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As at the end of June 2025, China recorded RMB 17.4437 trillion in outstanding external debt denominated in both domestic and foreign currencies (equivalent to USD 2436.8 billion, excluding those of Hong Kong SAR, Macao SAR, and Taiwan Province of China, the same below). In terms of maturity structure, the outstanding medium-and long-term external debt was RMB 7400.9 billion (equivalent to USD 1033.9 billion), accounting for 42 percent; while the outstanding short-term external debt was RMB 10042.8 billion (equivalent to USD 1402.9 billion), taking up 58 percent,of which 34 percent was trade-related credit. In terms of institutional sectors, the outstanding debt of general government totaled RMB 3016.6 billion (equivalent to USD 421.4 billion), accounting for 17 percent; the outstanding debt of the central bank totaled RMB 652.1 billion (equivalent to USD 91.1billion), accounting for 4 percent; the outstanding debt of banks totaled RMB 7512.6 billion (equivalent to USD 1049.5 billion), accounting for 43 percent; the outstanding debt of other sectors (including inter-company lending under direct investments) totaled RMB 6262.4 billion (equivalent to USD 874.8 billion), accounting for 36 percent. In terms of debt instruments, the balance of loans was RMB 2312.3 billion (equivalent to USD 323.0 billion), accounting for 13 percent; the outstanding trade credits and advances was RMB 2735.3 billion (equivalent to USD 382.1 billion), accounting for 16 percent; the outstanding currency and deposits was RMB 3399.2 billion (equivalent to USD 474.9 billion), accounting for 19 percent; the outstanding debt securities was RMB 6087.5 billion (equivalent to USD 850.4 billion), accounting for 35 percent; the Special Drawing Rights (SDR) allocation amounted to RMB 356.1 billion (equivalent to USD 49.7 billion), accounting for 2 percent; the balance of inter-company lending under direct investments totaled RMB 1704.9 billion (equivalent to USD 238.2 billion), accounting for 10 percent; and the balance of other debt liabilities was RMB 848.4 billion (equivalent to USD 118.5 billion), accounting for 5 percent. With respect to currency structures, the outstanding external debt in domestic currency totaled RMB 9080.1 billion (equivalent to USD 1268.5 billion), accounting for 52 percent; the outstanding external debt in foreign currencies (including SDR allocation) totaled RMB 8363.6 billion (equivalent to USD 1168.3 billion), accounting for 48 percent. In the outstanding registered external debt in foreign currencies, the USD debt accounted for 79 percent, the Euro debt accounted for 8 percent, the JPY debt accounted for 4 percent, the HKD debt accounted for 5 percent, the SDR and other foreign currency-denominated external debt accounted for 4 percent. Since all major external debt indicators were within the internationally recognized thresholds, China's external debt risk is under control. Appendix Definition of terms and interpretations External debt classification by maturity structure. There are two methods to classify the external debt by maturity structure. One is on the basis of the contractual maturity, i.e. it is classified as medium- and long-term external debt if the contractual maturity is over one year, and classified as short-term external debt if the contractual maturity is one year or less; the other is on the basis of the remaining maturity, i.e., on the basis of the contractual maturity classification method above, the medium- and long-term external debt due within one year is classified as short-term external debt. In this news release, external debt is divided into medium- and long-term external debt and short-term external debt based on the contractual maturity. Trade-related credit is a broad concept. In addition to trade credit and advances, it also involves other kinds of credit provided for trade activities. According to its definition,trade-related credit includes trade credit and advances, bank trade financing, trade related bills, and so forth. In particular, trade credit and advances refer to external liability arising from directly extending credit between the seller and buyer of goods transactions,specifically transactions between residents in the Chinese Mainland and overseas non-residents (including non-residents in Hong Kong SAR, Macao SAR,and Taiwan Province of China), i.e., the debt incurred due to the difference between the time of payment and the time of the goods ownership transfer, which include credit directly provided by the supplier (e.g., the overseas exporter)for goods and services, and prepayments made by buyers (e.g., overseas importers) for goods, services, and work that is in progress (or work to be undertaken). Bank trade financing refers to trade related loans that offered by a third party (e.g., banks) to exporters or importers, for instance, loans extended by foreign financial institutions or export credit agencies to buyers. Annexed table：China’s Gross External Debt Position by Sector, End of June 2025 End of June 2025 End of June 2025 （Unit:100 million RMB） （Unit:100 million US dollars） General Government 30166 4214 Short-term 1135 159 Currency and deposits 0 0 Debt securities 1135 159 Loans 0 0 Trade credit and advances 0 0 Other debt liabilities 0 0 Long-term 29031 4055 Special drawing rights (allocations) 0 0 Currency and deposits 0 0 Debt securities 25252 3527 Loans 3779 528 Trade credit and advances 0 0 Other debt liabilities 0 0 Central Bank 6521 911 Short-term 2398 335 Currency and deposits 1302 182 Debt securities 1096 153 Loans 0 0 Trade credit and advances 0 0 Other debt liabilities 0 0 Long-term 4123 576 Special drawing rights (allocations) 3561 497 Currency and deposits 0 0 Debt securities 0 0 Loans 0 0 Trade credit and advances 0 0 Other debt liabilities 562 79 Other Depository Corporations 75126 10495 Short-term 60649 8473 Currency and deposits 32677 4565 Debt securities 15023 2099 Loans 12384 1730 Trade credit and advances 0 0 Other debt liabilities 565 79 Long-term 14477 2022 Currency and deposits 0 0 Debt securities 10914 1525 Loans 3492 488 Trade credit and advances 0 0 Other debt liabilities 72 10 Other Sectors 45575 6367 Short-term 32432 4531 Currency and deposits 14 2 Debt securities 172 24 Loans 1070 150 Trade credit and advances 26874 3754 Other debt liabilities 4302 601 Long-term 13143 1836 Currency and deposits 0 0 Debt securities 7284 1018 Loans 2397 335 Trade credit and advances 479 67 Other debt liabilities 2983 417 Direct Investment: Intercompany Lending 17049 2382 Debt liabilities of direct investment enterprises to direct investors 9212 1287 Debt liabilities of direct investors to direct investment enterprises 1462 204 Debt liabilities to fellow enterprises 6375 891 Gross External Debt Position 174437 24368 Notes: 1. The short-term and long-term herein are broken down by contractual (original) maturity. 2. The data in this table have been rounded off. 2025-09-30/en/2025/0930/2344.html
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The branches and foreign exchange administrative departments of the State Administration of Foreign Exchange (SAFE) in all provinces, autonomous regions, and municipalities directly under the Central Government; the branches of the SAFE in Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo: For the purpose of regulating the administration of the bankssynthetic positions in foreign exchange settlement and sales, the SAFE has formulated this Circular in accordance with the Regulations of the Peoples Republic of China on Foreign Exchange Administration. This Circular has collated and integrated the existing regulations on the administration of the bankssynthetic positions in foreign exchange settlement and sales. We hereby notify you as follows: I. The term bankssynthetic positions in foreign exchange settlement and sales (hereinafter referred to as positions) refer to the foreign exchange positions held by the designated foreign exchange banks (hereinafter referred to as the banks) arising from transactions between RMB and foreign currencies, which are formed from the bankssettlement and sales of foreign exchange for their clients in conformity with the administrative provisions on foreign exchange, from the settlement and sales of foreign exchange on their own, and from participation in transactions on the inter-bank foreign exchange market. II. The SAFE and its branches and foreign exchange administrative departments (hereinafter referred to as the foreign exchange authorities) shall be responsible for ratification of the limits for the bankspositions and the daily management thereof. (1) The SAFE shall be responsible for the ratification and daily management of the positions of the policy or national banks. (2) The local branches and foreign exchange administrative departments of the SAFE (hereinafter referred to as the SAFE branches) shall be responsible for the ratification and management of the positions of urban commercial banks, rural commercial banks, rural cooperative financial institutions, foreign-funded banks, and the finance companies of enterprise groups (hereinafter referred to as local financial institutions). The SAFE branches may authorize the central sub-branches within their respective jurisdictions to carry out the daily management of the positions of the banks. (3) Where a SAFE branch intends to ratify the positions of a local financial institution, the upper limit of which is USD1 billion or more, or to ratify the positions of a local financial institution which exercises the function of market-maker on the inter-bank foreign exchange market, it shall carry out a preliminary examination and then report it to the SAFE for unified ratification. III. Principles for the administration of positions (1) Unified ratification of legal persons. The foreign exchange authorities shall uniformly ratify the positions of the banks under the principle of regulation of legal persons and shall not separately ratify the positions of the branches of a bank (except the branches of a foreign bank). (2) Management of limits. The foreign exchange authorities shall adopt the administrative model of ratification of limits for the positions in accordance with the balance of payments, the foreign exchange business operations of banks, and other factors. (3) Management on an accrual basis. A bank shall include the foreign exchange settlement and sales for its clients, the foreign exchange settlement and sales of its own, and transactions on the inter-bank foreign exchange market in the positions on the day when the transaction is concluded (rather than the day when the capital is actually received and paid). (4) Examination and regulation on a daily basis. A bank shall manage the positions of the entire bank on a daily basis, and shall maintain the positions at the end of each trading day within the limits ratified by the foreign exchange authority. If the positions exceed the limits at the time, the bank shall adjust the positions within the limits before the end of the next trading day. (5) Reconciling the balance of positions against the accounting subjects on a regular basis. For differences, the bank may apply to the foreign exchange authority on an annual basis for an adjustment, and for differences caused by a variance in the currency conversion or any other reasonable reason, the foreign exchange authority may directly approve the adjustment; for differences resulting from false reporting or missed statistical data, the foreign exchange authority may approve the adjustment, but shall issue a sanction for violation of the relevant regulations. IV. Specific management requirements for positions (1) A bank shall, within 30 work days after obtaining the qualification to operate the business of foreign exchange settlement and sales, apply to the foreign exchange authority for ratification of its position limits. (2) Where the volume of foreign exchange settlement and sales of a bank undergoes any significant change and its position limits need to be adjusted, the bank shall file a written application with the foreign exchange authority. The bank shall not adjust the position limits without approval. (3) When applying for ratification or adjustment of the position limits, a bank shall submit the following materials to the foreign exchange authority: a. a request for instructions on ratification or adjustment of the position limits; b. the measurement and calculation basis for the ratification or adjustment of the position limits; c. the domestic consolidated balance sheet in both RMB and foreign currency and the domestic balance sheet in foreign currency at the end of the year prior to application; and d. other documents and information as required by the foreign exchange authority. (4) The foreign exchange authority shall, in light of the actual business operational needs, the volume of settlement and sales, as well as the receipt and payment of foreign exchange on behalf of clients, capital (or working capital) in RMB and foreign currencies, asset status, and other factors, ratify the position limits of the bank. In principle, the foreign exchange authority shall adjust the position limits of the bank not more than once during a calendar year. (5) A bank whose position limits have not been ratified by the foreign exchange authority will be subject to zero-position management, the net balance between the settlement and sales of foreign exchange on the current business day shall be balanced through the inter-bank foreign exchange market on the next business day. (6) The transactions for balancing the positions among banks shall be carried out through the inter-bank foreign exchange market. No bank may square off the positions over the counter without approval by the foreign exchange authority. (7) Where a bank takes the initiative to apply for closure of the business of foreign exchange settlement and sales or has its qualifications for operating the business of foreign exchange settlement and sales cancelled by the foreign exchange authority for illicit business operations, it shall, within 30 work days after the closing down of the business of foreign exchange settlement and sales, file an application with the foreign exchange authority and clear the positions until the date of closure of the said business upon approval of the foreign exchange authority. V. The administrative provisions on positions in this Circular shall not apply to foreign-funded banks that are qualified for foreign exchange settlement and sales, but are not approved to operate RMB businesses. Such banks shall be governed by the following provisions: (1) The bank shall use the special RMB account for foreign exchange settlement and sales opened with the local branch or sub-branch of the Peoples Bank of China (PBC) in accordance with the Detailed Rules for Implementation of the Foreign Exchange Settlement, Sales, and Payments of Foreign-funded Banks (Yinfa No. 202 [1996]). (2) The balance in the special RMB account for foreign exchange settlement and sales shall be subject to control. The account balance shall not exceed the equivalent of 20% of the registered foreign exchange capital or working capital of the bank, and the bank may conduct the RMB and foreign exchange conversion on its own to the extent that it does not exceed the balance. (3) The bank may open and use a special RMB cash account for foreign exchange settlement and sales in accordance with the Circular of the Peoples Bank of China on Relevant Issues concerning the Opening of Special RMB Cash Accounts for Foreign Exchange Settlement and Sales by Foreign-funded Banks (Yinfa No.180 [2003]). The balance in the special RMB cash account for foreign exchange settlement and sales shall be incorporated into the balance in the special RMB account for foreign exchange settlement and sales for the purposes of balance control. (4) The bank shall, within 30 work days after obtaining the approval of the CBRC to handle the RMB business, apply to the foreign exchange authority for ratification of the position limits in accordance with Part IV of this Circular, and shall, during the process of application, submit the document issued by the CBRC granting it approval to handle the RMB business. The bank shall, within 10 work days after obtaining the ratified limits, apply to the local branch or sub-branch of the PBC to close the special RMB account for foreign exchange settlement and sales in accordance with the Circular of the Peoples Bank of China on Relevant Issues concerning the Special RMB Accounts for Foreign Exchange Settlement and Sales (Yinfa No. 292 [2005]), and adjust the synthetic positions in foreign exchange settlement and sales within the range of the ratified position limits. VI. Centralized management of the positions of the branches of a foreign bank (1) For a foreign bank that has two or more branches in China, the head office or regional headquarters thereof may authorize a branch within China (hereinafter referred to as branch responsible for centralized management) to carry out centralized management of the positions of its branches within China. (2) Where the branches of a foreign bank adopt centralized management of the positions, the branch responsible for the centralized management shall file an application with the local SAFE branch. The application materials shall include the following: a. the letter of authorization granted by the head office approving implementation of the centralized management of the positions; b. the approval document issued by the CBRC for the resident office of the foreign-funded financial institution within China ; and c. the explanation by the foreign bank of its internal management system, accounting methods, and technical support for implementation of the centralized management of the positions. (3) The SAFE branch shall, upon receipt of the application, visit the business office of the branch responsible for centralized management, and inspect and check on-the-spot the supporting technical system for the centralized management of the positions of the bank. If the relevant requirements are met, the SAFE branch shall, within 20 work days upon acceptance of the application, give its opinions on the approval of the centralized management of the positions by the branch responsible for the centralized management, send a copy to the SAFE, and simultaneously send a copy to the local SAFE branches or sub-branches in the places where the branches of the foreign bank are located. (4) After the branches of a foreign bank are placed under centralized management of the positions, the original positions of all the branches or sub-branches of the foreign bank within China shall be incorporated into the positions of the branch responsible for the centralized management for the purposes of management, and shall be uniformly squared and managed by the branch responsible for the centralized management. If any new branch or sub-branch of the foreign bank is added under the centralized management of the positions, the branch responsible for the centralized management and the new branch or sub-branch shall file with their local SAFE branches respectively 10 work days in advance. (5) After the branches of a foreign bank are placed under the centralized management of the positions, the local SAFE branch in the place where the branch responsible for the centralized management is located shall be responsible for the ratification and daily management of the position limits; if the branch responsible for the centralized management exercises the function of a market-maker on the inter-bank foreign exchange market, Part II (3) of this Circular shall apply. When the branch responsible for the centralized management applies for or adjusts the position limits, the measurement and calculation basis shall be the aggregate data of all the foreign banks branches and sub-branches within China . (6) After the branches of a foreign bank are placed under the centralized management of the positions, if neither the branch responsible for the centralized management nor any other branch or sub-branch under the centralized management has opened an RMB business, the relevant provisions of Part V of this Circular shall apply. If the branch responsible for the centralized management has opened an RMB business, and other branches or sub-branches within China have not opened an RMB business, the branches or sub-branches which have not opened an RMB business shall still be governed by the relevant provisions of Part V of this Circular, but the balance in their special RMB accounts for foreign exchange settlement and sales shall be converted into US dollars and be recorded with a negative value into the positions of the branch responsible for the centralized management. VII. Data submission (1) Each SAFE branch shall, within 20 work days after the beginning of each year, fill out the Form of the XX Branch (Foreign Exchange Administrative Department) of the State Administration of Foreign Exchange on the Ratification of Limits for the Synthetic Positions in Foreign Exchange Settlement and Sales of Financial Institutions within the Jurisdiction (See Annex 1), and send an e-mail to the Intranet e-mail box of the SAFE (manage@bop.safe). (2) All banks shall, in accordance with the requirements of the Daily Statements on the Synthetic Positions in Foreign Exchange Settlement and Sales and the Directions for Submission (see Annex 2), submit all relevant data on the synthetic positions to the foreign exchange authorities in a timely and accurate manner. (3) Each bank shall fill in under the Remarkscolumn in the Daily Statements on the Synthetic Positions in Foreign Exchange Settlement and Sales the transaction information on the foreign exchange settlement and sales for clients, its own transactions of foreign exchange settlement and sales, and contract transactions of forward foreign exchange settlement and sales for clients, the single sum of which exceeds the equivalent of USD50 million on the current day, and shall submit the transaction information, including the clients name, item, amount, currency, and term (limited to forward foreign exchange settlement and sales contracts) for each transaction. VIII. Where a bank violates the administrative provisions on the positions, the foreign exchange authority shall punish it in accordance with the Regulations of the Peoples Republic of China on Foreign Exchange Administration and other laws and regulations. IX. This Circular shall come into force as of the date of promulgation. If there is any discrepancy between any previous provisions and this Circular, this Circular shall prevail. The documents on foreign exchange administration as listed in Annex 3 shall be abolished on the date of implementation of this Circular. All SAFE branches shall, upon receipt of this Circular, promptly forward it to the central sub-branches and branches of the SAFE, urban commercial banks, rural commercial banks, rural cooperative financial institutions, and foreign-funded banks within their respective jurisdictions. If any problems are encountered during implementation, please contact the Balance of Payments Department of the SAFE. Tel: 010-68402374, 68402464. 2010-10-20/en/2010/1020/959.html
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The State Administration of Foreign Exchange (SAFE) recently promulgated the Circular of the State Administration of Foreign Exchange on the Administration of External Guarantees Provided by Domestic Institutions (hereinafter referred to as the "Circular"). An interview was conducted with a relevant official of the SAFE regarding issues related to the Circular. Q: What is the background to this promulgation? A: According to the relevant stipulations on the administration of external guarantees currently in effect, with the exception of financing external guarantees provided by domestic banks for overseas investment enterprises were subject to annual balance management, the other types of external guarantees were mainly subject to case-by-case approvals. With Chinas increasing integration into the global economy, external investments of domestic institutions have been on a constant rise. Overseas investment enterprises are increasingly demanding credit support from domestic institutions, resulting in an urgent demand to improve and reform current policies for the administration of external guarantees. The policies currently in effect have some limitations: (i) the balance management is only applicable to certain types of institutions and is not applicable to non-bank financial institutions and enterprises; the balance management for external guarantees provided by banks is only applicable to financing guarantees in which the debtor is an overseas institutions; (ii) currently banks assign quotas for the balance of the external guarantees mainly based on the foreign exchange capital funds and the working capital of the debtor, which has led to decreasing rationality in the quota assignment; (iii) the policies currently in effect have higher qualifying standards for the guarantor and the debtor, that is, higher standards are imposed on the net asset proportions of both the guarantor and the debtor, the profits and losses of the debtor, and so on, which to some extent has hindered the development of the business of external guarantees. This situation necessitates early amendment to the policies concerning administration of external guarantees provided by domestic institutions. Q: What are the major aims and principles behind the adjustments to the administration of external guarantees by domestic institutions? A: Within the present fundamental policy framework for external guarantees, the reform aims to substantially streamline and straighten out the existing administration policies, and to clarify the technical and operational issues that need to be further clarified in the practice of the administration of guarantees, thereby further promoting the facilitation of trade and further pushing forward the reform of the mode of foreign exchange administration for external guarantees. The policy adjustment mainly complies with the principle of streamlining formalities, ensuring high efficiency of business operations, and keeping risks controllable. By streamlining the formalities for administrative approval and increasing the efficiency of administration, the SAFE will be able to provide greater support to the going-globalactivities of domestic institutions. Meanwhile, the SAFE must prevent possible negative impacts from the conversion of contingent external debts into actual debts or claims. Overall, the reform simultaneously will serve to promote development and to keep risks controllable. Q: What changes has the adjustment entailed in the mode of administration of external guarantees provided by domestic banks? A: The changes can be summed up in seven respects: (i) the scope for implementing balance management for financing external guarantees was expanded. The adjustment allows financing guarantees to be provided to institutions both at home and abroad instead of only to overseas institutions. That is to say, the banks provision of financing external guarantees to domestic institutions is no longer subject to deal-by-deal application and approval; (ii) adjustments have been made to the criterion for assignment of the balance quotas to the banks. The assignment of quotas is no longer subject to foreign exchange capital funds or working capital. Rather, the foreign exchange authorities are allowed to assign quotas to banks based on the paid-in capital in both RMB and foreign currency, or the foreign exchange net assets of the bank. In other words, the quota for a single bank shall not exceed 50% of its paid-in capital or working capital in both RMB and foreign currency, nor exceed the net asset value of its foreign exchange; (iii) the conditions for the debtorsqualifications for bank provision of financing external guarantees have been lifted, that is, the debtor shall not be subject to such conditions as its equity relationship with domestic institutions, net asset proportions, and profits and losses; (iv) the mode for the administration of the banksprovision of non-financing external guarantees has been clarified. The debtor shall not be subject to net asset proportions, profits and losses, and ex-ante approval to obtain non-financing L/G from banks; meanwhile, to ensure adequate caution, it is required that at least one of either the debtor and beneficiary shall be a domestic institution, or shall be an overseas institution in which a domestic institution directly or indirectly holds shares; (v) it is clarified that the ex-ante approval formalities shall be lifted for the banksprovision of external guarantees; (vi) it has been clarified that the registration of the external guarantees under the banksquota management shall be subject to regular filing; (vii) the relevant statements for the regular filing of the banksprovision of external guarantees have been re-designed to facilitate the filing and submission of the data. Q: What changes have been made in the mode of administration of external guarantees provided by domestic non-bank financial institutions and enterprises after the policy adjustment? A: The changes can be summed up in five respects: (i) an administration mode based on deal-by-deal approval supplemented by administration of the balance has been formed. Domestic non-bank financial institutions and enterprises (including wholly foreign-funded enterprises) with large numbers of external guarantee deals and high standardization of internal management that provide financing and non-financing external guarantees can apply to the SAFE for assignment of balance quotas and can provide external guarantees within the assigned quotas, without having to apply to the SAFE for deal-by-deal approval. However, the balance quota assigned by the SAFE and/or the balance of deal-by-deal external guarantees approved by the SAFE shall not exceed 50% of the net assets of the enterprise; (ii) the proportion of net assets owned by the corporate guarantor is uniformly adjusted to 15%, to replace the previously implemented separate rates for trade enterprises and non-trade enterprises; (iii) the scope of the debtor has been expanded. If the guarantor is an enterprise, the debtor shall be an institution formed within or outside China in which the guarantor directly or indirectly holds shares, replacing the pre-adjustment provision that the debtor shall be a first-layer subsidiary of domestic enterprises that are formed within or outside China. If the guarantor is a non-bank financial institution, the debtor shall be an institution within China, or an institution formed by a domestic institution or an institution in which a domestic institution directly or indirectly holds shares according to the relevant provisions; (iv) it has been clarified that in the event that non-bank financial institutions and enterprises perform external guarantees, they must file an application with the foreign exchange administration authority in their locality for deal-by-deal approval, and the purchase of foreign exchange is allowed when they provide the external guarantees; (v) it has been clarified that wholly foreign-funded enterprises shall handle the case-by-case approval, registration, and other formalities for their external guarantees with reference to the principles for the administration of general enterprises. Q: What adjustments have been made to the qualifications of the debtor? A: The policy adjustment has lowered the standards for the debtorsqualifications. The major adjustments can be summed up in three respects: (i) the scope of the debtor has been expanded to various degrees based on the institutional type of the guarantor. For a financing external guarantee provided by a bank, the debtor is not subject to any qualifications, and the bank has discretion over the provision of external guarantees based on its business development needs and its ability to keep internal risks under control. For a non-financing external guarantee provided by a bank, only one of the debtor or the beneficiary shall be a domestic institution or an overseas institution in which a domestic institution directly or indirectly holds shares. In an external guarantee provided by non-bank financial institutions, the debtor has been adjusted to be domestic institutions, or overseas investment enterprises owned by domestic institutions. In an external guarantee provided by an enterprise, the scope of the debtor is expanded to encompass enterprises that were established within or outside China in which the guarantor directly or indirectly holds shares; (ii) the financial index restrictions on the debtor have been unified and simplified: the requirement on the net asset proportion of the debtor is uniformly adjusted to the net asset value of the debtor shall be positive, and the profit requirement has been adjusted to the debtor shall have made profits in at least one of the past three years, replacing the previous the debtor shall not have any losses (for long-term projects such as resources exploration projects, the aforementioned three years can be extended to five years); (iii) the requirement that If the debtor is a joint venture within or outside China, the guarantees shall only be provided according to the proportions of the capital contributions of both partieshas been lifted. Q: What is the significance of the policy adjustment? A: The reform of the mode of administration of external guarantees is a critical step in further refining foreign exchange administration to achieve the goal of administration with the provision of better services. It will provide greater momentum for domestic institutions to implement the national strategy of going global on a wider scale and at a higher level, with greater involvement in international competition and collaboration. It will help domestic institutions take advantage of markets and resources both at home and aboard, promote the facilitation of trade and investment, and increase the efficiency of resource utilization. By stimulating financial innovation and business expansion in the financial industry and keeping potential risks under control, the adjustment will also play a positive role in sharpening the international competitive edge of Chinas financial industry. Q: How does the SAFE intend to control risks during the post-adjustment period? A: During implementation of the policy adjustment, we have taken into full consideration the practices in the administration of external guarantees provided by domestic institutions and have carried out classified administration of external guarantees based on the different risk-bearing and management capabilities of the institutions. This has enhanced risk control from an institutional perspective. The ex-post examination mechanism was strengthened. Thus, we have kept relevant risks controllable. Specifically: first, administration practices during recent years show that the performance of external guarantees provided by domestic institutions has remained at a low level; and the credit risks of the various categories of entities under external guarantees have been kept under effective control; second, given the varied risk management capabilities of banks, non-bank financial institutions, and non-financial enterprises owing to their different stages of development, we have established a mode for implementing classified administration; and while lowering the standards for the qualifications of the relevant entities, we have enhanced risk control by improving system design; third, we have conducted pressure tests for the policy adjustment. The results of the computations show that overall the risks are controllable. We will constantly improve the approaches for statistical monitoring of the external guarantees and the mechanisms for ex-post examination and will strengthen statistical monitoring, analysis, and early warning for external guarantees, so as to keep potential risks under control. 2010-07-30/en/2010/0730/945.html
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Q: Recently there have been comments by scholars that since 2003 China has suffered a huge loss of USD271.1 billion in its foreign exchange reserves, due to the appreciation of the RMB against the US dollar. What is your comment on this? A: First, the appreciation of the RMB will not bring about losses in Chinas foreign exchange reserves. Foreign exchange reserves essentially are assets in foreign exchange, which use the USD as the recording currency. Variations in the RMB/USD exchange rate will result in changes in the book value of RMB converted from the foreign exchange reserves, which are not the actually realized gains or losses. The variation only means some differences in the book value of the reporting currency, be it RMB or USD, and does not have a direct impact on the effective purchasing power of the foreign exchange reserves. The changes in the exchange of currency will only occur when foreign exchange reserves are repatriated from overseas countries (regions) and converted into RMB. Presently, China has no need to repatriate and settle its foreign exchange reserves on a large scale. In addition, equivalent incomes in RMB were attained by banks, enterprises, and individuals when foreign currencies were sold; the appreciated RMB generated considerable benefits in lowering the costs of imports, increasing incomes from investment, and so forth. That is to say, the benefits have been retained within the country. Second, the book loss of foreign exchange reserves caused by the RMB appreciation is far less than the book surplus of Chinas financial assets. The book loss and surplus generated from the reporting currency are like two sides of a coin (in economics called duality). In contrast to book losses of RMB converted from foreign exchange reserves which are denominated in USD, if converted to USD China enjoys a book surplus of RMB financial assets held by citizens. As of the end of March 2011, Chinas balance of foreign exchange reserves reached USD3.04 trillion. Converted at the end-March 2011 exchange rate, the total scale of RMB financial assets, such as RMB deposits of enterprises and individuals, stocks, treasury bonds, and insurance assets during the corresponding period was more than five times that of Chinas foreign exchange reserve assets. This means that when the RMB appreciates, the book gains of RMB assets is over 5 times the book losses of the foreign exchange reserve assets. Furthermore, the book gains of RMB assets will become more substantial when property assets and other kinds of financial assets held by residents in forms of stocks, bonds, and so on are taken into account. Likewise, in essence the above losses or gains are variations in book values. That means the variations will not be realized as gains or losses if the currency is not exchanges. Third, the effective purchasing power of foreign exchange reserves depends on the yield of foreign exchange reserves and the inflation rate of the countries where the investments are made. China has maintained stable gains from its foreign exchange reserves operations over the years; the yields of operations far exceed the inflation rate of the countries (regions) where investments have been made, such as the U.S., Europe, or Japan, thereby ensuring the effective purchasing power of the foreign exchange reserves. During the 2000-2010 period, the consumer price index (CPI) in the U.S., Europe, and Japan increased at an annual rate of 2.4 percent, 2.1 percent, and -0.2 percent respectively. In the meantime, China has seen a far higher average annual operating yield from its foreign exchange reserves. 2011-05-06/en/2011/0506/995.html
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In order to facilitate individualshandling of foreign exchange settlement and sales and to promote banks business innovation, at the beginning of 2010 the State Administration of Foreign Exchange (hereinafter referred to as the SAFE) gave a green light successively to the Bank of China, China Merchants Bank, and the Industrial and Commercial Bank of China for pilot operations of foreign exchange settlement and sales for individuals through e-bank channels. Domestic individuals are allowed to handle foreign exchange settlement and sales on a self-service basis through the e-channels provided by the pilot banks. In view of the fact that the pilot operation has received widespread praise from the public, the SAFE recently promulgated the Interim Measures for the Administration of E-bank-based Foreign Exchange Settlement and Sales for Individuals (hereinafter referred to as the Interim Measures), which will come into force as of April 1, 2011. The Interim Measures mainly comprise four areas: (1) After being accepted by the SAFE, banks are allowed to connect their e-banking systems to the information system for the administration of foreign exchange settlement and sales for individuals, to handle e-banking-based foreign exchange settlement and sales for individuals, and to implement the national uniform regulations on the annual aggregate administration of foreign exchange settlement and sales for individuals; (2) Individuals both at home and abroad are allowed to use their own accounts to handle the purchase and settlement of foreign exchange within the annual aggregate and under the current account (exclusive of trade) via multiple e-banking channels such as online banking, self-service terminals, phone banking, and mobile banking; (3) Banks and individuals shall comply with the foreign exchange administration regulations for the handling of e-banking-based foreign exchange settlement and sales for individuals, and shall ensure that the data entered into the information system for the administration of foreign exchange settlement and sales for individuals are authentic, complete, and accurate; (4) The SAFE and the banks will keep a close eye on the e-banking-based foreign exchange settlement and sales for individuals, screen and identify illegal transactions and transactions in violation of the regulations, and place those individuals becoming involved in activities in violation of the regulations, such as splitting large sums of money into smaller parts, on a watch-list for intensified administration. The individuals on the watch-list shall be prohibited from foreign exchange purchases and settlement via e-banking for a certain period of time. By keeping up with the trend of e-banking development, the promulgation of the Interim Measures will further facilitate individuals handling of foreign exchange settlement and sales, lessen the burden on bank counters, and reduce the operational costs for banks. Placing individuals involved in activities in violation of the regulations on the watch-list and intensifying administration of those on the watch-list will be conducive to checking individualssettlement and sales of foreign exchange by splitting large sums of money into smaller parts and to preventing inflows and outflows of abnormal foreign exchange funds through e-banking channels. 2011-03-15/en/2011/0315/987.html
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The SAFE recently released the revised data on China's Balance of Payments Statement for the year 2010, as well as the revised data for each quarter of 2010 according to the latest situation, and the annual data from 2005 to 2009. The current account and the capital and financial account continued to post a "twin surplus" in 2010, and international reserves maintained a growing momentum. The surplus under the current account totaled USD305.4 billion, a rise of 17 percent compared with that in the previous year. Specifically, according to the statistical coverage of the balance of payments, the surpluses in goods, income, and current transfers reached USD254.2 billion, USD30.4 billion, and USD42.9 billion, respectively, whereas the deficit in trade in services amounted to USD22.1 billion. Meanwhile, China's surplus under the capital and financial account totaled USD226 billion, an increase of 25 percent. In particular, net inflows of direct investments, portfolio investments, and other investments amounted to USD124.9 billion, USD24 billion, and USD72.4 billion respectively. International reserves assets posted an increase of USD471.7 billion, a rise of 18 percent. Specifically, transactions in foreign exchange reserves assets registered an increase of USD469.6 billion (exclusive of the influence of changes in value due to non-transaction factors such as exchange rates and prices) and the reserve position in the IMF and special drawing rights registered a total increase of USD2.2 billion. In Q4 of 2010, the surplus under the current account was USD102.1 billion, a rise of 7 percent year on year; the surplus under the capital and financial account totaled USD118.9 billion, an increase of 88 percent; and international reserves assets posted an increase of USD185.7 billion, an increase of 49 percent. In addition, the BOP Analysis Team of the SAFE released the China's Balance of Payments Report for 2010 in order to facilitate understanding among all groups sin society about the data and analysis of China's balance of payments. 2011-04-01/en/2011/0401/989.html
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On April 1, 2011, RMB-against-foreign exchange trading was officially introduced into Chinas inter-bank foreign exchange market. On the first day of trading, the system operated smoothly in parallel with brisk quotations and enquiries by banks. The quotation covered all 13 standard terms. A total of 10 RMB-against-USD options trading were concluded on the first day, with trading terms ranging from 1 to 6 months. The nominal principal amounted to a total of USD49 million. Since Chinas reform of the mechanism for setting up RMB exchange rates in July 2005, the foreign exchange market has witnessed accelerated development and increased varieties of trading products. A broad array of RMB-against-foreign exchange derivatives, such as forward exchange transactions, foreign exchange swaps, and currency swaps, were successively introduced into the market where banks provide services to their clients and the inter-bank foreign exchange market. The introduction of RMB-against-foreign exchange options trading signals the initial formation of a complete system for the trading of fundamental exchange rate derivatives on the foreign exchange market, which will provide a solid foundation for innovation-oriented development of the foreign exchange market in the future. The SAFE will continue to promote the progressive development of the foreign exchange market by taking into account circumstances in market operations and market conditions and by complying with the principle of maintaining the initiative, controllability, and progression of development. 2011-04-06/en/2011/0406/990.html
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A meeting was recently held by the SAFE to review the investment quotas for qualified institutional investors. Total quotas of USD400 million were allocated to four qualified foreign institutional investors (QFIIs), including Aviva Investors Global Services Ltd., Bank Julius Baer & Co. Ltd., Schroder Investment Management Ltd., and PineBridge Investments LLC, and total quotas of USD1.585 billion were granted to three qualified domestic institutional investors (QDIIs), including Guosen Securities Co., Ltd., American International Assurance Company, Ltd., and Lion Fund Management Co., Ltd. As of April 29, 2011, the SAFE had approved investment quotas of USD20.690 billion to 103 QFIIs and investment quotas of USD72.646 billion to 92 QDIIs. Specifically, during the period from January to April 2011, investment quotas of USD970 million were allocated to 13 QFIIs, and quotas of USD2.985 billion were allocated to 8 QDIIs. Based on the changes and development in Chinas balance of payments, the SAFE will continue to examine and approve investment quotas for qualified institutional investors in a prudent and orderly manner. 2011-04-29/en/2011/0429/993.html
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According to the statistical data released by the State Administration of Foreign Exchange (SAFE), in February 2011 the amount of foreign exchange settlement and sales by banks on behalf of clients amounted to USD90 billion and USD65.1 billion respectively. The surplus of foreign exchange settlement and sales by banks on behalf of clients amounted to USD24.9 billion. For the first two months of 2011, the cumulative amount of foreign exchange settlement and sales by banks on behalf of clients amounted to USD240.3 billion and USD147 billion respectively. The surplus of foreign exchange settlement and sales was USD93.3 billion. In February 2011, foreign-related receipts and payments of domestic banks on behalf of clients amounted to USD129.9 billion and USD120.6 billion respectively; and the surplus of foreign-related receipts and payments reached USD9.3 billion. For the first two months of 2011, the cumulative foreign-related receipts and payments of banks on behalf of clients amounted to USD316.6 billion and USD271.3 billion respectively; and the surplus of the cumulative foreign-related receipts and payments reached USD45.3 billion. 2011-04-13/en/2011/0413/991.html
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According to statistical data released by the State Administration of Foreign Exchange (SAFE), in March 2011 the amount of foreign exchange settlement and sales by banks on behalf of clients amounted to USD135.4 billion and USD94.5 billion respectively. The surplus of foreign exchange settlement and sales by banks on behalf of clients amounted to USD40.9 billion. For the first three months of 2011, the cumulative amount of foreign exchange settlement and foreign exchange sales by banks on behalf of clients amounted to USD375.7 billion and USD241.5 billion respectively. The surplus of foreign exchange settlement and sales was USD134.2 billion. During March 2011 foreign-related receipts and payments by domestic banks on behalf of clients amounted to USD188.4 billion and USD157.7 billion respectively, and the surplus of foreign-related receipts and payments reached USD30.7 billion. For the first three months of 2011, the cumulative foreign-related receipts and payments by banks on behalf of clients amounted to USD505 billion and USD429 billion respectively; and the surplus of the cumulative foreign-related receipts and payments reached USD76 billion. 2011-05-03/en/2011/0503/994.html