-
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
-
To further implement the gist of the "delegation, centralization and service" reform, advance the supply side structural reform, execute the policy measures of "stabilizing growth, promoting reform, adjusting structure and serving the common good" and effectively reduce costs incurred by enterprises in the real economy, the State Administration of Foreign Exchange (SAFE) keeps streamlining regulations, announcing nearly 900 foreign exchange regulatory documents abolished and nullified since 2009. The SAFE has recently released the Circular of the State Administration of Foreign Exchange on Announcing 27Foreign Exchange Regulatory Documents Abolished and Nullified (Huifa No. 29 [2016]), adding 27 documents that are abolished and nullified to the total. First, under the principle of refining system supply and streamlining administration, 18 foreign exchange regulatory documents whose contents have been substituted by new documents and that could not adapt to the status quo of administration are abolished, based on content analysis piece by piece. These documents involve trade in goods management, individual foreign exchange administration, and foreign exchange registration and administration for overseas investments. Businesses involved will be handled in accordance with existing provisions. For example, individual use of foreign exchange will be handled pursuant to the Measures for the Administration of Individual Foreign Exchange and the implementation details under the same regulatory requirements, as well as the same principle of supporting and facilitating normal and reasonable use of foreign exchange by market players. Second, under the principle of building a concise and clear policy framework with consistent logics, the SAFE has strengthened the "ledger-based" streamlining of regulations, and announced nullified a total of 9 foreign exchange regulatory documents whose application periods have expired, or adjustment targets have disappeared, and are actually invalid, such as the circulars on streamlining half-closed accounts of units directly under the Central Government at the end of 1998, on implementing a pilot program for foreign exchange accounts management reform in 2005, and on foreign exchange annual check for foreign-invested enterprises in 2010 and 2011. Announcing the above documents abolished and nullified can further enhance the level of convenience and is favorable for market players to understand and implement the foreign exchange administration policies. Next, the SAFE will continue to closely follow the deployments of the CPC Central Committee and the State Council, accelerate administration streamlining, power delegation and transformation of government functions, strive to make breakthroughs in reform, and implement the long-term mechanism for regulation streamlining, so as to reduce transaction costs from policy. Meanwhile, the SAFE will intensify monitoring and early warning of cross-border capital flows, support banks to refine the self-discipline mechanism and to strictly perform the requirements and responsibilities for authenticity and compliance reviews, and take a tough stance on foreign exchange irregularities to safeguard a healthy order in foreign exchange markets and serve the development of the real economy. 2016-12-19/en/2016/1219/1233.html
-
To push forward the rule of law in finance and support the policy measures of stabilizing reform, promoting reform, readjusting structure and improving people's living standards, the State Administration of Foreign Exchange (SAFE) has continued to increase legislations and streamline regulations in key areas since the beginning of 2016. Legislations mainly concern settlement of foreign exchange under the capital account, investment in interbank bonds markets by foreign institutional investors, domestic securities investment by qualified foreign institutional investors (QFIIs), foreign currency exchange agency and self-service currency exchange machines, declaration of the balance of payments statistics and refinement of authenticity review requirements. Regulations streamlining is to abolish or nullify regulations on foreign exchange administration that cannot adapt to the requirements for business development and reform. To facilitate public enquiry and application, the SAFE then upgraded 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 213 policies, laws and regulations on foreign exchange administration released as of June 30, 2016, which fall into 8 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. This is the seventh straight year that the SAFE has regularly updated and published the list of currently effective regulations. The SAFE will continue to implement a long-term mechanism for regulations streamlining, step up efforts with regard to power delegation, centralization and services, regularly streamline and update the Catalogue, to help market players understand and use foreign exchange administration laws and regulations, so as to serve the development of the real economy. 2016-11-08/en/2016/1108/1220.html
-
To further promote trade and investment facilitation and support the policy measure of "stabilizing growth, promoting reform, adjusting restructure and benefiting people", with a vision to streamline administration, delegate powers, combine decentralization and regulation, and optimize services, the State Administration of Foreign Exchange (SAFE) has been committed to law-based administration and sorting out regulations, to abolish, nullify or modify selected regulations on foreign exchange administration that cannot adapt to the requirements for business development and reform. More than 700 documents on foreign exchange administration have been abolished and nullified since 2009. To further streamline the effective regulatory documents on foreign exchange administration, the SAFE has recently released the Circular of the State Administration of Foreign Exchange on Announcing 14 Regulatory Documents on Foreign Exchange Administration Abolished and Nullified and One Modified (Huifa No. 13 [2016]) Specifically, one was modified, 3 were abolished including one that was announced abolished with the Ministry of Finance through negotiation, and 11 were nullified. The documents mainly concerned management of individual foreign exchange settlement under trade, foreign exchange administration under the capital account, balance of payments and foreign exchange statistics, foreign exchange administration for financing institutions and construction of foreign exchange system. Bearing in mind the whole picture of reform and development, the SAFE will continue to implement the long-term mechanism for regulation streamlining, and attach equal importance to establishment, modification, nullification and interpretation of regulations, so as to enhance policy transparency and serve the real economy. 2016-11-08/en/2016/1108/1217.html
-
To deepen the foreign exchange administration system, better serve and facilitate domestic players' demand on operations and capital operation, and boost cross-border investment and financing to serve the development of the real economy, the State Administration of Foreign Exchange (SAFE) recently published the Circular of the SAFE on the Policies for Reforming and Standardizing Management of Foreign Exchange Settlement under the Capital Account (Huifa No. 16 (2016), "Circular"). The highlights of the Circular are as follows: First, managing discretionary settlement of foreign exchange under external debt in an all-round way, allowing companies to choose the time for foreign exchange settlement under external debt at their discretion. Second, unifying the policy for discretionary settlement of foreign exchange receipts under the capital account by domestic institutions. Third, clarifying that domestic institutions' use of foreign exchange receipts and settlements under the capital account should be in conformity with the regulations on foreign exchange administration, a "negative list" approach will be adopted to the use of receipts under the capital account, and relative negative lists will be deeply cut. Fourth, further standardizing the payment management with regard to receipts and settlements under the capital account, and clarifying banks should take responsibility for authenticity review under the three-point business principle. Fifth, the SAFE will strengthen ongoing and ex-post management, with focus on strengthening ex-post regulation and punishments arising from violations. The Circular will come into force as of the date of issuance. (End) 2016-11-08/en/2016/1108/1218.html
-
Q: The State Administration of Foreign Exchange has provided window guidance to selected commercial banks with regard to a higher deficit in bank's sales and settlement of foreign exchange, requiring them to take proper measures to narrow the deficit, according to recent media reports. What would you say about this? A: This is not true. Foreign exchange authorities have not taken any new regulatory measures for currency exchanges or cross-border receipts and payments thus far, except to require banks to observe the existing foreign exchange regulations, implement the self-regulatory requirements and intensify authenticity and compliance reviews. The foreign exchange administration policies remain consistent with the previously published ones, with no change made. The foreign exchange purchase, payment, receipt and settlement are handled as usual. Next, foreign exchange authorities will systematically press ahead with the reform in key aspects, further enhance the level of trade and investment facilitation, intensify early warning with regard to monitoring of cross-border capital flows, help banks to improve the self-regulatory mechanism, and to implement the business requirements and responsibilities in authenticity and compliance reviews, while maintaining a tough stance on foreign exchange irregularities, in a bid to safeguard China's economic and financial security. 2016-12-19/en/2016/1219/1234.html
-
The State Administration of Foreign Exchange (SAFE) has recently published the 2016 list of enterprises surveyed for trade credit. According to the Statistics Law of the People's Republic of China, and the Measures for the Declaration of Balance of Payments Statistics, enterprises are obligated to cooperate with the survey and liable for the accuracy of the data reported. China's trade credit survey system came into force in 2004. In January 2016, the SAFE revised the system and released the Circular on the Issuance of the Trade Credit Survey System (Huifa No.1 [2016]）, effective August 1, 2016. Based on the foreign trade volume and receipts and payments under trade, 16,439 enterprises participated in the survey in the year, consistent with the figures of past years. To be specific, 11,851 enterprises participated in the annual survey, and 4,588, monthly survey. These two types of enterprises were required to report data by the month or per annum, so as to find an equilibrium between the improvement of the quality of statistical data and reduction of reporting burdens. To make it easy to enquire, the list is categorized by the foreign exchange authority located in the registration places of the enterprises surveyed. The list may be subject to minor adjustments as the survey goes on. 2016-11-08/en/2016/1108/1223.html
-
The SAFE has recently published the Circular of the State Administration of Foreign Exchange on Foreign Exchange Administration for Overseas Institutional Investors Participating in China's Interbank Bond Market (Huifa No. 12 [2016], "Circular") to facilitate the opening-up of the interbank bond market and standardize foreign exchange administration for overseas institutional investors participating in the interbank bond market. The highlights of the Circular are as follows: (a) overseas institutional investors are subject to registration management, and shall perform foreign exchange registration via a settlement agent; (b) no quota will be set for an individual institution or no total quota will be set. An overseas institutional investor may go through without authorization or approval of the SAFE the procedures for inward and outward remittances, or settlement and purchases of foreign exchange with a bank directly, based on relevant registration information; (c) the currencies in outward and inward remittances shall be the same, i.e., the proportion of domestic and foreign currencies in an outward remittance by an investor shall be consistent with that of an inward remittance, with the difference no higher than 10%. The Circular will come into force on the day of release. (The end) 2016-11-08/en/2016/1108/1219.html
-
Q: It has been recently reported that China, in order to crack down on capital flight, has introduced measures to constrain cross-border financing instruments and impact imports. What would you say about this? A: The State Administration of Foreign Exchange (SAFE) has not introduced recently any measures to intensify foreign exchange management with regard to import financing. For the authentic and legitimate foreign exchange receipts and payments under trade, relevant documents could be presented to a bank for direct handling. Cross-border guarantees such as overseas loans under domestic guarantees will continue to be handled in accordance with the Regulations on Foreign Exchange Administration for Cross-border Guarantees. The cross-border guarantees with authentic trade and investing backgrounds and relevant products will not be affected. 2017-01-25/en/2017/0125/1246.html
-
——A Transcript [Wang Yungui]: I would like to welcome all of you here this morning at the formal start of the press conference of the State Administration of Foreign Exchange, or the SAFE, on its policies for the third quarter of this year. I am also happy to see many familiar faces of media friends in the audience. [10:11] [Wang Yungui]: My name is Wang Yungui and I am director of the General Affairs Department. With us here today are Du Peng, director of the Current Account Department, and Ye Haisheng, deputy director of the Capital Account Management Department. You may not have met Mr. Ye before, but he has been working at the Capital Account Management Department for many years and is highly experienced. We also have here with us Cao Liqun, deputy director of the Administration Inspection Department. She has been working for the Inspection Department for many years and is very familiar with the inspection work. We will be taking questions later. [10:11] [Wang Yungui]: On behalf of the SAFE, I would first like to unveil the latest policies of the foreign exchange administration. Since the beginning of this year, China's economy has grown slowly but steadily, which is assuring. Despite various difficulties and downward pressure, the stable economic fundamentals have remained unchanged. Following the work plans of the CPC Central Committee and the State Council, the SAFE has pressed ahead with reforms while preventing risks, accelerated administration streamlining and power delegation and the "five shifts" in foreign exchange administration, deepened the capital account convertibility reform, and improved monitoring, warning, ongoing and ex-post management, thus effectively preventing the impact of cross-border capital flows and improving its capability to serve economic restructuring, transformation and upgrading. Below are the reform measures introduced in the quarter: [10:12] [Wang Yungui]: First, deepening the administration of centralized operation of foreign exchange funds by MNCs [10:12] [Wang Yungui]: The SAFE started a pilot program for the administration of centralized operation of foreign exchange funds by MNCs in 2012. Since the second half of 2014, the SAFE has promoted nationwide the upgraded version of the administration of centralized operation of foreign exchange funds by MNCs. The SAFE piloted facilitation reform measures with more than 200 MNCs, allowing MNCs to receive, pay, settle and sell foreign exchange under the current account, and to use external debt quota and overseas loan quota through the cash pool account in a centralized manner. The past year's pilot program shows that the pilot companies' costs of funds have dropped remarkably, the efficiency of their use of funds has been improved significantly, and the local governments' demand for developing the headquarters economy to promote structural transformation has been satisfied. [10:13] [Wang Yungui]: On this basis, the SAFE adjusted and optimized the policy for the centralized use of foreign exchange funds by MNCs in August, providing more measures for trade and investment facilitation for eligible MNCs. These measures include: first, simplifying the requirements for account opening and use. Eligible host enterprises for MNCs are allowed to open domestic and international master funds accounts at locations outside of their local jurisdictions. Second, simplifying foreign exchange receipts and payments procedures. MNCs can go through the procedures of foreign exchange receipts and payments under the current account with banks by presenting electronic instruments, and are allowed to purchase and pay foreign exchange under the current account and the capital account with different banks. Third, adopting the proportioned self-discipline management policy on MNCs borrowing external debt on a trial basis. Based on the pilot external debt reform in China (Shanghai) Pilot Free Trade Zone, MNCs are allowed to borrow external debt within the quota. Fourth, focusing on risk prevention. The high access threshold is maintained and MNCs that apply for participation are required to have more than USD 100 million in foreign exchange receipts and payments in the previous year; financing leverage ratio, macro-prudential adjustment parameter and risk warning mechanism are introduced in the proportioned self-discipline management for enterprise external debt, while ongoing and ex-post management are strengthened. [10:14] [Wang Yungui]: Second, the pilot program for cross-border foreign exchange payment through payment institutions has taken shape. [10:14] [Wang Yungui]: Based on the experience from the pilot program that has been in force in Shanghai, Beijing, Chongqing, Zhejiang, and Shenzhen since 2013, the SAFE rolled out nationwide the pilot program for cross-border payment business among payment institutions in January 2015, further relaxing the restrictions on business scope, elevating the limit on single transaction for online shopping to the equivalent of USD 50,000 and delegating the power to approve pilot payment institutions to SAFE branches. [10:14] [Wang Yungui]: As business advances, the pilot cross-border foreign exchange payment program has taken shape in terms of volume, facilitating cross-border electronic transactions such as “haitao” shopping. As of August 2015, 26 payment institutions across the country have participated in the pilot program for cross-border foreign exchange payment, handling USD 5.19 billion in cross-border receipts and payments, and settling and selling USD 5.26 billion in foreign exchange. From January to August 2015, the transaction volume of cross-border receipts and payments through pilot institutions accounted for 67% of the total transaction volume since 2013, and was 2.2 times the total transaction volume through pilot institutions in 2014. Since March 2015, the cross-border receipts and payments per month have exceeded USD 300 million for 6 consecutive months. For the moment, many payment institutions are still applying to the foreign exchange authority in the place where they are registered for joining the pilot program. [10:15] [Wang Yungui]: Third, the reform of foreign exchange administration under direct investment has been successfully implemented [10:16] [Wang Yungui]: On June 1, 2015, the measures for the foreign exchange administration reform such as delegation of registration of foreign exchange under direct investment to banks and discretional settlement of foreign exchange capital by MNCs were rolled out nationwide. Effectively, this means almost all the administrative approval items for the administration of foreign exchange under direct investment have been canceled, thus further facilitating cross-border direct investment. These measures are well received among market players and have produced positive policy results. For example, for enterprises, delegating the registration of foreign exchange under direct investment to banks helps simplify the business process, reduce enterprises' cost of going to and from foreign exchange authorities and banks, and facilitate cross-border investments by enterprises to provide concrete support to the development of the real economy. The policy for the discretional settlement of foreign exchange capital provides enterprises with options of independently mitigating foreign exchange risks, enhancing the flexibility of capital management and helping enterprises to reduce financial cost. [10:16] [Wang Yungui]: Generally speaking, the implementation of the two reforms has been well received in society and the policies have been carried out stably. For example, preliminary statistics of the foreign exchange funds settled across the country since the discretional settlement policy for foreign exchange funds show that from June to the end of August, foreign exchange funds of USD 19.3 billion were settled between foreign-funded enterprises and banks, including USD 4.2 billion of foreign exchange funds settled in a discretional manner, which accounted for 22% of total foreign exchange funds settled. No significant increase in foreign exchange settled or sudden settlement was identified in the period. Nor was centralized inflow of foreign exchange under direct investment or large-scale abnormal settlement identified either. [10:17] [Wang Yungui]: Fourth, stably pressing ahead with the pilot policy for the macro-prudential regulation of external debt [10:19] [Wang Yungui]: In February 2015, a pilot reform of macro-prudential administration of proportioned self-discipline of external debt in special economic areas including Zhongguancun of Beijing, Qianhai of Shenzhen and Zhangjiagang of Jiangsu, allowing enterprises to borrow external debt that is within a certain multiple of net asset. This pilot policy has produced positive results, and estimates show that this helps some pilot enterprises to save 2-3 percentage points of capital cost. [10:19] [Wang Yungui]: Based on the experience in the preliminary pilot program, the SAFE upgraded the pilot policy for Zhongguancun of Beijing in August 2015, expanding the use of external debt, loosening the administration of special accounts for external debt, and providing minimal quota for external debt to selected high-tech enterprises with small net assets, strong demand for financing and strong profitability. As a beneficial attempt in further exploring and improving the pilot program for macro-prudential administration of external debt, this can better address the financing difficulties that enterprises face and meet the requirements for "mass entrepreneurship and innovation". [10:19] [Wang Yungui]: Fifth, supporting the liberalization of the domestic commodity futures market and trade facilitation. [10:19] [Wang Yungui]: After China Securities Regulatory Commission released the methods for allowing overseas traders and brokers to engage in trading of futures of special categories, the SAFE released a circular in July 2015, clarifying the foreign exchange administration policies on overseas investors participating in domestic commodity futures trading to facilitate market operations. The circular is highlighted as follows: first, it is made clear that the foreign exchange accounts of traders will be regarded as special accounts for management and the funds will be under closed operation to reduce trading risks. Second, it is also clarified that the funds of overseas investors for futures trading will not account for the short-term external debt quota for a bank. Third, facilitating capital exchange. Overseas investors are allowed to go through foreign exchange settlement and sales with their own banks, after which, the funds can be directly transferred. Fourth, simplifying data submission. The trading data such as foreign-related receipts and payments involved in futures trading will be uniformly submitted by the opening banks and stock exchanges via their systems. As scheduled, the crude oil futures will be traded on Shanghai International Energy Trading Center. The SAFE is currently preparing for the listing. [10:20] [Wang Yungui]: Sixth, cracking down on activities in violation of foreign exchange laws and regulations. [10:20] [Wang Yungui]: Since the beginning of this year, the SAFE has been focusing on pressing ahead with reforms while preventing risks, allowing market players that do business in compliance with laws and regulations to enjoy investment facilitation, and cracking down on foreign exchange irregularities to effectively prevent risks arising from abnormal cross-border capital flows and to safeguard its bottom line while ensuring regional and systematic financial risks do not occur. First, the SAFE continues to work with the People's Bank of China, the Ministry of Public Security, the Supreme People's Court and the Supreme People's Procuratorate to crack down on the transfer of illegal income through offshore companies and underground banks. More than 30 major cases have been solved thus far, indicating this effort has produced positive results. Second, the SAFE has made centralized efforts to deal with the irregularities identified in the special inspection of banks' compliance with laws and regulations on foreign exchange business, enhance internal control and external regulation of banks, in order to boost the overall level of legal compliance of banks involved in foreign exchange business. Third, the SAFE has organized special inspections of financing and leasing companies in 15 regions regarding foreign exchange business, helping them improve internal management and raise their awareness of doing business in compliance with laws. Fourth, the SAFE has made known the penalties for some institutions and individuals that have engaged in foreign exchange business in violation of regulations, and intensified warning and education of foreign exchange traders to safeguard transactions in the foreign exchange market. [10:21] [Wang Yungui]: Generally speaking, the SAFE has continued to streamline administration and delegate power to lower levels, combine regulation and deregulation, and optimize services to fully facilitate normal trade and investment activities by enterprises and individuals and relevant foreign exchange receipts and payments, with the measures for the foreign exchange administration reform implemented in an orderly way. We have policies in place to safeguard the purchase and use of foreign exchange by enterprises and individuals with legitimate transaction backgrounds, which have fully satisfied their needs in this respect. While striving to serve the real economy, the foreign exchange authorities have successfully stuck to the bottom line of guarding against the risks arising from abnormal cross-border capital flows. [10:21] [Wang Yungui]: Now we will take your questions and please remember to tell us the name of your organization before you ask your question. [10:21] [Economic Daily]: It was reported that the SAFE has recently intensified regulation of split purchases of foreign exchange by individuals. Is this true? If yes, what is the purpose of restricting such purchases? And what measures will be taken? [11:13] [Wang Yungui]: This question has drawn wide concern. Let's invite Mr. Du to answer this question. [11:33] [Du Peng]: Thank you for your question. We have also taken note of the relevant media reports. Foreign exchange authorities fully ensure that all true, normal, legal, and reasonable demand for the utilization of foreign exchange by individuals will be satisfied and that the level of facilitation will not decrease. The SAFE launched the annual aggregate management system for individual settlement and sales of foreign exchange in 2007, stipulating that individuals can purchase or pay foreign exchange of no higher than USD 50,000 within the facilitated limit, by presenting a valid ID card. In the case that the amount exceeds the equivalent of USD 50,000, individuals can go through relevant procedures with banks by presenting personal ID cards and relevant supporting materials indicating the transaction amount, provided that the transaction background is true. This policy has satisfied individuals' rational demand for use of foreign exchange and strongly facilitated their use of foreign exchange. [11:36] [Du Peng]: Meanwhile, to guard against capital flow risks associated with individuals, we have developed relevant regulations. For example, individuals are not allowed to settle or sell foreign exchange in a split way in order to avoid quota management, which is a principled regulation. Past practices find that a limited number of individuals or even enterprises used others' quotas to settle and sell foreign exchange for cross-border capital flows in violation of regulations. Based on the characteristics of split settlement and sales of foreign exchange by individuals, the SAFE released in 2009 the Circular on Further Improving Management of Individuals' Sales and Settlement of Foreign Exchange (Hui Fa [2009] No. 56), or Circular 56. This Circular further clarifies the behaviors of split settlement and sales of foreign exchange by individuals and specific regulatory measures. Such behaviors include, for example, that more than 5 individuals purchase foreign exchange on the same day, every other day or many days in a row and remit the foreign exchange outward to the same individual or institution, and that an individual withdraws foreign currency banknotes that are worth the equivalent of USD 10,000 from the same foreign exchange savings account 5 times within 7 days, and that the same individual transfers the deposits under his/her foreign exchange savings account to more than 5 immediate relatives. Moreover, we require banks not to handle foreign exchange settlement and sales with individuals if it is confirmed or highly likely that the settlement and sales are split transactions. We have also noted that the media coverage is mostly regarding Circular 56 of 2009 and not about the new regulation. Based on local situations, some SAFE branches have reaffirmed Circular 56, urging banks to improve the level of compliance and requiring them to intensify authenticity review, which is necessary for day-to-day foreign exchange regulation and is a normal measure to ensure the quality of our job. [11:37] [Du Peng]: Media coverage also gave the example of Xiaoming, which is a vivid story but not an exact reflection of reality: individuals on the watch list will not be prohibited from conducting foreign exchange transactions or remitting money, but instead will not be allowed to enjoy the facilitation measures of "settling and selling foreign exchange through e-banks" for a period of two years. [11:38] [Du Peng]: Even if an individual is on the watch list, if their demand is found to be true, legal, and rational, they can still handle relevant transactions at bank counters by presenting the required supporting materials and ID certificates, but have to go through a more vigorous authenticity review by the bank. [11:38] [Du Peng]: Last but not least, I want to reaffirm that the legal and rational demand for use of foreign exchange by individuals is guaranteed by policy. To prevent the risks arising from cross-border capital flows, the SAFE will always emphasize the management of split settlement and sales of foreign exchange. If an individual is found borrowing others' quota for split settlement and sales of foreign exchange, banks should follow laws and regulations and refuse to handle it for them. If such a transaction is found afterwards, the SAFE will track and deal with it in accordance with laws and regulations. Thank you. [11:38] [Financial Times]: The SAFE recently announced the punishments for some institutions and individuals handling foreign exchange transactions in violation of regulations. What are your considerations when doing so? Will you make further announcements in the future? Can you brief us on the SAFE's crackdown on underground banks since the beginning of this year? [11:47] [Cao Liqun]: Let me answer the question on punishments first. Given the complex and changing economic conditions both at home and abroad since 2014, the SAFE has always been encouraging the promotion of investment and trade facilitation, as Mr. Wang talked about just now, and improving the monitoring of cross-border capital flows to prevent relevant risks. The SAFE has thus intensified monitoring and investigation of the main channels for abnormal cross-border capital flows and key entities involved and did find that some enterprises and individuals remitted outwards or purchased foreign exchange through false documents, invalid documents, repeated use of documents, fabricated or fraudulent transactions, or split outward remittance. At the same time, some banks failed to strictly perform their obligation of authenticity review and violated regulations in handling settlement, sales, receipts and payments of foreign exchange. [11:53] [Cao Liqun]: As a result, the SAFE announced punishments for institutions and individuals violating foreign exchange regulations on August 25, for the purpose of intensifying warning and education of players in the foreign exchange market, deter illegal behaviors and guiding social entities to handle foreign exchange receipts and payments in compliance with laws and regulations. In the future, the SAFE will further promote trade and investment facilitation and better serve the market players who abide by laws and regulations. Meanwhile, the SAFE will continue to intensify investigation into violating behaviors, exposing irregularities that are severe and involve a large amount of money, and build an effective punishment mechanism against violating and discredited behaviors. [11:54] [Cao Liqun]: For the question on crackdown on underground banks, the People's Bank of China, the Ministry of Public Security, the Supreme People's Court, the Supreme People's Procuratorate and the SAFE took a nationwide special action against transfer of illegal income through offshore companies and underground banks in mid-to-late April, and have solved some major underground bank cases, thus strongly intimidating lawbreakers. To support this action, the SAFE cooperated with the Ministry of Public Security and relevant departments, and made use of its advantages in monitoring and regulating cross-border capital. To be specific, the foreign exchange authorities screened abnormal transaction leads across the country, tracked the trajectory of illegal transaction funds, intensified investigation into customers involved in underground banks, tracked where the illegal funds came and went, investigated the illegal foreign exchange behaviors and upstream criminal behavior, thus threatening the survival of underground banks. Next, the SAFE will continue to work closely with relevant departments to crack down on irregularities such as underground banks, in an effort to achieve greater victories in this special action. [11:54] [Wang Yungui]: I would like to add two points. First, the announcement is not the first one the SAFE has made. For examples of irregularities previously announced by the SAFE, please visit our website. The purpose of announcing irregularities is to warn other foreign exchange transaction entities. Some banks and enterprises have failed to abide by the foreign exchange regulations in handling cross-border capital flows in recent years. After identifying the irregularities, we criticize, educate and even fine the violators. By punishing a small number of violators, we have taught many people a lesson. We have continued to announce example cases where laws and regulations have been violated in the past few years, which has been a common practice among regulators. [11:55] [Wang Yungui]: Second, the SAFE has maintained high pressure on underground banks. To be specific, the SAFE cracks down on cross-border transactions through underground banks with illegal funds and works with public security authorities and other regulators to enhance the results of the crackdowns. Anyone who conducts cross-border transactions through underground banks are faced with heavy risks associated with violation of regulations, and we also want to remind enterprises that do business in compliance with laws and regulations that foreign exchange should be handled through normal channels. [11:55] [China Daily]: We have observed that the People's Bank of China has recently allowed overseas central banks and international financial organizations to invest in the interbank market using the RMB and analysis says this will accelerate the approval of QFII and RQFII. What's your opinion on this? [11:57] [Ye Haisheng]: To promote the liberalization of the interbank market, the People's Bank of China began to allow overseas central banks and international financial organizations to invest in the interbank market using the RMB in June or July, with quite simple steps for those who wish to do so. This marks an important step in liberalizing China's capital market. Is this directly related to the quota approval for QFII and RQFII? Personally, I don’t think so. Overseas central banks and international financial organizations can invest in the interbank market either directly using the RMB after filing with the People's Bank of China or through channels such as QFII and RQFII, which are the two channels for overseas institutions to invest in China's capital market, including the exchange market and the interbank market. China's approval of QFII and RQFII is also based on the payments of balance, the demand of institutions and the development of the capital market. [11:58] [Phoenix Satellite TV]: We observed that the RMB has been depreciating since August. The FED will announce whether to increase interest rate on Friday, Beijing time. What impact do you believe the FED's decision will have on the RMB exchange rate? Will this increase the pressure from capital outflows? Thank you. [11:59] [Wang Yungui]: It is highly possible that the FED will increase the interest rate of US dollars, which is widely expected in the market. Interest rate rise will lead to appreciating US dollars, or depreciating RMB against USD, which is normal in the marketization process. [12:07] [Wang Yungui]: The pressure from capital outflows depends on the stability of the RMB exchange rate. The RMB exchange rate has been stabilized, without market basis for heavy capital outflows. Let me explain this in three aspects: First, since August, the central parity rate of the RMB against the USD has depreciated by 4% and by a different margin against the EUR, the JPY and the GBP, and the pressure from the RMB depreciation has been released since August 11. As you can see, the RMB nominal effective exchange rate rose by 4.9% and the RMB real effective exchange rate rose by 4.6% in the first seven months of this year. After the RMB depreciated against other currencies in August, it is expected that the rises in RMB nominal effective exchange rate and the RMB real effective exchange rate in the month would slow down and the imbalance of exchange rate would be adjusted. [12:09] [Wang Yungui]: Second, let's look at the basis for the formation of the RMB exchange rate. Countries look at balance of payments, especially foreign trade surplus and foreign direct investment, when assessing whether the exchange rate rises or falls. In the first eight months, China witnessed a foreign trade surplus of USD 365.5 billion and utilized foreign investments of more than USD 80 billion. Generally speaking, there was a basic balance of payment surplus of about USD 50 billion each month in the period, which basically guaranteed that the RMB exchange rate would not fall. [12:09] [Wang Yungui]: Third, let's look at China's economic growth rate. China has sustained a 7% economic growth rate, indicating it remains one of the world’s high-growth countries. What does the high growth rate mean? It means a high return on investment, which is favorable for retaining domestic funds and attracting overseas funds to flow in. [12:10] [Wang Yungui]: Therefore, when judging the movement of foreign exchange rate and of capital flows, we should be reasonable. The three pieces of data mentioned previously are very important for judging the current exchange rate and capital flows. [12:10] [CBN]: Since the launch of the reform of the central parity rate on August 11, the RMB exchange rate has fallen, and capital outflows have drawn wide concern recently. The data disseminated by the central bank for this week show that the funds outstanding for foreign exchange dropped remarkably. Did the foreign exchange reserves fall dramatically too? [12:12] [Wang Yungui]: The central bank has published a press release on the fall of foreign exchange reserves recently, so I won’t be explaining further. But I would like to say something more on capital flows. [12:13] [Wang Yungui]: It is said that China is currently witnessing capital outflows. Let's make a detailed analysis of relevant issues based on the data. The current situation can be summarized by three "increases": first, increase in net foreign exchange sold by banks. According to the spot and forward foreign exchange settlement and sales, banks sold foreign exchange of USD 56.1 billion in total in July, which increased to more than USD 90 billion in August. But foreign exchange reserves dropped by more than USD 90 billion, which also confirmed the net sales of foreign exchange by banks. Second, increase in foreign currency deposits absorbed by financial institutions. The balance of foreign currency deposits of financial institutions amounted to USD 667.4 billion as at the end of August, up by USD 93.9 billion from the end of 2014 and USD 27 billion from the end of July. Third, increase in net outflows of cross-border capital. The net outflows of cross-border foreign exchange of institutions and individuals through banks reached USD 14 billion in July and rose to more than USD 70 billion in August. The three increases show that the net sales of foreign exchange by banks have increased, and the foreign exchange deposits of enterprises and individuals have also risen, suggesting a growing number of people are holding more foreign exchange, and foreign exchange reserves are being transferred from the government to the public. China's overall foreign exchange is being fragmented and diversified, which is in line with the reform direction of market-based allocation of foreign exchange resources. As for the increase in foreign exchange outflows, our data shows that foreign trading companies do have accelerated payments of foreign exchange and actively paid debt under finance of foreign trade, in order to mitigate foreign exchange risks, but the outflows are supported by the real economy. In our opinion, foreign trading companies' acceleration of paying debt under trade finance is favorable for reducing external debt risks facing China and significant for maintaining the macroeconomic stability. Overall, cross-border capital flows have been fluctuating recently, but not abnormally. Capital inflows and outflows are stable and orderly, without large-scale capital flight. Our recent monitoring shows that sales or payments of foreign exchange by banks are shrinking remarkably, indicating the market sentiment is being recovered. [12:19] [CBN]: One more question: has the SAFE taken any measures to slow down or ease capital outflow pressures? [12:21] [Wang Yungui]: It is the SAFE's responsibility to monitor and manage cross-border capital flows. Given the fluctuations of cross-border capital flows in July and August, we have taken some measures. Most market judgments may hint that the recent capital flows are caused by fluctuations of foreign exchange. The one-month reform of improving the central parity rate has indeed strengthened the market's role in foreign exchange rate formation. The pressure from RMB depreciation was indeed released in the early stage of the foreign exchange rate reform, which is expected. Given the slight fall in foreign exchange rate, some enterprises and individuals who have been used to rising or stable foreign exchange rate panicked in the early stage of the reform and thus accelerated purchases and payments of foreign exchange, which is normal too. But what is abnormal is that a small number of enterprises and individuals purchased a large amount of foreign exchange that exceeded their real demand for the use of foreign exchange to engage in arbitrage, or even spread rumors that the foreign exchange rate was going to drop drastically or that regulators were going to restrict purchases of foreign exchange, thereby increasing market panic. [12:25] [Wang Yungui]: The SAFE's responsibilities are both to facilitate the use of foreign exchange by the real economy for trade and investments, and to prevent financial risks at the same time. These two goals do not conflict with each other. Some foreign trading companies will tell you that all they want is to run their businesses well, but are at a loss for what to do given the fluctuations in the foreign exchange rate. To avoid sharp ups and downs of the RMB, which will impact the normal operations of trading and investment companies, the SAFE has intensified monitoring of the foreign exchange market and cross-border receipts and payments since August 11, requiring some of its branches to increase the frequency of data monitoring and reporting. Traditionally, we require a report to be submitted on a monthly basis. But now, we accelerate the frequency of data reporting, and organize ex-post investigation and verification of big enterprises that have bought a significantly larger amount of foreign exchange in the short term. Meanwhile, we require our branches to urge banks and enterprises to enhance the levels of authenticity operation and compliance, in accordance with the existing laws and regulations. To speak truthfully, the SAFE has not introduced any new measures to restrict purchases and payments of foreign exchange thus far. Just as Mr. Du said a moment ago, the regulatory measures against split settlement and sales of foreign exchange by individuals, which have sparked heated discussion, are not new, but part of a policy document of the SAFE released in 2009. We require our branches to conduct law-based administration during monitoring to effectively ensure true and legal purchases and payments of foreign exchange. The SAFE ensures that all true and legitimate demands for the purchases and payments of foreign exchange will be efficiently satisfied. [12:33] [Wang Yungui]: Therefore, I would like to take this opportunity to tell everyone that there is no need for any enterprises that are conducting their businesses in an honest way and individuals with true and legitimate demand for use of foreign exchange to be panicking, and their demand for the purchases and payments of foreign exchange will be satisfied as always. However, to prevent speculators from fishing in troubled waters, we have to check and inquire of enterprises or individuals, just as security staff do to travellers during security checks at the airport; so we hope they can understand it if and when they are checked. Our examination and inquiries are ex-post and on a sample basis. Only by eliminating speculators and arbitragers can we provide an easy and convenient environment for individuals that want to focus on doing business and have rational demand for use of foreign exchange to use foreign exchange. [12:33] [Economic Information Daily]: Premier Li Keqiang proposed to promote capital account liberalization at the World Economic Forum in Davos. What measures are the SAFE going to take next in order to do so? Will market fluctuations have some impact? In addition, how is the revision of the foreign exchange administration regulation going? Could you brief us on that? [12:39] [Wang Yungui]: The two questions are closely related. Premier Li Keqiang addressed many issues to the world at the World Economic Forum Annual Meeting in Davos, including achieving the capital account convertibility in a stable manner. We believe the current fluctuations in cross-border capital flows are normal. Under such an environment, reform and opening up is all the more necessary to boost system building, including capital account convertibility. We will work to promote the capital account convertibility as always. In this process, we will continue with reforms, but not blindly. Allowing for relevant risks, we will design reform steps to ensure orderly and stable reforms. Therefore, the capital account reform will continue. [12:39] [Wang Yungui]: For example, we will continue to study and explore easier ways of foreign exchange administration in the external debt reform, and will be more prudent and careful in designing relevant reform measures for capital account liberalization. Studies are being conducted for the foreign exchange administration regulations, the key regulations to support the capital account convertibility, and the regulations are being drafted. Given that the regulations involve many people's interests, we are very careful and prudent, and are working with the People's Bank of China to solicit ideas for relevant provisions. We will follow the requirements of the CPC Central Committee and the State Council and make revisions in an active and prudent way. [12:39] [CBN Daily]: You say that more measures will be taken for capital account liberalization with respect to external debt. Besides these debt measures, will new measures be taken to promote foreign assets? [12:42] [Ye Haisheng]: As a matter of fact, the channels for domestic institutions to issue loans overseas are running quite smoothly. First, from the perspective of foreign exchange administration, there is no regulation on overseas lending by banks. Second, the reform of overseas lending by enterprises started 5-6 years ago, stipulating that an enterprise only has to register, rather than having to obtain approval as it did in the past, in order to provide capital support for overseas entities where it holds a majority or minority stake in proportion to its net assets. This is a significant measure to address difficulties in overseas financing by enterprises going global. Next, we will continue to improve these measures. In Zhongguancun and the old industrial base in Northeast China, an innovative pilot reform for cross-border M&As and financing support is being carried out. [12:43] [Ye Haisheng]: Mr. Wang briefed us on the overall situation of overseas investments by enterprises. Full convertibility has been achieved under direct investment. The process for making overseas investments by enterprises is very simple. An enterprise only needs to register with the SAFE and obtain its quota, and then can remit outward its funds, with the registration power being delegated to banks since June 1. But relevant competent authorities, such as the Ministry of Commerce, require the entities they charge or administer to register, file or obtain approval, which should be observed. [12:43] [Ye Haisheng]: As for overseas investments by individuals, there is no specific policy that says yes or no. What does this mean? Commercial departments are governing overseas investments by enterprises. Although no law or regulation has prohibited overseas investments by individuals, no specific regulations on operations are available, and this involves not just the SAFE. [12:44] [Wang Yungui]: This is the end of today's press conference. We will be holding another one on the foreign exchange situation at the State Council Information Office in October, to which all of you are warmly welcome. And on that note we will end today’s conference. [12:45] 2015-11-11/en/2015/1111/1175.html