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The State Administration of Foreign Exchange (SAFE) has recently published the Circular of the State Administration of Foreign Exchange on Regulating Large-sum Overseas Cash Withdrawals with Bank Cards (Huifa No. 29 [2017]) (Circular), and its official answered media questions on relevant issues. 1. Could you brief us on the background of the Circular? A: Alongside technical advancement, non-cash payment has been proliferating and offering increasing convenience. The international regulators' experience also shows that large-sum cash transactions tend to be associated with illegalities such as frauds, gambles, money laundering and terrorist financing. Given this, large-sum cash management is being intensified worldwide. Our monitoring finds that some individuals have withdrawn large sums of cash overseas with many bank cards, which are well above the payments for normal consumption, and are therefore suspicious of violating laws. Regulating large-sum overseas cash withdrawals with bank cards is crucial to cracking down on money laundering, terrorist financing and tax evasion, and can help guard against illegalities associated with cash withdrawals with bank cards. The Circular, aligned with the requirement of ensuring currency convertibility under the current account, does not contradict with the annual quota of USD 50,000 for foreign exchange purchases by individuals, or affect individuals' normal withdrawals of cash and consumption or the convenience for individuals to use foreign exchange. In addition, the SAFE is negotiating with overseas regulators the establishment of the information communication mechanism for regulating large-sum cash withdrawals, in a bid to enhance regulation and collaboration and guard against risks associated with cross-border money laundering. 2. What are the highlights of the Circular? A: First, in overseas cash withdrawals by individuals with domestic bank cards, the sum of withdrawals using the bank cards under the name of the individual (including additional cards) shall not exceed the equivalent of RMB 100,000 in every civil year. Second, the daily quota per card for overseas cash withdrawals with RMB cards and foreign currency cards is the equivalent of RMB 10,000. Third, in case of overseas cash withdrawals in excess of the annual quota, the individuals will not be allowed to withdraw cash overseas with the domestic bank cards in the current and second years. Fourth, individuals are prohibited from borrowing others' bank cards or lending their own bank cards to evade or help evade the management of overseas cash withdrawals. 3. Will the introduction of the Circular impact overseas consumption by cardholders? A: The introduction of the Circular will not impact overseas consumption by cardholders. Bank cards have become one of the most convenient payment tools for overseas consumption. They can be used for catering, accommodation, transport and purchases in overseas travel, business trips and study abroad, and does not offset the annual quota of USD 50,000 for foreign exchange purchases by individuals. The Circular is designed to standardize the large-sum overseas cash withdrawals with bank cards and will not change the basic framework for foreign exchange administration with regard to bank cards and the policy for the use of foreign exchange by individuals, or affect overseas consumption by individuals with bank cards. 4. What are the considerations behind the annual quota of RMB 100,000 for overseas cash withdrawals, as stipulated in the Circular? A: The quota-based management of overseas cash withdrawals with bank cards has been adopted since 2003, with the current quota no higher than RMB 100,000 per card per year. To prevent lawbreakers from withdrawing a large amount of cash with many cards from different banks, the Circular adjusts the annual quota for overseas cash withdrawals to RMB 100,000 per person per year. Statistics show that 81% of overseas cash withdrawals with domestic bank cards were lower than RMB 30,000 in 2016. The annual quota of RMB 100,000 as stipulated in the Circular can meet cardholders' requirements for normal cash withdrawals overseas and curb large-sum cash withdrawals by a few lawbreakers. If an individual does need to use large sums of cash overseas and will not violate regulations, they can handle it in accordance with relevant regulations for foreign exchange administration such as the Measures for the Administration of Individual Foreign Exchange, and the detailed implementation rules. For example, they can leave for China with foreign currency banknotes after buying foreign exchange in accordance with the law. 5. Will it be likely that individuals withdraw cash in excess of the annual quota after the Circular becomes effective? If yes, what impact will that have? A: The annual quota will be subject to the control by the SAFE through the card-issuing financial institutions based on the collection and calculations of the data from the card-issuing financial institutions. Considering that real-time control will postpone response and affect experience with the card, the SAFE adopts delayed control. Therefore, individuals shall well plan overseas cash withdrawals and ensure the quota will not be surpassed. In addition, the Circular requires the card-issuing financial institutions to properly notify the cardholders who withdraw cash overseas of watching policy changes and to step up policy promotion. To guard against malicious withdrawals by some cardholders, any individual who withdraws more cash than permitted will not be allowed to withdraw cash overseas with the domestic bank cards in the current and second years, and will be punished in accordance with the Regulations of the People's Republic of China on Foreign Exchange Administration, depending on the severity. 6. When will the Circular come into force? A: The Circular will become effective on January 1, 2018, with the 2018 annual quota for overseas cash withdrawals calculated on an accumulative basis starting from the same day. 7. Are individuals allowed to inquire about the breakdowns of overseas cash withdrawals with their bankcards? A: Any individual who is on the list of individuals whose right to withdraw cash overseas with domestic bankcards is suspended is allowed to inquire of the card-issuing financial institution about the breakdowns of the withdrawals using the bank card issued by the institution, or inquire of the branches or sub-branches of the SAFE by presenting their valid ID card. It should be noted that the SAFE has confidentiality provisions on the breakdowns of cash overseas withdrawals with bankcards and stipulates that any use of the breakdowns should comply with laws and regulations, and card-issuing financial institutions should properly keep the information on any individual whose right to withdraw cash overseas with domestic bankcards is suspended. 8. What suggestions do you have on overseas cash withdrawals by individuals with bank cards? A: Any individual who wants to withdraw cash overseas should protect their own interest. First, they should have a good plan for the use of foreign exchange, reducing the amount of cash carried or used, lest their personal and property security should be threatened by robbery. Second, they should be mindful of card security and information protection, lest their bank cards should be stolen, which will interrupt normal transactions. Third, they should use their bank cards in accordance with laws and regulations. They should not borrow others' bank cards to evade quota management, or lend their own cards to others lest the latter should use the cards for illegal purposes. 2017-12-30/en/2017/1230/1391.html
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By following the work plans of the CPC Central Committee and the State Council, the State Administration of Foreign Exchange (SAFE) has been committed to serving the real economy, facilitating cross-border trade and investments, intensifying regulation of the foreign exchange market, cracking down on foreign exchange irregularities since 2016, in a bid to safeguard 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), a selection of typical cases involving enterprises and individuals violating foreign exchange regulations are announced as follows: Case 1: Evasion of foreign exchange by Ningbo Dacheng International Trade Co., Ltd. In August and September 2015, Ningbo Dacheng International Trade Co., Ltd. fabricated the entrepot trade contracts with many overseas companies using other companies' expired bills of lading and set transaction prices that were 5-20 times higher than the market prices, illegally transferring funds overseas for 15 times, involving a sum of USD 119 million. Such behavior violated Articles 12 and 14 under the Regulations of the People's Republic of China on Foreign Exchange Administration, and was considered evasion of foreign exchange. Involving a huge amount of money, the behavior had an adverse impact on society and severely interrupted the order in the foreign exchange market. In accordance with Article 39 under the Regulations of the People's Republic of China on Foreign Exchange Administration, an administrative punishment of RMB 22.81 million was imposed on the company. Case 2: Evasion of foreign exchange by Grand China Logistics Holding (Group) Co., Ltd. From January to July 2015, Grand China Logistics Holding (Group) Co., Ltd. signed false charter contracts with its connected companies, domestic or overseas, and made false freight invoices, illegally transferring overseas funds of USD 45.0690 million. Such behavior violated Articles 12 and 14 under the Regulations of the People's Republic of China on Foreign Exchange Administration, and was considered evasion of foreign exchange. Involving a huge amount of money, this had an adverse impact on society and severely interrupted the order in the foreign exchange market. In accordance with Article 39 under the Regulations of the People's Republic of China on Foreign Exchange Administration, an administrative punishment of RMB 20.75 million was imposed on the company. Case 3: Evasion of foreign exchange by Hangzhou Zhiyu Information Technology Co., Ltd. From September 2015 to January 2016, Hangzhou Zhiyu Information Technology Co., Ltd. (formerly known as Wholesale Inc.) fabricated import transactions, and repeatedly used its contracts and invoices to make 44 payments in the total amount of USD 39.6770 million under "prepayment", leading to illegal outflows of large-sum foreign exchange. Such behavior violated Article 12 under the Regulations of the People's Republic of China on Foreign Exchange Administration and Article 3 under the Guidance on Foreign Exchange Administration under Trade in Goods, and was considered evasion of foreign exchange. Involving a huge amount of money, this had an adverse impact on society and severely interrupted the order in the foreign exchange market. In accordance with Article 39 under the Regulations of the People's Republic of China on Foreign Exchange Administration, an administrative punishment of RMB 10 million was imposed on the company. Case 4: Evasion of foreign exchange by Harbin Yabuli Timber Co., Ltd. From April to October 2015, Harbin Yabuli Timber Co., Ltd. repeatedly used expired Declaration Form for Import, changed the amount in the Form, used the information of other companies on their Declaration Forms for Import, and made false contracts and invoices for fabricated imports with foreign companies, illegally transferring funds of USD 18.92 million overseas. Such behavior violated Articles 12 and 14 under the Regulations of the People's Republic of China on Foreign Exchange Administration and Article 3 under the Guidance on Foreign Exchange Administration under Trade in Goods, and was considered evasion of foreign exchange. In accordance with Article 39 under the Regulations of the People's Republic of China on Foreign Exchange Administration, an administrative punishment of RMB 2.93 million was imposed on the company. Case 5: Evasion of foreign exchange by Techman Electronics (Changshu) Co., Ltd. In August 2015, to evade the authenticity review by the bank, Techman Electronics (Changshu) Co., Ltd. repeatedly used 7 copies of invoices, illegally transferring USD 3.82 million overseas through two banks. Such behavior violated Article 14 under the Regulations of the People's Republic of China on Foreign Exchange Administration and Article 15 under the Guidance on Foreign Exchange Administration under Trade in Goods, and was considered evasion of foreign exchange. In accordance with Article 39 under the Regulations of the People's Republic of China on Foreign Exchange Administration, an administrative punishment of RMB 1.17 million was imposed on the company. Case 6: Evasion of foreign exchange by a Mr. Che from Guangdong From December 2015 to January 2017, to transfer funds overseas and evade regulation, Mr. Che, native of Guangdong, transferred funds denominated in RMB into the accounts of 84 persons separately, including a Mr. Liu, and used their quotas for foreign exchange purchases to transfer USD 4.3552 million under personal travel and allowances for family maintenance into Che's personal accounts in Australia and Hong Kong. Che's behavior violated Article 7 under the Measures for the Administration of Individual Foreign Exchange and was considered evasion of foreign exchange that had adverse impact on society. In accordance with Article 39 under the Regulations of the People's Republic of China on Foreign Exchange Administration, an administrative punishment of RMB 1 million was imposed on Che. Case 7: Illegal arbitrage by a Mr. Zhao from Shandong From February to December 2015, to exchange his company's funds for a large sum of foreign exchange, Mr. Zhao, native of Shandong, transferred the money in his company's account into the individual accounts of 41 employees separately and purchased foreign exchange through online banking by using his employees' individual quotas for purchasing foreign exchange. Then Zhao asked his employees to withdraw the foreign exchange and transfer them into Zhao's personal account through 439 deals as time deposits, which amounted to USD 2.0468 million. Zhao's behavior violated Article 7 under the Measures for the Administration of Individual Foreign Exchange and was considered illegal arbitrage. In accordance with Article 40 under the Regulations of the People's Republic of China on Foreign Exchange Administration, an administrative punishment of RMB 705,800 was imposed on Zhao. Case 8: Illegal trading of foreign exchange by a Mr. Liang from Guangdong From November 2014 to October 2016, to evade taxes, Mr. Liang, native of Guangdong, transferred the money for exports in the amount of HKD 24.03 million into the overseas account of an underground bank through 82 deals. Later the underground bank transferred RMB 19.56 million into Liang's and his relatives' accounts through 94 deals. Liang's behavior violated Article 30 under the Measures for the Administration of Individual Foreign Exchange and was considered illegal trading of foreign exchange. Involving a huge amount of money, this had an adverse impact on society and severely interrupted the order in the foreign exchange market. In accordance with Article 45 under the Regulations of the People's Republic of China on Foreign Exchange Administration, an administrative punishment of RMB 586,600 was imposed on Liang. Case 9: Illegal foreign exchange trading by a Mr. Lou from Henan In March 2016, to illegally transfer the funds overseas, Mr. Lou, native of Henan, transferred RMB 7.1 million into 11 personal accounts controlled by an underground bank. The underground bank then exchanged the money for foreign exchange and transferred the foreign exchange amounting to AUD 1.426 million into an overseas account designated by Lou. Lou's behavior violated Article 30 under the Measures for the Administration of Individual Foreign Exchange and was considered illegal trading of foreign exchange that has interrupted the order in the foreign exchange market. In accordance with Article 45 under the Regulations of the People's Republic of China on Foreign Exchange Administration, an administrative punishment of RMB 235,000 was imposed on Lou. Case 10: Evasion of foreign exchange through split transactions by a Mr. Geng from Shanxi From February to June 2016, to illegally transfer assets overseas, Mr. Geng split the RMB funds and transferred the funds into the personal accounts of 31 persons. Then Geng had the funds exchanged for foreign exchange through online banking by using the annual quotas of the 31 persons for purchasing foreign exchange, and transferred the funds into his personal account in Hong Kong, which amounted to HKD 11.78 million. Geng's behavior violated Article 7 under the Measures for the Administration of Individual Foreign Exchange and was considered evasion of foreign exchange. In accordance with Article 39 under the Regulations of the People's Republic of China on Foreign Exchange Administration, an administrative punishment of RMB 150,000 was imposed on Geng. 2017-05-25/en/2017/0525/1269.html
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The State Administration of Foreign Exchange (SAFE) has recently released the Circular of the State Administration of Foreign Exchange on Foreign Exchange Risk Management for Foreign Institutional Investors in the Interbank Bond Market (Huifa No. 5 [2017], "Circular"). An official from the SAFE answered media questions on relevant issues. 1. What is the main background of promulgation of the Circular? A: As the domestic bond market is liberalized, foreign institutions' participation in the domestic bond market is rising. As at the end of 2016, the foreign investors in the interbank bond market held bonds worth RMB 870 billion in total, up by RMB 83.4 billion year on year. As the two-way floating elasticity of RMB exchange rate is being strengthened, foreign investors holding RMB bonds will have the requirements for foreign exchange risk management. The foreign investors surely could manage foreign exchange risks in offshore RMB markets, but as China's foreign exchange market goes deeper, the condition will be ripe to support foreign investors to participate in China's foreign exchange market and to manage them in the bond and foreign exchange market. This Circular is released to help foreign institutional investors manage foreign exchange risks in the interbank bond market, and to boost the opening up of the bond and foreign exchange market. 2. Could you tell us what foreign institutional investors in the domestic foreign exchange market mean? Are foreign central banks and similar institutions the foreign institutional investors? A: By definition by this Circular, foreign institutional investors in the domestic foreign exchange market are the foreign investors that meet the provisions under the Announcement No. 3 of the People's Bank of China [2016], which is consistent with the scope of opening up of the interbank bond market. But foreign central banks and similar institutions are not foreign institutional investors, because they can participate in China's foreign exchange market through various channels and conveniently manage the foreign exchange risk exposure arising from the investments in interbank bond market, according to the Announcement No. 31 of the People's Bank of China [2015]. 3. What kind of foreign exchange derivatives business are foreign institutional investors allowed to engage in? A: To hedge against the foreign exchange risk exposure in the interbank bond market, foreign institutional investors could choose the RMB-foreign exchange derivatives laid out in the Detailed Rules for the Implementation of the Administration Measures for Foreign Exchange Settlement and Sales by Banks (Huifa No. 53 [2014]), including forward derivatives, foreign exchange swaps, currency swaps and options, and are subject to no restrictions on the trading categories within the existing types of derivatives in China's foreign exchange market. 4. How to understand the principle of transaction for actual requirements on foreign institutional investors in trading foreign exchange derivatives? A: This principle means that foreign institutional investors trade foreign exchange derivatives to hedge against the foreign exchange risk exposure arising from the investment in the interbank bond market with remittances from abroad. In other words, the foreign exchange risk exposure under bond investment is the basis for trading foreign exchange derivatives. Under this principle, foreign institutional investors may flexibly choose foreign exchange derivative tools and use transaction mechanisms including reverse position closing, balance settlement or gross settlement, based on the foreign exchange risk exposure of a single bond or a bond portfolio that they face. This principle is a basic requirement in the domestic foreign exchange derivatives market, inherently aligned with the prudential trading principle of the market participants. This helps maintain the order of the foreign exchange market and provides guarantees for the trading flexibility of market participants. 5. What are the policy considerations of requiring settlement agents to provide foreign exchange risk management services to foreign institutional investors? A: Settlement agents are required to provide bond investment-related services such as trading and settlement to foreign institutional investors, in accordance with the existing policy arrangements for the interbank bond market. As a result, settlement agents could provide one-stop services covering bond investment and foreign exchange trading to foreign institutional investors in handling foreign exchange derivatives business, so as to better satisfy the investment demand of foreign institutional investors. Going forward, the SAFE will diversify the trading models for foreign institutional investors to participate in China's foreign exchange market, based on the policy arrangements for the interbank bond market. 6. Could foreign institutional investors participate in China's interbank foreign exchange market? A: China's foreign change markets include the interbank market or wholesaling market, and the over-the-counter market, or retailing market or banking foreign exchange sales and settlement market. In the former market, financial institutions are responsible for providing market liquidity. Given that foreign institutional investors participate in China's foreign exchange market for the purpose of hedging against the foreign exchange risk exposure arising from investment in the interbank bond market, and are not the major providers of market liquidity at present, participating in the over-the-counter market as a client could fully satisfy their demand. Foreign institutions participating in the interbank foreign exchange market shall still follow the Announcement No. 40 of the People's Bank of China and the State Administration of Foreign Exchange [2015]. 7. What are the provisions on foreign exchange receipts and payments involved in the foreign exchange derivatives business handled by foreign institutional investors? A: Where a foreign institutional investor, when handling the foreign exchange receipts and payments involved in the derivatives business under the interbank bond market investment in accordance with the Circular of the State Administration of Foreign Exchange on Foreign Exchange Administration for the Investments of Foreign Institutional Investors in the Interbank Bond Market (Huifa No. 12 [2016]), goes through the procedures for outward/inward fund remittances or foreign exchange settlement or purchases through the special account for domestic and foreign currencies directly with a settlement agent, and the currencies for inward and outward remittances are the same, the SAFE will not conduct ex-ante verification or approval. 8. Is it necessary for a foreign institutional investor to sign a master agreement with the counterparty in foreign exchange derivatives trading? A: It is a universal practice in both domestic and foreign financial markets to sign a master agreement. The foreign institutional investor shall handle foreign exchange derivatives business with a settlement agent, and the two parties may select and sign a master agreement through consultation. 9. What are the considerations of the SAFE on the future development of China's foreign exchange market? A: Looking ahead, the SAFE will continue to deepen the foreign exchange market, diversify trading instruments, increase the number of participants, expand opening up and refine infrastructure to better satisfy the demands for foreign exchange risk management from market participants, domestic or overseas, including the foreign institutional investors in the interbank bond market, serve the development of the real economy and support the liberalization of the financial market. 2017-02-27/en/2017/0227/1252.html
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To implement the gist of the 18th CPC National Congress, and the Third, Fourth, Fifth and Sixth Plenums of the 18th CPC Central Committee, and the Central Economic Work Conference, further deepen the foreign exchange administration reform, streamline administration and delegate powers, support the development of the real economy, and guard against the risks arising from cross-border capital flows, the State Administration of Foreign Exchange (SAFE) has recently released 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 Circular is focused on coordinating facilitation and risk prevention. On the one hand, the reform will continue, with policy measures implemented in favor of the balance of foreign exchange receipts and payments to support the development of the real economy. On the other hand, efforts will be made to urge banks and enterprises to comply with the existing foreign exchange administration provisions to perform their responsibilities for authenticity and compliance reviews, to intensify statistical analysis of retained earnings overseas, refine the integrated management of cross-border funds denominated in domestic and foreign currencies and guard against risks. Authentic cross-border receipts and payments and exchanges that are in compliance with regulations will not be affected. Specifically, the Circular covers 9 measures in three aspects: I. Deepening reform to enhance the level of trade and investment facilitation. First, expanding the scope of foreign exchange settlements for domestic foreign exchange loans; second, allowing funds for overseas loans under domestic guarantees to be transferred back for domestic use. Third, increasing the share of deposits absorbed by the international foreign exchange master account with domestic banks for domestic use. Fourth, allowing overseas institutions in pilot free trade zones to go through foreign exchange settlements through the non-resident account. II. Refining management to strengthen authenticity and compliance reviews. First, further standardizing foreign exchange administration for trade in goods and requiring exporters to collect foreign exchange in time. Second, continuing to implement and refine the outward remittance management policy for foreign exchange profits from direct investment, and clarifying the requirements on documents and endorsement for the outward remittance of foreign exchange profits of the equivalent of USD 50,000 (exclusive), and that the losses of the previous years should be duly made up for before remitting profits outward. Third, making sure that any domestic institution explains to the bank the sources of investment funds and the purposes (use plan) of the funds, and present to the bank the resolutions of the board of directors (or the resolutions of the partners), contracts and other authenticity evidencing materials, when going through ODI registration and remittance procedures. III. Stepping up efforts in statistics to coordinate management of domestic and foreign currencies. First, any domestic institution who has retained overseas its export revenues or revenues from trade in services due to various reasons, but fails to undergo registration and filing procedures or submit information for the administration of foreign exchange as planned shall report relevant information to the local foreign exchange authority within one month after the Circular is released. Second, the integrated macro-prudential management of domestic and foreign currencies will be adopted for the overseas lending business of domestic institutions. In the overseas lending business of a domestic institution, the sum of the balance of overseas loans denominated in domestic currency and the balance of overseas loans denominated in foreign currencies shall not exceed 30% of its owner's equity in the audited financial statements for the previous year. The Circular will take effect as of the date of promulgation. The SAFE will regularly assess the outcomes of policy implementation and make adjustments at a proper time in line with the BOP situations. 2017-01-26/en/2017/0126/1247.html
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Since the beginning of 2017, to implement the reform requirements of the CPC Central Committee and the State Council on pushing forward administration streamlining and power delegation, combination of deregulation and regulation, and optimization of services, the State Administration of Foreign Exchange (SAFE) has been committed to legislation in key areas and documents streamlining. Based on this, to facilitate public enquiry and application, the SAFE then updated the Catalogue of Major Existing Laws and Regulations in Effect on Foreign Exchange Administration ("Catalogue") and released it at its official website. The upgraded Catalogue contains 223 main laws and regulations on foreign exchange administration released as of December 31, 2017, which fall into eight categories including general 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, the RMB exchange rate and the foreign exchange market, balance-of-payments and foreign exchange statistics, foreign exchange inspections and application of the laws and regulations, and the scientific administration of foreign exchange, and several sub-categories by specific business type. The extra documents added to the Catalogue covers various topics, such as foreign exchange sales and settlement for foreign people, improvement of declaration of personal foreign exchange information, foreign exchange administration for financial leasing, foreign exchange administration for overseas loans under domestic guarantees, foreign exchange administration for overseas deals with bank cards, regulating large-sum overseas cash withdrawals with bank cards, rules on business reviews for the declaration of balance of payments statistics via banks, verification rules for external financial assets and liabilities and trading statistics, guidance on statistics collection regarding external financial assets and liabilities and trading, and unified social credit code applicable to the foreign exchange business system. Going forward, the SAFE will carefully implement the work arrangements by the CPC Central Committee and the State Council, deepen the foreign exchange administration reform, deepen legislation and document streamlining in key areas, and enhance trade and investment facilitation to serve the real economy. 2018-01-15/en/2018/0115/1395.html
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The State Administration of Foreign Exchange (SAFE) has recently published the Circular of the State Administration of Foreign Exchange on Regulating Large-sum Overseas Cash Withdrawals with Bank Cards (Huifa No. 29 [2017]) (Circular) to regulate large-sum cash withdrawals overseas with bank cards and enhance regulation against cross-border money laundering. The highlights of the Circular include: first, in overseas cash withdrawals by individuals with domestic bank cards, the sum of withdrawals using the bank cards under the name of the individual (including additional cards) shall not exceed the equivalent of RMB 100,000 in every civil year. Second, the daily quota per card for overseas cash withdrawals with RMB cards and foreign currency cards is the equivalent of RMB 10,000. Third, in case of overseas cash withdrawals in excess of the annual quota, the individuals will not be allowed to withdraw cash overseas with the domestic bank cards in the current and second years. Fourth, individuals are prohibited from borrowing others' bank cards or lending their bank cards to evade or help evade the management of overseas cash withdrawals. The SAFE supports individuals' use of bank cards overseas in compliance with regulations. Regulating large-sum overseas cash withdrawals with bank cards is crucial to cracking down on money laundering, terrorist financing and tax evasion, and can help guard against illegalities associated with cash withdrawals with bank cards. The Circular, aligned with the requirement of ensuring currency convertibility under the current account, does not contradict with the annual quota of USD 50,000 for foreign exchange purchases by individuals, or impact individuals' normal withdrawals of cash and consumption, or the convenience for individuals to use foreign exchange. This Circular will become effective on January 1, 2018. 2017-12-30/en/2017/1230/1390.html
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To implement the requirements of the State Council on streamlining administration and delegating power to lower levels, combining regulation and deregulation, and optimizing services, as well as other reform measures, and further promote trading policy facilitation, the State Administration of Foreign Exchange (SAFE) has continued streamlining regulations, abolishing and nullifying more than 900 copies of documents on foreign exchange administration since 2009. The SAFE has recently released the Circular of the State Administration of Foreign Exchange on Announcing 6 Regulatory Documents on Foreign Exchange Administration Abolished and Nullified(Huifa No. 25 [2017]), to step up efforts to streamline regulations, announcing two regulatory documents on foreign exchange administration abolished and four invalid. The six regulatory documents involved individual foreign exchange-related business and the construction of the foreign exchange system. The contents abolished and made invalid were abolished in accordance with the requirements of the ongoing reform of "delegation, regulation and service" such as all-in-one certificates, or were substituted by new regulatory documents on relevant regulatory requirements, or were about temporary work that is not in line with current management practices. But none of them involved new policy adjustment. Next the SAFE will continue to implement the requirements on the reform of "delegation, regulation and service", refine the regulatory system of foreign exchange, deepen the streamlining and integration of regulations, and enhance policy transparency, so as to better serve the development of the real economy. 2017-12-07/en/2017/1207/1384.html
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The Brazil-China Cooperation Fund for the Expansion of Productive Capacity (China-Brazil Fund) was officially launched on 30 May 2017 local time in So Paulo, Brazil. China-Latin America Production Capacity Cooperation and Investment Fund Co., Ltd. (China-Latin America Production Capacity Fund) signed the fund establishment documents with the Brazilian Ministry of Planning, Budget and Management (Brazilian Ministry of Planning). The China-Brazil Fund Steering Committee held its first meeting, deliberating and adopting the China-Brazil Fund Operating Procedures, thus officially kick-starting the China-Brazil Fund. Pan Gongsheng, Deputy Governor of the People's Bank of China and Administrator of the State Administration of Foreign Exchange, Li Jinzhang, Ambassador of China to Brazil, and Dyogo Oliveira, Brazilian Minister of Planning, were present at the ceremony. The official launch of the China-Brazil Fund, established based on the consensus between the heads of state of both countries, is a key measure of the China-Latin America Production Capacity Fund to implement China's Belt and Road Initiative and going global strategy, and will be favorable for both sides to carry out production capacity cooperation and seek mutual benefit. Next, the China-Brazil Fund will focus on boosting strategic cooperation between China and Brazil and robust operation of the Fund, based on the market-oriented operation mechanism. 2017-06-02/en/2017/0602/1270.html
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To expand the opening up of the foreign exchange market and boost the liberalization of the interbank bond market, the State Administration of Foreign Exchange (SAFE) has recently released the Circular of the State Administration of Foreign Exchange on Foreign Exchange Risk Management for Foreign Institutional Investors in the Interbank Bond Market (Huifa No. 5 [2017], "Circular"). The Circular mainly includes the following: Firstly, any foreign institutional investor in the interbank bond market could handle the RMB-foreign exchange derivatives business with a qualified domestic financial institution to enhance the level of opening-up of the foreign exchange market. Secondly, under the principle of transaction for actual requirements, foreign institutional investors shall carry out the foreign exchange derivatives business only for the purpose of hedging against the foreign exchange risk exposure arising from the investments in the interbank bond market with funds remitted from abroad, so as to guarantee the order of the foreign exchange market. Thirdly, diverse trading tools and mechanisms will be provided for foreign institutional investors' foreign exchange derivatives business to facilitate foreign exchange risk management. The Circular shall come into force as of the date of issuance. 2017-02-27/en/2017/0227/1251.html
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[Xu Weigang]: Good afternoon, friends from the press. Welcome to this press conference on the SAFE's policies for September 2016. I am Xu Weigang and I am deputy director of the SAFE General Affairs Department. We are also glad to have here with us Wang Chunying, director of the Balance of Payments Department, Du Peng, director of the Current Account Management Department, Guo Song, director of the Capital Account Management Department, and Zhang Shenghui, director of the Management and Inspection Department. [15:11] [Xu Weigang]: Since the beginning of this year, the SAFE, while strictly following the plans of the CPC Central Committee and the State Council, has been committed to streamlining administration and delegating powers to lower levels, advancing foreign exchange administration reform, and facilitating trade and investment, with the aim of serving the development of the real economy. Meanwhile, the SAFE has highlighted the ongoing and ex-post regulation, urged banks to perform authenticity and compliance reviews, stepped up inspections and punishment of foreign exchange irregularities, and tackled unusual cross-border capital flows to effectively safeguard the stability of foreign exchange markets. [15:12] [Xu Weigang]: On behalf of the SAFE, I will now be announcing the recent foreign exchange administration policies. The highlights are as follows: [15:14] [Xu Weigang]: I. Efforts have been made to press ahead with the reform in key aspects and expand opening up [15:17] [Xu Weigang]: (1) Promoting macro-prudential management of full-scale cross-border financing [15:17] [Xu Weigang]: In January 2016, the People's Bank of China published the Circular on Rolling out the Pilot Program of Macro-prudential Management of Full-scale Cross-border Financing (Yinfa No. 18 [2016]), with the aim of expanding the pilot program applicable to both domestic and foreign currencies to cover 27 financial institutions and enterprises registered under the four free trade zones, respectively in Shanghai, Tianjin, Guangzhou and Fujian. [15:17] [Xu Weigang]: At the end of April, the SAFE cooperated with the People's Bank of China in publishing the Circular on Rolling out Nationwide the Pilot Program of Macro-prudential Management of Full-scale Cross-border Financing (Yinfa No. 132 [2016]), specifying that the pilot program applicable to both domestic and foreign currencies will be expanded to include financial institutions and enterprises across China starting from May 3, 2016. Financial institutions and enterprises will be insulated from ex-ante approval of external debt, and allowed to independently conduct cross-border financing in domestic and foreign currencies within the ceiling of cross-border financing that is linked to their capital or net assets. This policy has further diversified the financing channels for market players in China, especially Chinese companies, and is favorable for reducing financing costs to address financing difficulties and high financing expenses, thereby better serving and supporting the development of the real economy. [15:17] [Xu Weigang]: (II) Promoting the opening up of interbank bond markets [15:18] [Xu Weigang]: To cooperate with the People's Bank of China's move to further open up the domestic interbank bond market, the SAFE published in May the Circular on Foreign Exchange Administration for Overseas Institutional Investors Investing in the Interbank Bond Market (Huifa No.12 [2016]). The highlights of the Circular are as follows: overseas institutional investors will be subject to registration management via their settlement agents; no individual or total quota will be set, and overseas institutional investors can go through funds remittances and foreign exchange settlements or purchases directly with banks by presenting relevant registration information, with no need for verification or ex-ante approval with the SAFE; outward remittances will not be subject to lock-up period or installment remittances; currencies for outward and inward remittances shall be consistent, with the ratio of domestic and foreign currencies in outward remittances consistent with the ratio in inward remittances, with the fluctuation range of less than 10%. Up to now, more than 30 overseas institutions or products have been filed with the People's Bank of China Shanghai Head Office. [15:18] [Xu Weigang]: (III) Reforming the RMB qualified foreign institutional investors (RQFII) management system [15:19] [Xu Weigang]: In February, the SAFE published the Regulations on Foreign Exchange Administration for Domestic Securities Investments by QFII (No.1 of SAFE Announcement [2016]), further relaxing the quota limitations for qualified foreign institutional investors (QFIIs) and simplifying approval processes. The market has responded positively to relevant policies implemented. As at the end of August, 270 QFIIs had obtained quotas of USD 81.478 billion. [15:19] [Xu Weigang]: At the beginning of September, the People's Bank of China and the SAFE released the Circular on Managing Domestic Securities Investments by RQFIIs (Yinfa No. 227 [2016]), in a bid to further enhance the consistency of foreign exchange administration for RQFIIs and QFIIs and boost the liberalization of domestic financial markets. The highlights are as follows: first, with reference to QFII management, a proportion of an institution's assets will be taken as the ground for obtaining the quota (basic quota), with balance management as a common way of quota management. Second, quota approval management will be simplified, with application for a quota lower than the basic quota subject to filing management and automatic attainment. Third, efforts will be made to facilitate outward and inward remittances by RQFIIs. With reference to QFII management, no term will be set for inward remittances. No requirements on proportion and installment remittances will be imposed on outward remittances. No lock-up period will be set on quotas for open-end funds, and daily outward remittances will be allowed. The lock-up period for other products or funds will be shortened from one year to 3 months, with daily outward remittances allowed. Fourth, outward remittances via purchasing foreign exchange will be cancelled and RQFIIs will be required to remit funds in the RMB. Fifth, the requirements on data reporting will be simplified so as to collect and monitor data in the capital account information system. [15:20] [Xu Weigang]: II. Efforts will be made to support the development of the real economy and facilitate trade and investment. [15:22] [Xu Weigang]: (I) Implementing policies in an all-round way to facilitate trade and investment activities [15:22] [Xu Weigang]: In April, the SAFE released the Circular on Further Promoting Trade and Investment Facilitation and Improving Authenticity Reviews (Huifa No. 7 [2016]), providing nine measures such as further expanding the positions held by banks in foreign exchange sales and settlements, unifying the policies on external borrowings by foreign and Chinese enterprises, simplifying the procedures of foreign exchange receipts and settlements by class-A enterprises, clarifying the requirements on reviewing documents on offshore resales under trade in goods, and standardizing the reminder system with regard to risks arising from trade in goods. Some of the measures are favorable for providing better financial services by banks for the real economy, reducing costs on enterprises for receipts and settlements of foreign exchange and facilitating more flexible use of external debt by Chinese enterprises, especially private and micro and small businesses. [15:23] [Xu Weigang]: (II) Unifying and simplifying the management policy for foreign exchange settlements under the capital account [15:23] [Xu Weigang]: In June, the SAFE published the Circular on the Policy for Reforming and Standardizing the Management of Foreign Exchange Settlements under the Capital Account (Huifa No.16 [2016]), in an effort to implement discretionary foreign exchange settlements with external debt in an all-round way, and unify the policy for discretionary settlements of foreign exchange receipts under the capital account for domestic institutions. Moreover, a common negative list approach will be adopted for the use of the receipts under the capital account, and relevant negative lists will be significantly reduced in order to offer convenience for domestic enterprise to meet their needs for production and capital operations, and facilitate cross-border investment and financing. [15:24] [Xu Weigang]: (III) Improving the management of BOP statistics declaration [15:24] [Xu Weigang]: In March, the SAFE published the Operating Guidelines for the Declaration of Balance of Payments Statistics through Banks (2016 version) (Huifa No.4 [2016]), to direct declarers and relevant banks in declarations of BOP statistics. The Guidelines updates and integrates the existing regulatory documents on indirect declarations, and refines the statistics system for indirect declarations. To support business innovations of banks, the Guidelines clearly defines and standardizes new situations and problems in time, thereby greatly facilitating declarations by enterprises and banks. This measure is also designed for cost cuts. These are the three facilitation measures that have been introduced. [15:25] [Xu Weigang]: III. Cracking down on foreign exchange irregularities to guard against cross-border capital flow risks [15:26] [Xu Weigang]: Since the beginning of this year, the SAFE has closely tracked the changes in situations, organized various special inspections against illicit cross-border capital flows, and stepped up crackdowns on major cases and foreign exchange-related crimes such as underground banks to safeguard the normal trading order and stability of foreign exchange markets. From January to August, more than 1,100 foreign exchange-related cases were investigated and cracked, with the administrative penalty of over RMB 190 million collected. First, organizing special inspections of financial institutions. In the first 8 months, 504 cases involving regulatory violations by financial institutions were investigated and cracked, involving a penalty of RMB 32.397 million. Second, cracking down on irregularities like underground banks. In the first eight months, the SAFE worked with public security authorities and reported 36 underground bank-related cases cracked or under investigation, cracked 20 cases involving illicit trading of foreign exchange, destroyed 226 hideouts and arrested 298 persons. [15:26] [Xu Weigang]: Overall, the SAFE has actively adapted to the new normal of foreign exchange administration, and broken new grounds in reform and risk prevention and controls. While being committed to facilitation and risk prevention, the SAFE has worked to ensure smooth implementation of reformative measures for foreign exchange administration. At the time of preventing cross-border capital flow risks, the SAFE has systematically pushed forward foreign exchange administration reform, and strongly supported economic restructuring, transformation and upgrades.[15:27] [Xu Weigang]: Now I will be taking your questions, with one from each reporter. Please tell us your organization before asking your question. [15:27] [Financial News]: President Xi Jinping said at the opening ceremony of the 2016 G20 Hangzhou Summit that, in the face of the existing challenges, we should build an open world economy, continue to boost trade and investment liberalization and facilitation. I am wondering what measures have been taken with regard to foreign exchange administration? What new measures, if any, will be taken in the future? [15:54] [Xu Weigang]: During the G20 Summit that has just been closed, President Xi Jinping proposed in his speech that an open world economy should be built. Since the 18th CPC National Congress was held, especially since the 13th Five-Year Plan was published, five development concepts including openness have been proposed. In recent years, the SAFE has been committed to implementing the decisions and plans of the CPC Central Committee and the State Council. To be specific, it has been dedicated to pushing ahead with reforms, simplifying administration while delegating powers, promoting trade and investment facilitation, and supporting trading and investing activities that are in compliance with regulations, so as to serve the development of the real economy. The earlier-mentioned three aspects of reform in foreign exchange administration and three measures for trade and investment facilitation, which have been adopted since the beginning of this year, are all favorable for serving the development of the real economy and building an open world economy. Specifically, as at the end of 1996, the current account had been made convertible. Currently, the policies for foreign exchange receipts and payments under trade in goods and trade in services offer great convenience to market players, allowing them to go through procedures relative of foreign exchange receipts, payments, sales and settlements with banks without any barrier. The earlier-said facilitation policy, introduced in April, makes it easier for class-A enterprises to go through foreign exchange receipts and settlements procedures under trade in goods. [15:55] [Xu Weigang]: In cross-border financing, the earlier-said macro-prudential management of full-scale cross-border financing, registration of foreign exchange under direct investment with banks, and discretionary foreign exchange settlements under capital funds are all conducive to building a sound environment for attracting foreign investments, and supporting going global of domestic institutions. In bonds investment, the SAFE has cooperated with the People's Bank of China to boost the opening up of the interbank bond market, further simplified the procedures for portfolio investments by QFIIs and RQFIIs, expanded the liberalization of the capital market, and diversified tradable products and trading participants in foreign exchange markets. To sum up, we have adopted many measures to boost reforms in key aspects and trade and investment facilitation, which have delivered positive outcomes, and drastically reduced enterprises' financing costs, making it easier for them to carry out trading and investing activities. [15:56] [Xu Weigang]: While continuing to follow the requirements of the 13th Five-year Plan and the third and fifth plenums of the 18th CPC Central Committee, we will be committed to facilitation and risk prevention. On the one hand, we will be dedicated to reform, continue to simplify administration and delegate powers to forge ahead, and study and introduce measures that are conducive to achieving an equilibrium between foreign exchange receipts and payments and aligned with the direction of the long-term reform, in a bid to enhance trade and investment facilitation. On the other hand, we will intensify monitoring and analysis of cross-border capital flows, and crack down on foreign exchange irregularities to ensure stability of foreign exchange markets. [15:56] [Economic Information Daily]: Since the beginning of this year, many Chinese enterprises have gone global for overseas M&As. Could you brief us on the SAFE's foreign exchange policies for these enterprises? The return of China Concept Stocks in recent years also involves foreign currency exchanges. What are the SAFE's policies in this regard? [16:09] [Guo Song]: Thank you for your attention to China's overseas M&As. The Ministry of Commerce disseminated the 2015 growth data this morning, which were high still. How to look at this issue objectively is crucial for the moment. Is it welcome news that many enterprises go global? From our point of view, global experience has taught that when it becomes a middle-income country, China will gradually shift from a country with net capital inflows to the one with net capital outflows, given the current stage of China's economic development. This was explained this morning by Zhang Xiangchen, deputy minister of the Ministry of Commerce. So we believe this is a normal and reasonable case. [16:11] [Guo Song]: The number of enterprises going global has grown a bit too quickly now, to be sure. Will this impact China's foreign exchange? Absolutely, especially on the supply and demand of foreign exchange. In the past, the surplus under the capital account came primarily from FDI or investments. By comparison, a deficit of USD 10 billion has been registered in FDI and ODI under the capital account, according to the data disseminated by the Ministry of Commerce this morning. In a word, the SAFE supports real and reasonable M&As abroad, and we also expect the acquirers are competent and qualified. [16:12] [Guo Song]: It could be more suitable to inquire of the China Securities Regulatory Commission about the return of China Concept Stocks. The principles of the return are the same with those of foreign exchange administration. The centralized return of China Concept Stocks could have adversely hurt the images of Chinese enterprises going global. But in our opinion, we will support valuable considerations provided that you have real demands. However, we do have to prevent the return of China Concept Stocks for the purpose of arbitrages. We will support normal cross-border M&As and the return of China Concept Stocks that are in compliance of regulations, and be dedicated to maintaining the equilibrium of BOP. [16:12] [Financial Channel of CCTV]: Could you brief us on the measures taken by the SAFE in response to the foreign exchange regularities since the beginning of this year, especially the unusual outflows of cross-border capital? What would you say about the effects? [16:18] [Zhang Shenghui]: This is not a complex question, but should be answered in two aspects. First, allow me to brief you on the crackdowns on foreign exchange irregularities. This involves the SAFE's attitude and stance first: the SAFE has always maintained a tough stance on foreign exchange irregularities. Given its performance this year, the SAFE has upgraded its off-site inspection system, which has been in operation for several years as you all know. This upgrade involves the improvement of the database and the refinement of off-site monitoring indicators. When it comes to training on system use and organization of off-site inspections, we proposed to bring the latter to a new high last year, which has delivered satisfactory outcomes. This system has dramatically enhanced our capability to spot leads on unusual capital and capital obtained in violation of regulations, and strengthened the relevance, effectiveness and timeliness of our inspections, making inspections more aligned with the demands and more relevant in cracking down on actions violating regulations and laws. [16:45] [Zhang Shenghui]: The second aspect concerns how to deal with leads on irregularities. Foreign exchange inspections are carried out in several links, namely, off-site inspections, on-site inspections and case solving. Since last year, we have rebuilt and integrated the processes for the combination and interfacing of these three aspects, which has significantly ramped up inspection efficiency and delivered positive outcomes. In the first half, we organized two phases of off-site inspections, primarily against outflows of capital obtained in violation of regulations, and found out 2,335 leads that were suspected of irregularities and involved more than USD 8.4 billion. Most of these cases have been solved, except some that are still being dealt with now. [16:46] [Zhang Shenghui]: One more thing, foreign exchange authorities have made authenticity reviews the foundation and focus of foreign exchange inspections for a while, stressing the authenticity of trading and its consistency with foreign exchange receipts and payments. To this end, we stepped up inspections of banks' performance of their responsibilities and proposed relevant requirements. We have recently announced dozens of cases involving banks that did business in violation of regulations, which was useful to educate banks. We expect that bank employees, either frontline tellers or internal controls/compliance staff in the back office, could strengthen authenticity reviews and effectively perform their obligations in accordance with laws and regulations. [16:46] [Zhang Shenghui]: Last but not least, we have been committed to innovating our way of work while stepping up crackdowns on irregularities, such as the way of off-site inspections and the combination of off-site and on-site inspection and disposal stages. We are also intensifying training to our branches and provide support for bank training. Moreover, we highlight law-based administration and are increasing relevant education and training on branches and the SAFE itself. [16:46] [Xinhua News Agency]: Data show that a foreign trade surplus of USD 354.9 billion was registered by the Customs in the first eight months, while the surplus of USD 121.6 billion in foreign exchange sales and settlements under trade in goods was recorded by the SAFE for the same period. The gap is large, and I am wondering whether there were false trading. [16:47] [Du Peng]: I am very glad to answer this question. Although it seems that the foreign trade surplus posted by Customs is somewhat related to the surplus in foreign exchange sales and settlements under trade in goods, yet we fear that direct comparison of the two figures that are quite different in statistical coverage could lead to misinterpretation of the BOP situation. Specifically, the differences lie in the following aspects: [16:48] [Du Peng]: First, different points of time for statistics collection. Customs foreign trade statistics are based on the right-responsibility generation system, or accrual system, while statistics on foreign exchange receipts, payments, sales and settlements are based on the debit-credit realization system, or receipt & payment system. Enterprises can settle foreign exchange that is either the receipts for the current period or those for the past, and also can buy foreign exchange ahead of external payments. In practice, enterprises also engage in trade finance and trade credit, which have further widen the time gap between the two statistics. [16:48] [Du Peng]: Second, different items for statistics collection. No Customs statistics on the circulation of goods and materials are recorded under some special trade such as entrepot trade, but the figures will be recorded under foreign exchange receipts and payments, or foreign exchange sales and settlements under trade in goods in BOP statistics. Another example is inward processing. The figure is recorded by Customs under foreign trade, while foreign exchange settlements data for processing fees of inward processing is not recorded under trade in goods. [16:48] [Du Peng]: Third, impact on the data from enterprises' sales and settlements of foreign exchange. According to the existing foreign exchange regulations, discretionary sales and settlements of foreign exchange under trade in goods are adopted, with enterprises allowed to settle foreign exchange for the current period or previous years, and to buy foreign exchange in advance. Moreover, enterprises can also use the RMB in the receipts and payments of fees. [16:49] [Du Peng]: All these contribute to the mismatch between foreign trade data recorded by Customs and foreign exchange sales and settlements data under trade in goods. But it is not a scientific approach to judging whether there is false trading based on the discrepancy of the two figures, which are not comparable.[16:49] [Du Peng]: The current account management has been computerized. There are the monitoring system for foreign exchange under trade in goods, the monitoring system for foreign exchange under trade in services, as well as the monitoring system for individual foreign exchange. The current monitoring results show no large-scale cross-border arbitrages or outflows of funds through false trading. [16:49] [Du Peng]: Since the beginning of this year, the SAFE has continued with special inspections of trade in goods. For areas where foreign trade volume and foreign exchange receipts and payments are high or grow rapidly, foreign exchange authorities have verified and analyzed unusual cross-border capital flows including false trading. Meanwhile, foreign exchange authorities have strengthened cooperation with Customs and tax authorities for data sharing, information sharing, mutual help and recognition in law enforcement. Given the verification results, no large-scale unusual capital outflows or inflows have been identified yet. [16:49] [Reuters]: According to the data on banks' sales and settlements of foreign exchange that have were just disseminated by the SAFE, a deficit of about USD 9.5 billion was registered under foreign exchange sales and settlements for August. By comparison, a deficit of USD 22.8 billion was registered under the funds outstanding for foreign exchange for August released by the Central Bank. My question is why the discrepancy is so large. Has the pressure on the RMB exchange rate been remarkably relieved? [17:03] [Wang Chunying]: As for the Central Bank's data, it is more authoritative for the department that disseminated the data to interpret. The outflow pressure of cross-border capital is being relieved, based on relevant data. Therefore, the depreciation pressure of the RMB exchange rate, as you asked, is being eased too. [17:03] [Wang Chunying]: As for the BOP data, measured by cross-border capital flows, as is widely adopted in the international community, a deficit of USD 123.3 billion was registered under the non-reserve financial account in the first quarter, down by 26% quarter-on-quarter. The deficit for the second quarter went down by 60% from the first quarter. As for official data, please wait until the end of September. [17:03] [Wang Chunying]: As for banks' sales and settlements of foreign exchange, a deficit of USD 89.4 billion was registered in December 2015, and dropped to USD 41.6 billion per month on average in the first quarter of this year, and then fell further to USD 16.3 billion per month on average in the second quarter. In July, due to Britain's exit from the EU and seasonal factors such as travel and study abroad, and distribution of bonuses and dividends, the deficit picked up to USD 31.7 billion, and then plunged to USD 9.5 billion in August. [17:04] [Wang Chunying]: The balance of foreign exchange reserves tumbled at the beginning of this year. But since February, the margins have narrowed drastically, with ups and downs in month-on-month changes. Currently, the balance stays at around USD 3.2 trillion. [17:04] [Wang Chunying]: According to enterprises' behaviors, with importers' cross-border financing as an example, Chinese importers' balance of cross-border financing in foreign currencies such as refinancing and forward L/C has rebounded since March, which has continued for 6 months. This indicates that the funds from such overseas financing are flowing into China again. [17:04] [Xu Weigang]: Just as Premier Li Keqiang said, there is much leeway for China' economic development, which exhibits a tilt towards stable and optimistic growth, proving any speculation of RMB depreciation is groundless. Instead, the RMB exchange rate will stay stable at a reasonable and balanced level. [17:07] [China.com.cn] The Fed announced today at midnight that the FOMC meeting for September agreed that interest rates will not be raised, but also implied that an interest rate hike would be likely at the end of this year. What would you say about the expectation? Is there any response to the expectations of the Fed's interest rate hikes and the changes of specific time for the hikes? [17:10] [Xu Weigang]: This conference is about the SAFE's policies, and another conference that is on the situations of foreign exchange will be held at the State Council Information Office next month, where more details will be unveiled. You are welcome to the conference and raise questions on issues of interest. In fact, I have answered your question earlier. Since there is much leeway for China's economic development, there is no ground for sustained depreciation of the RMB exchange rate. [17:10] [Wall Street Journey]: I have a question for Director Guo Song. You said the SAFE supports normal overseas M&As, but will also strive to maintain the equilibrium of BOP. Can this be interpreted as the SAFE's future efforts to intensify authenticity reviews of overseas M&As? Or Has the SAFE already intensified the reviews? [Guo Song]: We do support authentic outbound investments that conform to laws and regulations, and will surely take a tough stance on fake investments. Director Zhang Shenghui mentioned just now our solving of some cases for the year. Over the past year, we did have identified assets transfer by individual enterprises and persons through outward investments, which is surely our focus for the moment. [17:18] [Zhang Shenghui]: One more thing about authenticity reviews. There is no case about authenticity reviews already strengthened or to be strengthened now. According to the Regulations of the People's Republic of China on Foreign Exchange Administration, foreign exchange administration practices and inspections, there have always been such requirements on authenticity reviews, as well as on consistency between receipts and payments and transactions. A case in point is the requirements on the earlier said crackdowns on foreign exchange trading activities in violation of laws and regulations. [17:18] [Xu Weigang]: In the last modified Regulations of the People's Republic of China on Foreign Exchange Administration, published on August 5, 2008, Article 12 says that foreign exchange receipts and payments under the current account shall be based on authentic and legitimate transactions. Both international conventions and domestic regulations require that banks should conform to business operation principles. Specifically, they should know their customers, understand their business and conduct prudential due diligence in handling cross-border receipts and payments, which, from the perspective of anti-money laundering or of knowing customers, indicate that banks must strengthen authenticity reviews. This is a requirement of the past, present and future, as well as an international convention and domestic practice. [17:19] [Securities Times]: In response to the just released foreign exchange sales and securities data for August, some argue that the deficit for August is not closely related to the reduction in foreign exchange purchases, and heavy pressure is still on residents to buy foreign exchange, which shows that there are expectations of RMB depreciation in the short and middle term. What would you say about this? The growth in foreign exchange settlements for August contributed greatly to the declines of foreign exchange purchases, because the net inflows of cross-border foreign exchange loans surged against the previous months. Could you tell us why? [17:42] [Wang Chunying]: We made an explanation right after the dissemination of the August data. Just as I did when answering the reporter from the Reuters, I would here like to cite some data for explanation despite your different opinions. As for the rises in enterprises' cross-border financing, I view it a positive change. External debt is necessary for a company while there is still a bottom line in servicing external debt. It has been a while since enterprises began deleveraging their external debt, which, however, has slowed down. Data also show that enterprises' trade financing for imports is picking up. All this indicates that enterprises have delivered good performance in production, operation and credit activities. [17:44] [Xu Weigang]: This also explains why "there is much leeway for China' economic development, and the RMB exchange rate will stay stable at a reasonable and balanced level". Do you have something to add, Director Guo, since it involves external debt？[17:45] [Guo Song]: It is true that the rises in foreign exchange settlements have something to do with inflows of external debt. A pilot program on macro-prudential management of cross-border financing started in January, and then was rolled out nationwide at the end of April. The program involves a wide range of areas, such as financial institutions and enterprises, making it easier for enterprises, especially Chinese enterprise, to borrow external debt. In addition, at the foreign exchange settlement end, we have standardized the procedures for foreign exchange settlement under external debt, just as was mentioned in our earlier introduction of the policies, making foreign exchange settlement more convenient. With these two policies in place, administrative approval has been made unnecessary. Second, borrowing external debt has since become more flexible. This is why some institutions believe it is better to conduct overseas financing at this moment. [17:46] [caixin.com]: We noted that the quotas for QDIIs for last December haven't been increased all along. What are your considerations for this? Have the approved QDII quotas been used up? I learned that some trust companies are also applying for QDII quotas. Could you tell us when will the approval of new QDII quotas restart? Thank you. [17:47] [Guo Song]: The total quotas for QDIIs of USD 90 billion were used up last March, and the accumulated quotas for QDIIs approved later amounted to USD 89.993 billion. No new quotas have been granted since then. This is true. We are now coordinating relevant departments to apply for new quotas, yet status quo will be maintained and no new QDII quotas will be approved before new quotas are granted. [17:47] [Nihon Keizai Shimbun]: The RMB will be officially included in the SDR basket on October 1. Do you think this would impact China's cross-border capital flows? [17:48] [Wang Chunying]: This issue seems to have attracted much of your attention. Last year the IMF decided to include the RMB in the SDR basket, and the new SDR basket will come into force on October 1, 2016. Before that, the People's Bank of China and the SAFE have introduced a series of open market policies, offering convenience to overseas institutions in their adjustment of their allocation of assets. When it comes to the direct impact on cross-border capital flows, the inclusion of the RMB in the SDR basket will attract overseas institutions such as central banks, reserves managers and private sectors to hold more RMB assets, and the liberalizing capital market in China will also boost capital inflows, but this will be a long-term and gradual process. On the other hand, the inclusion will promote RMB internationalization and convertibility, enhance the global position of the RMB, and support "going global" of Chinese enterprises. China's demand for foreign investment portfolios will rise too. As for market expectations, the inclusion will help strengthen market confidence in RMB assets, and enhance its international creditability and reputation, which is of positive importance. A managed floating exchange rate system for the RMB exchange rate will be established based on supply and demand, with reference to a basket of currencies. In the foreseeable future, it will be the keynote of the RMB exchange rate formation mechanism to intensify reference to and maintain stability of a basket of exchange rates. In general, after the inclusion, the two-way fluctuations of cross-border capital flows will be more apparent, with the size not to be significantly expanded though. Put it together, China's cross-border capital flows have good conditions to remain in a properly balanced and stable range. [17:50] [Xu Weigang]: Reform and opening up is China's national strategy. The SAFE has been committed to reform and will continue to do so in the future. We will simplify administration and delegate powers to lower levels, continue to systematically enhance convertibility of cross-border capital and financial transactions, in a bid to achieve the convertibility of the RMB capital account. As time is running short, I have to end this press conference here. Thank you for your understanding and support of foreign exchange administration. Thank you all! [17:52] (The original text is available at www.people.com.cn) 2016-09-22/en/2016/0922/1212.html