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In accordance with the requirements of the State Council for further transforming government functions and establishing service-oriented governments as well as promoting e-government administration, and in order to adapt to the need to develop direct investment within the new context, promote the reform of foreign exchange administration for direct investment, and raise management efficiency, service levels, as well as statistical, monitoring, analytical, and pre-warning capabilities for direct investment, and to facilitate an increase in investment, the State Administration of Foreign Exchange has decided to disseminate a nationwide online information system for Direct Investment Foreign Exchange Business beginning in May 2008 on the basis of early pilot programs. The Information System for Direct Investment Foreign Exchange Business is composed of four major functional modules: foreign investment, overseas investment, annual inspections, and statistical analysis. At this time, primarily the foreign direct investment module will be promoted and go online nationwide. A networking data exchange mechanism will be established for the SAFE with banks, enterprises, and accounting firms due to the promotion of the online system. Thus enterprises can apply to the SAFE directly through the Internet for relevant business and at the same time, the SAFE will phase out the use of paper-based vouchers and adopt IC cards in place of the paper-based foreign exchange registration certificates so as to ensure the timeliness, convenience, reliability, and security of business registration, operations, and data transmission in terms of means and increase the statistical, monitoring, and pre-warning levels for cross-border capital under direct investment accounts 2008-04-23/en/2008/0423/867.html
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China International Fund Management Co., Ltd's purchasing quota of foreign exchange for overseas portfolio investment approved 2007-10-12/en/2007/1012/857.html
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China International Fund Management Co., Ltd's purchasing quota of foreign exchange for overseas portfolio investment increased 2007-10-18/en/2007/1018/858.html
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HSBC's purchasing quota of foreign exchange for overseas investment services on behalf of its clients increased 2007-10-27/en/2007/1027/859.html
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June 26, 2007 - In Beijing, the SAFE recently held a briefing meeting on inspection of the foreign exchange transactions of banks. Attendees included representatives from 19 Chinese-funded banks, 4 foreign cooperative banks, and some foreign-funded banks. Ms. Hu Xiaolian, deputy governor of the PBOC and administrator of the SAFE, attended the meeting and delivered a speech. According to Ms. Hu, the disequilibrium in the balance of payments has become increasingly serious. On many occasions, the Party Central Committee and the State Council have attached great importance to this problem and have proposed clear requests to promote a general equilibrium in the balance of payments and to strengthen improvements in foreign exchange management. One of the key administrative tasks for the current period is to monitor short-term speculative capital inflows, strengthen inspection and management of cross-border capital inflows, especially short-term capital inflows, and seriously deal, according to the law, with foreign exchange inflows without real transaction backgrounds or those with fraudulent reports on export trading volumes. According to the unanimous decision of the Party Central Committee, since last year the SAFE has actively boosted the reform of the foreign exchange management system and further facilitated foreign exchange holdings and use by enterprises and individuals for trade and investment activities. Meanwhile, the SAFE has seriously combated illegal and abnormal short-term capital inflows and foreign exchange sales, thus restraining short-term speculative capital inflows. In terms of foreign exchange receipts and payments under the items of trade, services, capital fund, and external debt as well as some industries like tourism and real estate, relevant foreign exchange inspection departments have carried out special inspections of capital inflows and sales of foreign exchange. Meanwhile, since many of China 's foreign exchange administration policies and regulations are implemented through the banks, key inspections were intensified on the compliance of the foreign exchange transactions of banks and their own foreign exchange collection and sales. This is very necessary and timely for accurately analyzing the cross-border capital flows, discovering the main channels and forms of abnormal capital inflows, searching for policy loopholes, and offering a scientific decision-making basis for reinforcing and improving macro-control. Ms. Hu pointed out that in recent years foreign exchange-designated banks have made great efforts to coordinate with the adjustment of foreign exchange policies, carrying out the tasks of authenticity verification. They have contributed to the healthy development of China 's foreign trade, the steady advancement of the financial opening-up, and the promotion of a general equilibrium in the balance of payments. However, some problems have arisen from the inspections, to which great attention should be paid. Concerning the question of how banks can promote their own healthy development and better implement their responsibilities related to foreign exchange administration, Ms. Hu put forward the following requests. First, banks should properly balance the relationship between their own interests and the national interests. Along with the continual progress in the financial system reform, commercial banks have faced obviously stronger restraints from their shareholders and the market, and their internal management and operating mechanisms have witnessed fundamental changes. The pursuit of interests by banks has poured energy into the development of the financial industry. However, the interests of banks are closely linked to the operation of the macro-economy. While pursuing their own interests, banks should further strengthen their consciousness of the overall situation and take an initiative to carry out national macro policies. Second, banks should properly manage the relationship between passive and active implementation of foreign exchange inspections. So far, most of the authenticity verifications of foreign exchange under the current account and the verifications of the comparatively standard foreign exchange sales and purchases under the capital account have been handled directly by the banks. Therefore, banks are required to fulfill the responsibility of exercising authenticity verifications seriously and to take an initiative to actively carry out the requirements for foreign exchange inspections. Third, banks should properly manage the relationship between commercial competition and fulfilling the subrogation responsibility of the government. With the continual financial opening-up, commercial banks are facing increasingly severe market competition. Banks should compete orderly under the precondition of seriously implementing national macro-economic policies and fulfilling the subrogation responsibility of the government. The competition should not become the solicitation of clients and businesses at the price of failing to carry out inspections. Fourth, banks must properly manage the relationship between their business management and foreign exchange supervision requirements. Due to the special requirements for the business processing and internal management of banks, foreign exchange supervision must be implemented through electronic and IT approaches. In order to fulfill the subrogation responsibility of the government more efficiently and conveniently, banks should further improve their business procedures to satisfy the two requirements. Meanwhile, banks should establish relevant platforms for the collection, processing, and exchange of information so as to receive authentic and accurate data and information, and then should help implement the regulations in practice. Fifth, the banks must properly manage the relationship between financial innovation and compliance. The foreign exchange administrations have been supporting and encouraging financial innovation, and have strengthened enforcement efforts by adjusting relevant policies and employing a series of measures for developing foreign exchange derivatives and expanding financial investment abroad. While enhancing innovation consciousness, the banks should intensify the risk concepts and master the direction of the innovation from the perspective of the long-term healthy development of both themselves and the financial industry, not only meeting the needs of clients, but also satisfying the relevant regulations and the requirements for national macro-control. Ms. Hu emphasized that in the near term the foreign exchange administrations would carry out a special inspection on implementation of control of the size of the short-term external debt and on the execution of the administrative regulations by banks throughout China . Hence, all banks should prepare for this in advance, seriously and actively carrying out self-checking and coordination. Mr. Deng Xianhong, deputy administrator of the SAFE, reported on the illegal behavior found from the inspections of the foreign exchange business. He put forward that generally all the foreign exchange-designated banks have attached increasingly more importance to the compliance of their foreign exchange business operations, and their legal consciousness in terms of operations has been improved; but certain illegal behaviors in the foreign exchange business still exist in some banks. These illegal behaviors can be mainly classified into three types. First, responsibility for authenticity examination is not fulfilled in some banks, for example, handling foreign exchange collection and sales for clients against the rules, violating the related rules about foreign exchange loans, and breaching the administrative regulations concerning the verification business for exports. Such behaviors have led to inflows of some foreign speculative capital through trade or investment channels, and some of the capital even flows into the domestic real estate and stock markets in disguised forms, thus having some negative effect on the healthy development of China 's macro-control and economy. Second, for some banks, illegal behaviors exist in the operation of the foreign exchange business, such as policy-incompliance in the comprehensive position management of foreign exchange sales and purchases, poor management of short-term external debt, illegal treatments of their own foreign exchange sales business, and posting exchange rates beyond the stipulated floating ranges, etc. All of these have seriously harmed the implementation effect of the policies, not only disregarding the requirements for risk control and the sound operation of the banks, but also bringing pressure on implementing the monetary policies of the Central Bank and maintaining an equilibrium in the balance of payments. Third, in some banks, the quality of data reporting is poor, the business or accounting system cannot meet the current regulatory requirements, and the balance of payments fails to be managed according to the rules. During the 2006 annual inspection, the SAFE punished 19 Chinese-funded banks and 10 foreign-funded banks that were found to be violating the relevant foreign exchange administrative regulations. The results of the illegal behaviors discovered during the 2006 special inspection of the external debt of banks and the 2007 special inspection of the foreign exchange collection and sales of banks are in the process of being handled. 2007-06-26/en/2007/0626/842.html
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May 18, 2007 - The SAFE recently held a symposium on the inspection of foreign exchange inflows and sales in Chongqing . During the symposium, the progress of the inspection work, which had been carried out in ten provinces and cities of China since early April of this year, was announced and summarized, and the relevant inspection work for next stage was arranged. Ms. Hu Xiaolian, deputy governor of the PBOC and administrator of the SAFE, was present and delivered a speech. The meeting was chaired by Mr. Deng Xianhong, deputy administrator of the SAFE. This activity constitutes a special inspection developed by the SAFE according to the situation of sustained foreign exchange inflows in recent years. Ten important coastal provinces and cities such as Guangdong were chosen to undergo this inspection, which covers foreign exchange collection and sales, as well as the use of RMB capital from foreign exchange sales of all FX-related entities from January 2006 to March 2007. The inspection focused on such behaviors as foreign exchange collection and sales under trade items of goods and services, capital inflows and foreign exchange sales of foreign-funded enterprises, inflows and foreign exchange sales of external debt and trade financing, capital inflows and foreign exchange sales under individual accounts, capital inflows and foreign exchange sales of round-tripping investments, and illegal capital inflows and foreign exchange sales through underground money shops. According to Ms. Hu, the ten provinces and cities undergoing the inspection are quite representative, as the amount of their foreign exchange collection and sales accounts for more than 60% of Chinas total amount. Therefore, the inspection in these key regions can provide a comprehensive picture of the capital inflows to China . So far, the SAFE branches that joined the inspection have attached great importance to this activity and have reached phased achievements through overall planning and thorough arrangements, as well as through concerted efforts. During the next stage, the branches will concentrate efforts on the following three tasks. First, the branches will consolidate the inspection achievements of the previous phase, carry out extended inspections of the revealed clues and issues, and seriously deal with the verified illegal foreign exchange activities while exposing the typical cases. Second, the branches will strengthen case analyses and in-depth investigations and research, and further adjust relevant policies and improve administrative approaches. Third, the branches will reinforce macro analysis, closely connect local conditions with the national situation, judge the overall situation of the balance of payments in a scientific manner, and further unify thoughts and improve the awareness and initiative to resolutely implement the macro-decision making of the Central Government. Ms. Hu emphasized that the Party Central Committee and the State Council have attached great importance to the situation of a sustained balance of payments surplus and clearly pointed out that the promotion of an equilibrium in the balance of payments must be treated as an important task for maintaining steady macro-economic development. Since this year, the trend in foreign exchange capital inflows has remained strong, and national foreign exchange reserves have been increasing continuously. Thus, the task of realizing an equilibrium in the balance of payments is still arduous. However, this task is the focus of foreign exchange administration and must be implemented in a down-to-earth manner. As one of the important approaches, foreign exchange inspections should be fully utilized. In addition, some other practices should be adopted. First, the SAFE shall further deepen the systemic reform of foreign exchange administration, facilitate trade and investment, steadily boost the convertibility of items under the capital account, and make a great effort to develop and improve the functions of the foreign exchange market. Second, the SAFE shall further adjust the foreign exchange management policy of easy in and difficult out and apply balanced management to capital inflows and outflows. The current focus is to reinforce management of capital inflows and foreign exchange sales. Third, the SAFE shall speed up the revision and promulgation of the Regulations on the Foreign Exchange System and improve the regulatory system for foreign exchange administration. Fourth, the SAFE shall establish a coordination mechanism for supervision and bring cooperative efforts into full play, realizing resource sharing and joint supervision. Fifth, the SAFE shall fully utilize modern science and technology as well as the available electronic system and data, thus strengthening the supervision and monitoring of foreign exchange receipts and payments. Sixth, the SAFE shall faithfully execute the laws, reinforce punishment, expose the various illegal cases, and enhance the dissemination of information on policies and regulations. 2007-05-18/en/2007/0518/840.html
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May 25, 2007 - The Balance of Payments Statistical Branch of the National Statistical Society of China (hereinafter referred to as the BOP Statistical Branch) was recently established in Beijing . The first leadership group and organizations were elected at the meeting. Mr. Li Dongrong, deputy administrator of the SAFE, was present and delivered a speech. Mr. Li Gang, secretary general of the National Statistical Society of China, and Mr. Tang Sining, head of the Financial Survey and Statistics Department of the PBOC, also attended the meeting and congratulated the BOP Statistical Branch on its establishment. Li Dongrong pointed out that the statistics in China 's balance of payments are facing new challenges as the international economy has witnessed an expanding scope and the demands from macro-economic decision-making have been increasing. First, the volume of statistical data has increased rapidly and accordingly the statistical methods and approaches require improvement. The task of maintaining integrated, accurate, and timely statistics has become more arduous. Second, the position of the balance of payments has become more and more complex, and its connections with the world economy and other aspects of the national economy have become closer. It is more difficult to master the development rules of the balance of payments and to solve in-depth economic issues. Third, the functions and social effects of serving the economy and society through statistical analysis of the balance of payments have not been fully utilized. The laws and regulations relevant to the reporting, collection, and application of statistical data need to be improved. Fourth, the development of China 's economy requires a team that is proficient in both theory and practice, and dedicated to a statistical analysis of the balance of payments. Therefore, the BOP Statistical Branch was set up at an appropriate time. It will infuse new effective strength into the statistical work of the balance of payments, provide a platform for studying academic theory, enhance the way of thinking on statistical work, enrich the statistical approaches, and improve the theoretical level of the statistics. Li Dongrong expressed hopes that the BOP Statistical Branch, serving as a stage, will create an academic atmosphere for research on the statistical analysis of the balance of payments, master the operations and change in the rules of the balance of payments through carrying out research on the economic phenomena and the internal reasons behind the statistical data, thus improving the intrinsic value of statistics in the balance of payments, providing a scientific basis for national macro-economic analysis and decision-making, and playing a consultative role in promoting an equilibrium in the balance of payments. He proposed several tasks for the work of the Branch, as follows: First, the Branch should always stick to the principles of seeking truth from facts and combining theory with practice, and achieve good results under the guidance of the principles. Second, the Branch should guarantee the positioning of its work and set a solid foundation for its development. Third, the Branch should strengthen analysis and research and make use of its advisory function in making policies on the national macro-economy and the balance of payments. Fourth, the Branch should establish service awareness and embody its own value in the development of market entities. Fifth, the Branch should carry on the spirit of unity and cooperation and establish a statistical analysis team with a solid theoretical foundation, rich experience in practice, and active ideas about innovation. Ms. Han Hongmei, head of the BOP Statistical Branch, presented a report entitled "Establish a Platform and Utilize the Advantages, Promote the Vigorous Development of Statistical Work in the Balance of Payments." She put forward that based on the ideas of pioneering and the principles of being practical and innovative, the BOP Statistical Branch would devote itself to the establishment of a professional platform which is full of a spirit of innovation, has a good incentive mechanism, and is oriented to statistical practices in the balance of payments. The Branch must reach achievements in four respects, such as making clear the urgency of the times, building up its professional authority, improving the popularity of its business, and increasing its ability for acceptance and inclusion. In 2007, the work of the Branch shall focus on the central target of promoting a general equilibrium in the balance of payments, carry out a scientific view of development in an in-depth manner, boost all the basic work, improve the Branchs organizational construction and functions, and develop various timely activities such as theoretical investigation and research and business training. 2007-05-25/en/2007/0525/841.html
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May 18, 2007 - Since April 2007 the SAFE has launched inspections of foreign exchange capital inflows and sales in 10 coastal cities and provinces. A reporter interviewed the SAFE's spokesperson on related issues. Q: Why did the SAFE launch inspections of foreign exchange capital inflows and sales? A: In recent years, the SAFE, centering on the goal of achieving an equilibrium in the balance of payments, has changed its working style, adopted innovative administrative means, and improved its management of capital inflows and foreign exchange sales. Some progress has been made. However, the situation in the balance of payments remains grim. This year our foreign exchange capital still posts a trend of net inflows. Foreign exchange reserves still remain high, reaching USD 1.202 trillion at the end of March, an increase of 12.72% compared with the end of 2006, and to some extent affecting stable and sound economic development. Therefore, the SAFE launched inspections of foreign exchange capital inflows and sales in ten coastal cities and provinces for the following purposes. First, to grasp the overall situation of capital inflows, and foreign exchange sales and the use of RMB capital from foreign exchange sales to provide a scientific and reliable foundation for improving macro-control. Second, to understand the channels, methods, structure, and operation of abnormal and illegal capital inflows, foreign exchange sales, and the use of RMB capital from foreign exchange sales to curtail the inflows of cross-border short-term venture capital. Third, to check the effect of the policies on foreign exchange administration, step up the fight against foreign exchange-related illegal behavior, alleviating their negative impact on economic development and achieving rapid and sound economic development. Q: Why did the SAFE choose ten coastal cities and provinces like Guangdong to carry out the inspection? A: In light of the foreign exchange revenue and expenditure of each province in 2006, the SAFE decided to carry out off-site inspections of the foreign exchange capital inflows and sales in Guangdong, Jiangsu, Zhejiang, Shandong, Fujian, Liaoning, Ningbo, Qingdao, Xiamen, and Dalian where the foreign exchange business is brisk and where collection and sales account for 60% of the entire country. Therefore, grasping the foreign exchange capital inflows and foreign exchange sales and use of RMB capital from foreign exchange sales in these regions will be helpful to take account of the overall situation in China . Q: What are the requirements for the inspected subjects and time slot for the inspected businesses? A: The SAFE will mainly inspect subjects involved in foreign exchange, including Chinese- and foreign-funded banks engaged in foreign exchange collection and sales in China, non-bank financial institutions, foreign-funded enterprises, Chinese enterprises and institutions, foreign organizations in China, and individuals. Foreign exchange collection and sales as well as the use of RMB capital from foreign exchange sales from January 1, 2006 and March 31, 2007 (or, if necessary, the time before and after this period) will be inspected. Q: What will the SAFE mainly inspect? A: The SAFE will focus on the inspection of the foreign exchange collection and sales as well as the use of RMB capital from foreign exchange sales of the inspected subjects during the specified period. We will emphasize the authenticity and lawfulness of the foreign exchange collection and sales under the goods trade and services trade, capital inflows and foreign exchange sales of foreign-funded enterprises, capital inflows and foreign exchange sales of external debts and trade financing, individual capital inflows and sales, and those involved in real estate, securities, and round-trip investments, and will crack down on illegal capital inflows and foreign exchange sales through underground money shops. The SAFE also will require local foreign exchange inspection departments to analyze local foreign exchange capital inflows and sales as well as the use of RMB capital from foreign exchange sales with a special focus on the local situations. Q: What progress has the SAFE made? A: To ensure its success and achieve the expected goals, the SAFE made full preparations for the inspection. Inspections of the chosen regions, launched on April 9, are proceeding smoothly and the first phase is expected to be completed at the end of May. Inspections reveal that illegal behavior exists in both trade and investment. On the one hand, we will carry out extended inspections and strictly combat illegal short-term capital inflows and foreign exchange sales; on the other hand, the SAFE will adjust the policy in a targeted fashion according to the exposed problems from the inspections, further improve and strengthen foreign exchange administration, guard against the impact of short-term capital inflows, and promote an equilibrium in the balance of payments. 2007-05-18/en/2007/0518/839.html
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March 30, 2007 - The SAFE recently held the 2007 National Work Conference on Foreign Exchange Inspection and the Work Conference on the Inspection of Foreign Exchange Capital Inflows and Sales in Dongguan , Guangdong . The conference summarized the inspection of foreign exchange in 2006 and made arrangements for 2007. Deputy Administrator Mr. Deng Xianhong attended the meeting and delivered a speech. The SAFE focused on inspection to combat abnormal capital and short-term venture capital against the background of the continuous balance of payments surplus and the rapid increase in foreign exchange reserves. By carrying out special inspections and surveys of the external debts and the foreign exchange assets and liabilities of banks, deferred payments, cross-border related transactions, services trade, external debts of foreign-funded enterprises, temporary payable received accounts of Chinese- and foreign-funded enterprises, collections and sales in some regions, pending surrender accounts, and nominal rate and foreign capital inflows to the real estate market, the SAFE cracked down on over 70 underground money shops and dens of illegal foreign exchange transactions and solved some large cases, for instance online speculation in foreign currency, illegal transaction of verification documents, and underground KRW circulation and illegal inflows of large amounts of abnormal funds through exchanges outside of China. During the entire year of 2006, 1,914 cases were investigated and punished through the national foreign exchange inspection system and 1,915 cases were solved, with the amounts of the fines totaling RMB 139 million and the confiscations totaling RMB 138 million in the one year. The work in 2006 played a positive role in grasping the overall trend in foreign exchange capital inflows, curtailing the inflow of illegal capital, and promoting an equilibrium in the balance of payments. The conference also made overall arrangements for foreign exchange inspection work in 2007. In light of the financial situation of the macro-economy, the inspection of foreign exchange will center on the goal of achieving a basic equilibrium in the balance of payments and stepping up the monitoring and inspection of the inflow of short-term abnormal capital. Inspection of the main factors that influence an equilibrium in the balance of payments will be intensified, while taking into consideration the new problems emerging in the equilibrium in the balance of payments. The SAFE will keep up with an adjustment of the policies for foreign exchange administration, carry out special inspections and check the effects of the new policies, severely crack down on illegal foreign exchange behavior and enhance the inspection and punishment of severe and important cases, reinforce the study of means for off-site inspections and establish an off-site inspection system, further rectify and standardize the foreign exchange market order, deepen the construction of a foreign exchange credit system, and strengthen the construction of internal control. Management and inspection teams will be strengthened and the risks of law enforcement will be prevented. The conference made detailed arrangements for the coming all-round inspection of foreign exchange capital inflows and the collection and sales of banks in some regions. Inspections of foreign exchange capital inflows and sales will be divided into two phases off-site and on-site. The SAFE will carry out off-site inspections covering foreign exchange collection and sales and the use of RMB capital from foreign exchange by banks, enterprises, and institutions, foreign institutions in China , and individuals in ten regions where the exchange business is brisk. Four designated foreign exchange banks in Shanghai, Tianjin, Beijing, and Shenzhen will undergo special inspections of their foreign exchange collection and sales, through which the SAFE will grasp whether the business was conducted according to the regulations and whether the business had an impact on an increase in a favorable balance between the settlement and sale, and will deal with their illegal practices. 2007-03-30/en/2007/0330/834.html
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August 15, 2007 - In order to improve foreign exchange administration in closed areas and bonded sites under customs supervision (hereinafter referred to as bonded areas under customs supervision) and facilitate trade and investment made by enterprises within such areas, the SAFE recently announced the "Measures for Foreign Exchange Administration in Bonded Areas under Customs Supervision" (hereinafter referred to as the "Measures"). In recent years, bonded regions, export-processing zones, bonded logistics parks, bonded logistics centers, bonded ports, integrated bonded areas, cross-border industrial parks, and other different types of bonded areas under customs supervision have been developing rapidly, playing a positive role in promoting regional economic development and the development of high-tech and high value-added products trade. To meet the demands to further expand and transform the functions of the bonded areas under customs supervision, the SAFE formulated and promulgated the "Measures" to integrate the existing foreign exchange management policies applicable to different bonded supervision areas and to adjust the policies that lag behind the development of the bonded supervision areas. The main contents of the "Measures" are as follows: First is to continue to maintain the advantages of foreign exchange management policies in the regions. Local enterprises engaged in trading goods abroad do not have to go through the procedures for verification. Local enterprises and domestic enterprises outside the regions can use RMB or foreign currencies for valuation and settlement in transactions. Second is to integrate some of the internal and external policies, further facilitating the opening of current foreign currency accounts, retaining the current foreign exchange income, the purchases and sales of foreign exchange, investment under the capital accounts, and external guarantees, as well as the reporting system for the balance of payments statistics and implementing the same policy with that outside the bonded areas under customs supervision. Third is to fit in with the transaction manners of local enterprises and the new features of the logistics development and to simplify the material verification requirements, so the payment of foreign exchange whose logistics and capital flow do not correspond to each other can be directly handled in the banks. The announcement and implementation of the "Measures," are suitable to the current economic situation for structural adjustment, satisfy the operational and innovation needs of enterprises, and will further facilitate the operation of enterprises in these areas, thus promoting the development of the bonded areas under customs supervision. Meanwhile, they will contribute to effective supervision. The "Measures" shall become effective on October 1. 2007-08-15/en/2007/0815/845.html