19th CPC National Congress, put into practice the proactive opening-up policy, facilitate the creation of new pattern of overall opening-up covering all dimensions, multiple levels and extensive field, and deepen the reform of “ delegation, regulation and service” on an ongoing basis, the State Administration of Foreign Exchange (SAFE) has recently decided to carry out the pilot program on foreign exchange receipts and payments facilitation for trade in goods in Guangdong-Hong Kong-Macao Greater Bay Area, Shanghai city and Zhejiang province, so as to support prudential and compliant banks to implement more convenient measures when handling trade receipts and payments for enterprises with good credit standing. Major contents of the pilot program include four parts. The first is optimizing verification of foreign exchange receipt and payment documents for trade. The banks shall handle foreign exchange businesses for trade in goods in accordance with three principles of “knowing your customer”, “understanding your business” and "due diligence”. The second is that foreign exchange receipts from trade are not required to go through accounts pending verification. Foreign exchange receipts of pilot enterprises under authentic and legitimate trade in goods can be entered into foreign exchange settlement account under the current account or settled directly. The third is abolishing special re-exchange business registration formalities. Overdue re-exchange and re-exchange via routes other than the original one can be handled with a bank directly. The fourth is simplifying import declaration verification. If a bank can confirm that foreign exchange payment for trade is authentic and lawful, the electronic information verification formalities for import declaration can be waived. The SAFE will further promote trade and investment liberalization and facilitation based on pilot results, so as to create sound business environment and promote the stable and healthy development of the economy. 2019-01-02/en/2019/0108/1484.html
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Since the beginning of 2018, the State Administration of Foreign Exchange (SAFE) has implemented the spirit of the 19th CPC National Congress, the Central Economic Work Conference and the National Financial Work Conference, with a focus on deepening reform in key areas and working on legislation and files consolidation in key areas. To make it easier for the public to inquire and use, the SAFE has recently updated the Catalogue of Effective Laws and Regulations on Foreign Exchange Administration (Catalogue). The Catalogue classifies 220 policies, laws and regulations on foreign exchange administration released as of June 30, 2018 into eight major categories, namely, Comprehensive Foreign Exchange Administration, Foreign Exchange Administration under the Current Account, Foreign Exchange Administration under the Capital Account, Regulation of the Foreign Exchange Business of Financial Institutions, RMB Exchange Rate and Foreign Exchange Market, BOP and Foreign Exchange Statistics, Foreign Exchange Inspections and Applicable Regulations, and Foreign Exchange Technical Management, and into several sub-items further by type of business. The files added to the Catalogue this time around involve statistical survey of trade credit, domestic securities investments of qualified foreign institutional investors, onshore guarantees for offshore loans by insurance institutions, improvement of foreign exchange administration related to forward foreign exchange sales and settlements, statistical system of FDI, and assessment of the implementation of foreign exchange administration regulations among banks. Going forward, the SAFE will continue to carry out the arrangements of the CPC Central Committee and the State Council, with a focus on deepening the reform of foreign exchange administration, and advancing legislation and files consolidation in key areas, so as to facilitate the understanding and use of foreign exchange administration regulations by banks, companies and individuals, promote liberalization and facilitation of trade and investment and improve the service level for the real economy. 2018-07-31/en/2018/0731/1450.html
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Over the past four decades since the reform and opening up policy was implemented, China's foreign exchange market has grown from nothing to the large scale it is at today, with a preliminary market system that adapts to the socialist market economy established, thus playing significant roles in macro control, resource allocation, exchange rate formation and risk management. In 2017, China posted USD 24 trillion in the trading of RMB against foreign currencies in the domestic foreign exchange market. To further support financial institutions in serving the real economy and preventing risks arising from foreign exchange, the State Administration of Foreign Exchange (SAFE) has recently released the Circular on Foreign Exchange Administration for Improving Forward Foreign Exchange Sales and Settlement (Hui Fa No. 3 [2018]) (Circular). Forward foreign exchange sales and settlement are the most basic and one of the major derivatives in the domestic foreign exchange market. Starting from the key links to diversify the trading mechanism, the Circular allows gross or netting settlement as the way of delivery when the forward contract for foreign exchange sales expires, while adopting netting delivery for forward foreign exchange settlement in 2016. This marks forward foreign exchange sales and settlement has been fully market-based in market-oriented pricing, delivery and settlement, and risk management. The Circular will become effective the day it is released. Going forward, the SAFE will continue to deepen the development and liberalization of the foreign exchange market to provide support and guarantee for trade and investment facilitation. 2018-02-13/en/2018/0213/1418.html
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Since established in 2006, the QDII system has played positive roles in boosting the opening-up of financial markets, expanding investment channels for domestic residents and supporting financial institutions to go global. To implement the spirit of the 19th CPC National Congress, and the requirement of further opening-up raised by General Secretary Xi Jinping at the 2018 annual meeting of the Boao Forum for Asia, the State Administration of Foreign Exchange (SAFE) follows the logic of macro-prudential administration, considers the AUM, internal control and compliance of QDIIs based on the business features of institutions and works on the matters relating to QDIIs in a fair, just and transparent manner, thus better meeting the requirements of domestic players for cross-border assets allocation. Customarily, the updates of the quotas for QDIIs are published at the official website of the SAFE at the end of every month, in the hope of calling your attention and subjecting relevant issues to your supervision. Next, the SAFE will work with relevant departments to study how to press ahead with the reform. They will continue to improve the macro-prudential administration of QDIIs based on the BOP, industry trends and outbound investments, to serve the new pattern of comprehensive opening-up in China and help build an open world economy. 2018-04-11/en/2018/0605/1434.html
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To implement the spirit of the central government on deepening the financial reform and opening up, the State Administration of Foreign Exchange (SAFE) has recently released the Regulations on Foreign Exchange Administration of Domestic Securities Investments by Qualified Foreign Institutional Investors (Announcement No. 1 [2018] of the State Administration of Foreign Exchange, "Regulations"), and issued the Circular of the People's Bank of China and the State Administration of Foreign Exchange on the Management of Domestic Securities Investment by RMB Qualified Foreign Institutional Investors (Yinfa No. 157 [2018], "Circular") together with the People's Bank of China, so as to improve administration of domestic securities investment by QFIIs/RQFIIs and further facilitate cross-border securities investment. Major policies and measures are as follows: first, cancel the requirement that the outward remittances by QFIIs should be no higher than 20%, and they are allowed to entrust a custodian with handling outward remittances. Second, cancel the requirement on the lock-up period of principal for QFIIs/RQFIIs, and they are allowed to remit out principal based on investment situations. Third, QFIIs/RQFIIs are allowed to engage in foreign exchange hedging to offset the risks arising from foreign exchange rate in domestic investment. The Regulations and the Circular will become effective as of issuance. (The end) 2018-06-12/en/2018/0612/1455.html
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To meet the requirements of foreign investors to expand investment in China’s capital market, the total quota for qualified foreign institutional investors (QFIIs) has been raised from USD 150 billion to USD 300 billion upon approval of the State Council. As the earliest and most important institutional arrangement for China's capital market to open to the outside world, QFII system serves as one of the major channels for foreign investors to make investment in China's domestic financial market. From 2016 to 2018, the State Administration of Foreign Exchange (SAFE) conducted a significant reform on QFII system-related foreign exchange administration, including improving prudent management, abolishing restrictions on proportion of outward remittance and canceling relevant provisions on lock-up period, allowing foreign exchange hedging of securities assets held by QFIIs in China, which has greatly facilitated foreign investors to invest in domestic financial market via QFII channels. 2019-01-14/en/2019/0118/1486.html
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To strongly support capable domestic institutions to make diverse forms of outbound investments, the State Administration of Foreign Exchange (SAFE) has conducted a pilot program of QDLPs/QDIEs in Shanghai and Shenzhen since 2013. Given the outcomes of the pilot program and the demand of market participants for cross-border asset allocation, the SAFE has pressed ahead with the pilot program, and increased the piloting quota to USD 5 billion for the two cities recently. Next, the SAFE will work with relevant departments and local governments to further improve the macro-prudential management of QDLPs/QDIEs based on the experience from the pilot program, the situations of the balance of payments, industry trends and outbound investments to better serve the new landscape of comprehensive opening. 2018-04-24/en/2018/0605/1435.html
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The State Administration of Foreign Exchange (SAFE) has recently issued the Circular of the State Administration of Foreign Exchange on Further Advancing Foreign Exchange Administration Reform to Enhance Authenticity and Compliance Reviews (Huifa No. 3 [2017]) (hereinafter referred to as Circular). The official of the SAFE has answered press questions on relevant issues. I. What are the background and logic behind introducing the Circular? A: For a long time, the SAFE has closely followed the work plans of the CPC Central Committee and the State Council, with a focus on accelerating administration streamlining and power delegation, transforming government functions, breaking new grounds in the reform, reducing institutional transaction costs and promoting trade and investment facilitation. Meanwhile, it has been committed to monitoring and early warning of cross-border capital flows, imposing stringent requirements on authenticity and compliance reviews, maintaining a tough stance on foreign exchange irregularities, and safeguarding the healthy and orderly foreign exchange markets to serve the development of the real economy. The Circular will continue with this logic: first, efforts will be made to systematically advance the reform in key areas, especially the liberalization of the domestic foreign exchange markets, in a bid to promote trade and investment facilitation; second, the capital flow management system will be built and refined under the macro-prudential management framework. Banks and enterprises will be required to observe the existing provisions on foreign exchange administration and make sure transactions are authentic and comply with relevant regulations. The bottom line against risks must be adhered to under the overall principle of reform and opening up to safeguard the order of the foreign exchange markets and guard against cross-border capital flow risks. The cross-border receipts, payments and exchanges that have authentic backgrounds and comply with relevant regulations will not be affected. II. How will the market benefit from foreign exchange settlements for domestic foreign exchange loans for exports under trade in goods? What attention should be paid? A: Allowing foreign exchange settlements for domestic foreign exchange loans for exports under trade in goods on the premise of controllable risks will be favorable for addressing difficult and costly financing facing some small and medium-sized importers and exporters and for the development of the real economy. Foreign exchange funds that could be settled include outward documentary bills and export bill discounts under L/C and collection, export commercial invoice discounts, export factoring, forfeiting, order financing, agreed financing, overseas agency payments for exports, packing loans and other domestic foreign exchange loans for exports under trade in goods. To avoid currency mismatches between enterprises and banks, and reduce the impact on the monetary policy from foreign exchange settlements of domestic foreign exchange loans, domestic institutions will be required to use foreign exchange proceeds from exports of goods to repay the domestic foreign exchange loans under which foreign exchange has been settled into RMB. In principle, they are not allowed to make payments through buying foreign exchange, in order to maintain an equilibrium between aggregate supply and demand in the foreign exchange markets. III. What are the major considerations for allowing funds for overseas loans under domestic guarantees to be transferred back for domestic use? A: Since the macro-prudential management policy for full-scale cross-border financing was implemented in 2016, Chinese enterprises have been allowed to borrow external debt in proportion to their net assets. Allowing funds for overseas loans under domestic guarantees to be transferred back as external debt for domestic use under the macro-prudential management framework will be favorable for facilitating cross-border investment and financing by enterprises and enable them to ease the difficulties to raise funds, reduce the heavy cost of financing and serve the real economy by using the resources of both domestic and foreign markets. In practice, the enterprises should simply handle the external debt registration in accordance with the existing regulations on external debt management. Moreover, funds for overseas loans under domestic guarantees could also be transferred back for domestic use through equity participation according to relevant regulations. IV. What new progress has been achieved in supporting centralized operation and management of foreign exchange of multinationals? A: According to the Regulations on the Centralized Operation and Management of the Foreign Exchange Funds of MNCs (Huifa No. 36 [2015]) issued in 2015, "the deposits attracted by domestic banks through the international foreign exchange master account can be used in China within 50% of the balance of the daily average deposits for the previous six months; over 50% of the deposits attracted through the international foreign exchange master account can be used domestically provided that the quota for outstanding short-term external debt have been used." In practice, the models and paths of domestic use of deposits are based on banks' own operations. The adjustment of the proportion of 50% into 100% this time and the provision that funds for domestic use are not included in the quota for outstanding short-term external debt of banks are for the purposes of motivating banks' initiatives to optimize the functions of the international foreign exchange master account and diversify the channels to use funds. V. What are the major considerations for allowing overseas institutions in pilot free trade zones to go through the procedures of foreign exchange settlements through the non-resident account? A: Building pilot free trade zones is a significant move adopted by the CPC Central Committee and the State Council to deepen reform and opening up under new circumstances. The SAFE has been active in supporting and implementing the measure. According to the Circular of the State Administration of Foreign Exchange on Management of Non-resident Accounts of Overseas Institutions (Huifa No. 29 [2009]), without approval from the SAFE branch and foreign exchange administration department in places of registration, overseas institutions are forbidden from going through foreign exchange settlements of funds in their non-resident accounts directly or in disguise. To seek the experience in monitoring offshore accounts and make further use of the pilot free trade zones in deepening reform and opening up, the Circular allows settlements of foreign exchange funds in the non-resident account (NRA) opened with the banks in the pilot free trade zones. Where the funds are remitted for domestic use after the foreign exchange settlement, the valid commercial documents and vouchers of domestic institutions and individuals concerned will first be reviewed in accordance with the regulations with regard to cross-border transactions and the balance of payments declaration will be made as required. Moreover, the SAFE made clear in 2015 that overseas institutions could engage in spot foreign exchange settlement and sales in accordance with relevant regulations, and the banks registered in the pilot free trade zones could handle RMB and foreign exchange derivatives transactions for them, while allowing foreign exchange settlements in the non-resident account of an overseas institution in the free trade zones could boost the above innovative measures to play their roles. VI. Why does the Circular stress again that "enterprises shall go through the procedures of foreign exchange receipts and payments under trade in the principle that 'whoever exports shall receive foreign exchange, and whoever imports shall make payments", and are required to undergo the procedures for foreign exchange receipts in time? A: In accordance with Article 14 of the Guidance on Foreign Exchange Administration under Trade in Goods and Article 2 of the Detailed Rules on the Implementation of the Guidance on Foreign Exchange Administration under Trade in Goods, enterprises shall go through the procedures of foreign exchange receipts and payments under trade in the principle that 'whoever exports shall receive foreign exchange, and whoever imports shall make payments", and collect payments on time and in full as agreed upon in the contracts in export business. In the case of foreign trade agency, the agent shall be responsible for foreign exchange receipts and payments. Where the entity that handles foreign exchange receipts and payments in line with regulations is inconsistent with the importer/exporter, the subject alteration procedures shall be gone through with the local foreign exchange authority. Recently, the SAFE has found from its monitoring and verification that a few enterprises do not collect foreign exchange or collect less foreign exchange than they should, and the foreign trade declarer is inconsistent with the subject engaged in foreign exchange receipts and payments, which have interrupted the order of foreign exchange receipts and payments. Given this, the Circular reiterates the above requirements, warns risks and stresses foreign exchange business should be authentic and comply with regulations, in a bid to further regulate the order in the foreign exchange markets and serve the sustained and healthy economic development. VII. Why are domestic institutions required to report information on the overseas deposits of the foreign exchange receipts under the current account? A: According to the Circular of the SAFE on Printing and Distributing the Regulations on Foreign Exchange Administration for Trade in Goods (Huifa No. 38 [2012]), and the Circular of the SAFE on Printing and Distributing the Regulations on Foreign Exchange Administration for Trade in Services (Huifa No. 30 [2013]), domestic institutions are required to go through the opening registration or verification procedures for the overseas foreign exchange account with the foreign exchange authority in advance if they want to deposit overseas the foreign exchange receipts generated by trade in goods and trade in services, and timely report the information on the receipts and payments in the overseas foreign exchange account for the foreign exchange authority to conduct off-site monitoring. But the monitoring and verification revealed that individual institutions have failed to go through relevant registration and filing procedures or report information as required for various reasons. To understand and obtain the information on foreign exchange receipts under the current account, collect the data on foreign exchange receipts deposited overseas, standardize data reporting, and refine the management of foreign exchange receipts deposited overseas, the Circular requires that any domestic institution who fails to timely report their overseas accounts and the receipts and payments in the account should actively report the accurate and complete information to the local foreign exchange authority, or have them recorded into the system within one month after the Circular is released, so that relevant information could be obtained in an all-round way. Any domestic institution who fails to go through registration procedures or report information will be punished by the foreign exchange authority in accordance with the Regulations of the People's Republic of China on Foreign Exchange Administration. VIII. What refinements have been made in the Circular to the management of outward remittances of the profits of domestic institutions? A: Outward remittances of the profits from direct investments should be recorded under the current account. Since the current account is convertible in China, a domestic institution only needs to follow procedures to present evidencing materials and can complete the procedures of outward remittances directly with the bank without any constraints, provided that the profits are authentic and in compliance with regulations. Pursuant to the Company Law, the Circular further clarifies that domestic institutions should make up for the losses incurred in previous years before remitting the profits overseas, and reiterates the requirement on document reviews for remitting outward the profits in the amount above the equivalent of USD 50,000 (exclusive), and does not require additional new review materials to be submitted. For the outward remittances of the profits in the amount below the equivalent of USD 50,000 (inclusive), the Circular of the SAFE on Printing and Distributing the Regulations on Foreign Exchange Administration for Trade in Services (Huifa No. 30 [2013]) shall continue to be followed, and banks may skip reviewing transaction documents in principle, but shall require domestic institutions and individuals to present transaction documents for reviews in case that the nature of funds is uncertain. Banks shall continue to refine the authenticity and compliance reviews with regard to the outward remittances of the profits of domestic institutions in accordance with the three business operation principles, which is in line with international practices. IX. What policy adjustments have been made with regard to ODI management? A: The SAFE has always been supportive to ODI that is authentic and rational. It has been committed to administration streamlining and power delegation with regard to ODI policies in recent years, shifting frequent reviews and verification to registration and filing, and adopted consistent and stable foreign exchange administration policies for ODI. Without changing the regulatory orientation for ODI, the Circular requires domestic institutions to explain to banks the sources and purposes (use plan) of the investment funds, and present to banks the resolutions of the board of directors (or of the partners), contracts and other authenticity evidencing materials, for the purposes of promoting sustained and healthy development of China's ODI to seek mutual benefits and common development through enhancing authenticity and compliance reviews. The authenticity materials could be the resolutions of the board of directors (or of the partners), contracts, or financial statements (with the sources of funds explained), and the fund use plan (with the purposes of funds described). X. What are the major considerations for managing full-scale overseas loans in domestic and foreign currencies? A: As the impact of the cross-border flows of RMB and foreign currencies on the balance of payments are the same in nature, the People's Bank of China (PBC) and the SAFE have long been committed to refining the integrated management of cross-border capital in domestic and foreign currencies. In April 2016, the PBC issued the Circular on Implementing Nationwide the Macro-prudential Management of Full-scale Cross-border Financing (Yinfa No. 132 [2016]) to roll out the pilot program of integrated management of full-scale cross-border financing in domestic and foreign currencies to financial institutions and enterprises across the country, in a bid to diversify the financing channels of domestic market players, help reduce financing cost and serve and support the development of the real economy. According to the Circular, the integrated macro-prudential management will be adopted for overseas loans in domestic and foreign currencies of domestic enterprises, which is for the purposes of building and refining the capital flow management system under the macro-prudential management framework, promoting the two-way balance of cross-border capital flows in domestic and foreign currencies, and strengthening and intensifying macro control. This Circular shall prevail in case of inconsistency between other existing provisions on foreign exchange administration and this Circular in the proportion of the owner's equity. 2017-01-26/en/2017/0126/1248.html