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According to statistical data released by the State Administration of Foreign Exchange (SAFE), in February 2012 the amount of foreign exchange settlement and sales by banks on behalf of clients amounted to USD114 billion and USD109.6 billion respectively. The surplus of foreign exchange settlement and sales amounted to USD4.4 billion. During the same period, the total amount involved in contracts for forward settlement of foreign exchange with banks on behalf of clients was USD16.5 billion, the total amount involved in contracts for forward sales of foreign exchange was USD10.7 billion, and the net forward exchange settlement was USD5.8 billion. For the first two months of 2012, the cumulative amount of foreign exchange settlement and sales by banks on behalf of clients amounted to USD237.6 billion and USD213.8 billion respectively. The surplus of foreign exchange settlement and sales was USD23.8 billion. During the same period, the cumulative amount in contracts for forward settlement of foreign exchange by banks on behalf of clients was USD27.6 billion, the cumulative amount in contracts for forward sales of foreign exchange was USD18.4 billion, and the cumulative net forward settlement of foreign exchange by banks on behalf of clients was USD9.2 billion. In February 2012, foreign-related receipts and payments of domestic banks on behalf of clients amounted to USD193.3 billion and USD179.6 billion respectively; and the surplus of foreign-related receipts and payments reached USD13.7 billion. For the first two months of 2012, the cumulative foreign-related receipts and payments of banks on behalf of clients amounted to USD376.5 billion and USD336.2 billion respectively, and the surplus of the cumulative foreign-related receipts and payments reached USD40.3 billion. Annex: Glossary and relevant definitions Balance of Payments refers to all economic transactions occurring between residents and non-residents in China , including all financial transactions and barter transactions resulting in changes in the assets and liabilities of residents and non-residents. Foreign Exchange Settlement and Sales by Banks refer to settlement and sales conducted by designated foreign exchange banks for their clients or for themselves, excluding data on inter-bank foreign exchange market transactions. Foreign exchange settlement and sales by banks on behalf of clients (including foreign exchange settlement and sales by the banks themselves) refer to those conducted by designated foreign exchange banks for their clients. The time of conversion between the RMB and the foreign currency is regarded as the time-point for the statistics on the foreign exchange settlement and sales by banks. Specifically, foreign exchange settlement refers to the sale of foreign exchange to designated foreign exchange banks by owners of foreign exchange; foreign exchange sales refer to the sale of foreign exchange by designated foreign exchange banks to users of foreign exchange. The difference between the foreign exchange settlement and sales is regarded as an offset balance. Such differences, which will be offset by the banks through transactions on the inter-bank foreign exchange market, function as a major force resulting in changes in the country’s foreign exchange reserves. However it is not equivalent to the net change in the foreign exchange reserves during the same period. The principle for transactions between residents and non-residents does not apply to the preparation of statistics on foreign exchange settlement and sales by banks on behalf of clients; such statistics only cover RMB and foreign currency transactions between banks and their clients, namely, exchange transactions between RMB and foreign currencies, which fall outside the category of the balance-of-payments statistics. Contracts for Forward Settlement and Sale of Foreign Exchange refer to contracts for forward settlement (sales) of foreign exchange executed between banks and their clients through consultation, in which the foreign currency, amount, exchange rate, and term for the forward settlement (sales) of foreign exchange are agreed upon; where the foreign exchange is due to be received (paid), the foreign exchange settlement (sales) is to be handled on the basis of the foreign currency, amount, and exchange rate specified in such contracts. The forward foreign exchange settlement and sales business enables enterprises to lock in the exchange rate in advance for future foreign exchange settlement or sales and to effectively avoid the risk of changes in the RMB exchange rate. In general, the banks will hedge the risk exposure arising from the forward foreign exchange settlement and sales business on the inter-bank foreign exchange market. For example, where the total amount involved in the contracts for forward settlement of foreign exchange executed by banks is more than that of the contracts for forward sales of foreign exchange, the banks will generally sell an equivalent amount of foreign exchange in advance on the inter-bank foreign exchange market, and vice versa. Therefore, the forward settlement and sales of foreign exchange business is also a factor that affects changes in China ’s foreign exchange reserves. Foreign-related Receipts and Payments by Banks on Behalf of Clients refer to receipts and payment occurring between domestic non-bank resident institutions/individuals (collectively referred to as the “non-bank sector”) and non-resident institutions/individuals through domestic banks, exclusive of receipts and payments in cash and foreign-related receipts and payments by the banks themselves. In particular, they include cross-border receipts and payments between non-bank sectors and non-residents through domestic banks (including RMB and foreign exchange), and domestic receipts and payments between non-bank sectors and non-residents through domestic banks (temporarily excluding receipts and payments in RMB between domestic individual residents and domestic non-resident individuals). Statistics are collected at the time the clients conduct the foreign-related receipts and payments at the domestic banks. Specifically, foreign-related receipts of banks on behalf of clients refer to funds collected by non-bank sectors from non-residents via domestic banks; external payments by banks on behalf of clients refer to funds paid by non-bank sectors to non-residents through domestic banks. Although the foreign-related receipts and payments of banks on behalf of clients are an integral part of the balance-of-payments statistics, the accounting method for the statistics, unlike the accrual basis of accounting required by the balance of payments statistics, is based on a cash basis. In addition, they merely reflect fund flows between non-bank sectors and non-residents, and do not include barter transactions and foreign transactions conducted by the banks themselves. The scope of the statistics on the foreign-related receipts and payments of banks on behalf of clients is smaller than the scope of the balance-of-payments statistics. 2012-05-15/en/2012/0515/1045.html
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According to statistical data released by the State Administration of Foreign Exchange (SAFE), in January 2012 the amount of foreign exchange settlement and sales by banks on behalf of clients amounted to USD123.6 billion and USD104.2 billion respectively. The surplus of foreign exchange settlement and sales by banks on behalf of clients amounted to USD19.4 billion. During the same period, the total amount involved in contracts for forward settlement of foreign exchange with banks was USD11.1 billion, the total amount involved in contracts for forward sales of foreign exchange was USD7.7 billion, and the difference was USD3.4 billion in terms of the amount of net foreign exchange settlement. In January 2012, foreign-related receipts and payments by domestic banks on behalf of clients amounted to USD183.2 billion and USD156.7 billion respectively, and the surplus of foreign-related receipts and payments reached USD26.5 billion. Annex: Glossary and relevant definitions The Balance of Payments refers to all economic transactions occurring between residents and non-residents in China , including all financial transactions and barter transactions resulting in changes in the assets and liabilities of residents and non-residents. Foreign exchange settlement and sales by banks refer to settlement and sales conducted by designated foreign exchange banks for their clients or for themselves, excluding data on transactions on the inter-bank foreign exchange market. Foreign exchange settlement and sales by banks on behalf of clients (including foreign exchange settlement and sales by banks) refer to settlement and sales by designated foreign exchange banks for their clients. The time of conversion between RMB and the foreign currency is regarded as the time-point for the statistics on the foreign exchange settlement and sales by banks, Specifically, foreign exchange settlement refers to the sale of foreign exchange to designated foreign exchange banks by owners of foreign exchange; foreign exchange sales refer to the sale of foreign exchange by designated foreign exchange banks to users of foreign exchange. The differences between foreign exchange settlement and sales are regarded as an offset balance. Such differences, which will be offset by the banks through transactions on the inter-bank foreign exchange market, function as a major factor resulting in changes in the country’s foreign exchange reserves. But they are not equivalent to the net change in foreign exchange reserves during the same period. The principle for transactions between residents and non-residents does not apply to the preparation of statistics on foreign exchange settlement and sales by banks on behalf of clients, and such statistics only cover transactions of RMB and the foreign currency between the banks and their clients, namely, exchange transactions between RMB and the foreign currency that fall outside the category of the balance-of-payments statistics. Contracts for forward settlement and sales of foreign exchange refer to the contracts for forward settlement (sales) of foreign exchange executed between the banks and their clients through consultation, in which the foreign currency, amount, exchange rate, and term for the forward settlement (sales) of foreign exchange are agreed upon; where the foreign exchange is to be received (paid), the foreign exchange settlement (sale) is to be handled on the basis of the amount of foreign currency and the exchange rate specified in such contracts. The forward foreign exchange settlement and sales business enables enterprises to lock into the exchange rate in advance for future foreign exchange settlement or sales and effectively avoid the risk of RMB exchange rate changes. Generally, banks will hedge the risk exposure arising from the forward foreign exchange settlement and sales business through the inter-bank foreign exchange market. For example, where the total amount involved in the contracts for forward settlement of foreign exchange executed by banks is more than that in the contracts for forward sales of foreign exchange, the banks will generally sell an equivalent amount of foreign exchange in advance on the inter-bank foreign exchange market, and vice versa. Therefore, the forward settlement and sales of foreign exchange business is also a factor that affects changes in the foreign exchange reserves in China . Foreign-related receipts and payments by banks on behalf of their clients refers to receipts and payments occurring between domestic non-bank resident institutions/individuals (collectively called the “non-bank sector”) and non-resident institutions/individuals through domestic banks, exclusive of the receipts and payments in cash and foreign-related receipts and payments by the banks themselves; in particular, cross-border receipts and payments between non-bank sectors and non-residents through domestic banks (including RMB and foreign exchange), and domestic receipts and payments between non-bank sectors and non-residents through domestic banks (temporarily excluding receipts and payments in RMB between domestic individual residents and domestic non-resident individuals). Statistics are collected at the time when the clients conduct the foreign-related receipts and payments at the domestic banks. Specifically, foreign-related receipts of banks on behalf of clients refer to funds collected by non-bank sectors from non-residents via domestic banks; external payments by banks on behalf of clients refer to funds paid by non-bank sectors to non-residents through domestic banks. Although the foreign-related receipts and payments of banks on behalf of clients are an integral part of the balance-of-payments statistics, the accounting method for the statistics, different from the accrual basis of accounting required by the balance-of- payments statistics, is based on a cash basis. In addition, it merely reflects fund flows between the non-bank sectors and non-residents and does not include barter transactions or foreign transactions conducted by the banks themselves. Furthermore, the scope of the statistics on foreign-related receipts and payments of banks on behalf of clients is smaller than the scope of the balance-of-payments statistics. 2012-04-16/en/2012/0416/1042.html
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As of the end of 2011, China ’s outstanding external debt (excluding that of Hong Kong SAR, Macao SAR, and Taiwan Province ) reached USD694.997 billion. Specifically, the outstanding registered external debt totaled USD445.797 billion and the balance of trade credit between enterprises totaled USD249.2 billion. Among the outstanding external debt, the outstanding medium- and long-term external debt (with the remaining term) was USD194.096 billion; the outstanding short-term external debt (with the remaining term) was USD500.901 billion. Specifically, trade credit between enterprises and bank trade financing accounted for 49.75 percent and 24.26 percent of the outstanding short-term external debt respectively. The two accounted for 74.01 percent of the outstanding short-term external debt (with the remaining term). The data are closely related to the rapid growth of China ’s foreign trade during recent years. The outstanding debt of Chinese-funded financial institutions was USD211.953 billion, accounting for 47.54 percent of the outstanding registered external debt; the outstanding debt of foreign-funded enterprises was USD136.36 billion, accounting for 30.59 percent; the outstanding debt of foreign-funded financial institutions was USD54.054 billion, accounting for 12.13 percent; the outstanding sovereign debt borrowed by ministries under the State Council, the outstanding debt of Chinese enterprises, and the outstanding debt of other institutions were USD37.371 billion, USD5.925 billion, and USD134 million respectively. In terms of outstanding registered external debt, USD debt accounted for 75.94 percent, JPY debt 8.06 percent, Euro debt 7.49 percent, and debt in other currencies 8.51 percent. In terms of outstanding registered long- and medium-term external debt (based on contractual terms), borrowed money invested in the manufacturing industry accounted for 25.20 percent, the transportation, storage, and postal industry 13.35 percent, the electric power, coal gas, and water production and supply industry 7.67 percent, the real estate industry 4.87 percent, and the information technology service industry 3.65 percent. In 2011 China newly borrowed USD44.447 billion as medium- and long-term external debt, repaid USD33.165 billion as the principal of long- and medium-term external debt, and paid USD2.275 billion in interest. Net inflows under the outstanding long- and medium-term external debt totaled USD9.007 billion, down 24.85 percent on a year-on-year basis. According to preliminary calculations, in 2011 China ’s external debt/GDP ratio was 9.52 percent, its external debt/export revenue ratio was 33.31 percent, and its debt servicing ratio was 1.72 percent. The ratio of short-term external debt to foreign exchange reserves was 15.75 percent. All of these indexes are within the safe range of international standards. Annex: Glossary and relevant definitions Trade Credit between Enterprises refers to the external liability arising from directly extending credit between the seller and buyer of goods, specifically transactions between residents in Mainland China and foreign non-residents (including non-residents in Hong Kong SAR, Macao SAR, and Taiwan province), i.e., the debt incurred due to the difference between the time of payment and the time of the ownership transfer of the goods. Trade credit between enterprises includes credit directly provided by the supplier (e.g., the overseas exporter) for commodity transactions and services, and advance payments made by buyers (e.g., overseas importers) for goods, services, and on-going business (or business to be undertaken). Bank Trade Financing refers to loans related to trade extended 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. Trade-related Credit is a broad concept. In addition to trade credit between enterprises, it also includes other kinds of credit provided for trade activities. According to the definition, trade-related credit consists of trade credit between enterprises, bank trade financing, short-term notes related to trade, and so forth. External Debt/GDP Ratio refers to the ratio of the external debt balance as of the end of the year to the Gross Domestic Product of the current year. At present, the internationally accepted safety line for the External Debt/GDP Ratio is 20 percent. External Debt/Export Revenue Ratio refers to the ratio of the external debt balance as of the end of the year to the export revenue for trade in goods and services of the current year, which is calculated on the basis of the statistical coverage of the balance of payments. At present, the internationally accepted safety line for the External Debt/Export Revenue Ratio is 100 percent. Debt Servicing Ratio refers to the ratio of the repayment amount of the external debt principal and interest (the sum of the repayment amount for the principal and interest of the long- and medium-term external debt principal and the payment amount of the interest for the short-term external debt) to the export revenue for trade in goods and services of the current year, which is calculated on the basis of the statistical coverage of the balance of payments. At present, the internationally accepted safety line for the Debt Servicing Ratio is 20 percent. Ratio of Short-term External Debt to Foreign Exchange Reserves refers to the ratio of the outstanding short-term external debt of the remaining term to the reserve amount of foreign exchange controlled by the monetary authority. At present, the internationally accepted safety line for the Ratio of Short-term External Debt to Foreign Exchange Reserves is 100 percent. 2012-05-15/en/2012/0515/1044.html
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The State Administration of Foreign Exchange (SAFE) recently held a briefing on foreign exchange inspections of financial institutions; the relevant persons-in-charge of 20 Chinese-funded banks, 9 foreign-funded banks, 3 insurance companies, and 2 finance companies attended the briefing. The briefing pointed out that in 2011 the foreign exchange authorities conscientiously implemented the decisions and arrangements of the CPC Central Committee and the State Council, firmly focused on the key channels for cross-border capital flows, i.e., financial institutions, specifically carried out multiple special inspections of foreign exchange businesses, rigorously cracked down on activities in violation of the foreign exchange laws and regulations, and guarded against the risks of unusual flows of foreign exchange funds. According to the results of the inspections, in terms of foreign exchange business, in general compliance was improving; however, there were still some financial institutions that emphasized business expansion but made light of lawful operations and carried out some irregular activities. The briefing circulated information on the irregular activities in the foreign exchange business of financial institutions, mainly including that some banks, in handling business of behalf of clients, failed to carry out their responsibility of conducting examinations of the authenticity of the business, handled foreign exchange settlement of capital and individual foreign exchange settlement and sales in violation of the regulations on foreign exchange administration, violated the provisions on the administration of foreign exchange accounts and external guarantees, and failed to handle the receipts and payments of funds under the current account and the capital account in accordance with the applicable provisions; that some banks, upon handling their own foreign exchange business, violated the provisions on foreign exchange administration in such areas as external debt, the synthetic positions concerning foreign exchange settlement and sales, market access and the filing of the foreign exchange business, and gold lending; that some non-bank financial institutions violated the provisions on foreign exchange administration in such areas as external debt, foreign exchange settlement and sales, external guarantees, foreign exchange accounts, and market access to foreign exchange business. In addition, there are some banks that maintained high foreign exchange loan-to-deposit ratios, whose off-balance sheet business innovations evaded supervision and whose domestic and overseas business, were coordinated to engage in arbitrage. The briefing mandating that financial institutions enhance macro awareness and awareness of the overall situation , conscientiously establish the idea of sound operations and scientific development, correctly deal with the relationship between self-interest and national interest, between short-term interest and long-term interest, between business development and lawful operations, and between internal management and external supervision, actively assume their social responsibilities, and strictly comply with the foreign exchange administration policies. The briefing stressed that in 2012 the foreign exchange authorities will, in accordance with the decisions and arrangements of the CPC Central Committee and the State Council, continue to earnestly perform their supervisory responsibilities, maintain the risk limits, further expand the scope of inspections of financial institutions, increase the frequency of the inspections, increase efforts to disclose information on irregular activities, guard against the risks of unusual flows of foreign exchange funds, and effectively safeguard the economic and financial security of China. 2012-05-15/en/2012/0515/1046.html
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We are an official institution under the State Administration of Foreign Exchange (SAFE), responsible for China ’s foreign exchange reserve management. We are now looking for high caliber professionals who share our commitment to “professional, responsible and international” asset management to join us. Our Culture Composed of young, qualified and motivated staff from diversified academic backgrounds of finance, economics, engineering, maths, computer science, languages and human resources etc., we embrace “Dedication, Discipline, Enterprise and Cooperation” as our core value and we attach utmost importance to the safety, liquidity, diversification and return of reserve assets under our management. We value human capital as the most important resources and offer competitive reward incentives. Vacancies Currently, we have the job vacancies in our asset allocation group (Strategist and Macro economist), external managers group (Alternative Assets Investment and Management) and risk management group (Market risk and Legal affairs), based in Beijing headquarter. Basic requirements 1. Masters or above degree from world renowned universities; 2. Relevant working experience with renowned financial institutions; 3. Good command of both Chinese and English as working language; 4. Computer proficiency; 5. Healthy; 6. Other criteria specific to the vacancies. Application procedures 1. Please visit the website of http://rmdhr.safe.gov.cn to submit your application. We ONLY receive the application through our website; 2. Application deadline: refer to the vacancy list; 3. Short-listed applicants will be invited to written test and interview after documentation screening; 4. New recruits will be required to sign Employment Contracts (with probation) in accordance with Chinese and local regulations. Contact Fax: 86-10-66213319 Email: HR@mail.rmd-safe.gov.cn (recommended) FILE: 2012 Experienced Professional Recruitment Program, Reserve Management Department, SAFE 2012-03-30/en/2012/0330/1041.html
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The State Administration of Foreign Exchange recently convened a conference to summarize the comprehensive work of foreign exchange administration in 2011 and to set forth the tasks for the comprehensive work of foreign exchange administration in 2012. The conference pointed out that in 2011 cadres and staff in the comprehensive work system of foreign exchange administration deeply implemented the scientific outlook on development, and in accordance with the requirements of the “Five Kinds of Transformation” of the concepts and methods of foreign exchange administration, focusing on the central tasks and serving the overall situation, continuously improved the level of policy research, strictly promoted law-based administration, reinforced publicity work, did a good job in internal management, and achieved new progress in all work. The conference concluded that in 2012, in confronting the face of the complicated and volatile economic and financial situations both at home and abroad, in terms of the comprehensive work of foreign exchange administration, the foreign exchange authorities should conscientiously implement the spirit of the Central Economic Work Conference and the National Financial Work Conference, and in accordance with the overall arrangements decided upon at in the National Foreign Exchange Administration Work Conference of 2012, adhere to the essential requirements of finance to serve the real economy and continuously deepen the reform of foreign exchange administration. The foreign exchange authorities should maintain the risk limits, keep a close eye on unusual cross-border capital flows, establish a system and mechanism guarding against the impact of bilateral flows of cross-border capital, actively promote work to realize the “Five Kinds of Transformation” of the concepts and methods of foreign exchange administration, further change the work style, improve the capability of the foreign exchange authorities in terms of comprehensive coordination, provide services and advice regarding the comprehensive work, and continuously improve the effectiveness of foreign exchange administration. The conference set the tasks for the comprehensive work of foreign exchange administration in 2012: first, the foreign exchange authorities should further strengthen forward-looking and relevant research on foreign exchange administration policies; second, the foreign exchange authorities should unswervingly deepen work on law-based administration and on putting the regulations in order; third, the foreign exchange authorities should continuously improve the transparency of foreign exchange administration policies, and; fourth, the foreign exchange authorities should effectively do a good job in all aspects of the basic work. 2012-04-16/en/2012/0416/1043.html
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Since the State Administration of Foreign Exchange (SAFE) expanded the pilot of the domestic and foreign currency exchange franchise business for individuals in November 2009, the number of franchise operation institutions (hereinafter referred to as “Franchised Institutions”) has steadily increased, the exchange service level has improved continuously, and the pilot work has achieved good results. In order to further regulate the continuous and sound development of the domestic and foreign currency exchange franchise business for individuals, the SAFE recently printed and distributed the Measures for the Administration of the Pilot on the Domestic and Foreign Currency Exchange Franchise Business for Individuals (HuiFa No.27 [2012], hereinafter referred to as the “Pilot Measures”) which came into effect as of May 1, 2012. The main contents of the pilot measures include: first, simplifying market access management, expanding the scope of the franchise business, improving the flexibility of the excess reserve adjustment, further reducing the operating costs of the Franchised Institutions, and increasing the capital earnings; second, encouraging chain businesses of Franchised Institutions to achieve economies of scale, and meanwhile, increasing the minimum registered capital requirement for Franchised Institutions operating within a single region to RMB 5 million, and for those Franchised Institutions operating nationwide to RMB 30 million; third, emphasizing risk control. The pilot measures further regulate over-the-counter business and excess reserve management of the franchised institutions, and establish a system to retain relevant data and vouchers for future reference. The pilot measures strengthen the regular monitoring system for capital operations of Franchised Institutions and the regular inspection system for business activities of Franchised Institutions, to supervise and encourage the Franchised Institutions to comply with regulatory operations. Implementation of the pilot measures facilitates market access and the day-to-day business of the Franchised Institutions under controllable risks, and provides them with space for future development. Furthermore, implementation of the pilot measures emphasizes ex-post data monitoring, increases efforts for ex-post regular on-site and off-site supervision, and promotes the sustainable development of the Franchised Institutions. 2012-05-15/en/2012/0515/1048.html
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The SAFE recently released China’s balance of payments statement for the fourth quarter and the year 2011, revised and released data on China’s Balance of Payments Statement for each quarter and the year 2010 according to the updates on the undistributed profits of foreign-funded enterprises for the year 2010, and so forth. In the fourth quarter of 2011 the current account posted a surplus whereas the capital and financial account posted a deficit. International reserves maintained a growing momentum. The surplus under the current account totaled USD60.5 billion. Specifically, according to the statistical coverage of the balance of payments, the surpluses in goods, income, and current transfers reached USD70.6 billion, USD2.7 billion, and USD2.3 billion, respectively, whereas the deficit in trade in services amounted to USD15.2 billion. Meanwhile, China ’s deficit under the capital and financial account totaled USD29 billion. In particular, net inflows of direct investments, portfolio investments, and net outflows of other investments amounted to USD49 billion, USD1.3 billion, and USD80.5 billion respectively. International reserves registered an increase of USD12.4 billion (exclusive of changes in the value of non-transaction factors such as exchange rates and prices). Specifically, foreign exchange reserve assets posted an increase of USD11.7 billion. For the year 2011, the surplus under the current account was USD201.7 billion and the surplus under the capital and financial account was USD221.1 billion, whereas international reserves registered an increase of USD387.8 billion. In addition, the BOP Analysis Team of the SAFE released China ’s Balance of Payments Report for 2011 in order to facilitate understanding among all groups in society about the data and analysis of China ’s balance of payments. 2012-05-15/en/2012/0515/1047.html
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An interview was recently conducted with a responsible person from the State Administration of Foreign Exchange (SAFE) on the revised Methods for Reporting the Balance of Payments Statistics (hereafter referred to as the Methods). 1. For what types of transactions does China require that the statistics on the balance of payments be reported? A: In principle, balance-of-payments (BOP) statistics are required for all economic transactions between Chinese and non-Chinese residents, and all financial assets and liabilities arising therefrom, settled in either RMB or foreign currency: “residents” refer to individuals and institutions; “non-Chinese residents” refer to overseas individuals and institutions. “Economic transactions” refer to all activities involving economic incomes and expenditures, including purchases and sales of commodities, provision and use of services, and donations and financial investments, thus emphasizing the capital flows as the relevant activities occur. “Financial assets and liabilities arising therefrom” refer to a creditor’s rights and debt obligations after the occurrence of financial investments, with an emphasis on capital stock. 2. Among non-Chinese residents, who is required to report the BOP statistics? Is this also required of overseas Chinese? A: According to the revised Methods, non-Chinese residents who engage in economic transactions with Chinese residents within the territory of China are required to report the BOP statistics. Currently, statistical data on the balance of payments regarding transactions between Chinese and non-Chinese residents are primarily collected from the Chinese residents. The SAFE does not require non-Chinese residents to report the BOP statistics. However, as these transactions continue to expand in size and type, it will become more difficult and more costly to collect data only from the Chinese residents and will be more difficult to effectively guarantee the quality of the data. Thus, the revised Methods include a reporting requirement for non-Chinese residents who engage in economic transactions within China. The SAFE will introduce specific requirements in this regard at an appropriate time based on the actual circumstances. As overseas Chinese have been residing outside of China for a long period of time and most of their economic interests are in other countries, they are deemed to be non-Chinese residents. When they engage in economic transactions with Chinese residents within China it is difficult to collect high-quality statistical data, thus they are required to carry out the reporting obligation. But they need not report the BOP statistics on all their economic transactions, including those carried out with other non-Chinese residents outside of China, as these transactions are beyond the scope of the statistics in China. 3. Through what channels should the BOPS be reported? A: Entities now report the BOP statistics to the SAFE primarily through two channels: (1) direct reporting. This applies to large (financial and non-financial) institutions that are required to make timely reports on their transactions with respect to bulk foreign-related goods, services, stocks and bonds investments, deposits, and loans and financial derivatives investments; (2) indirect reporting, or reporting through relevant intermediaries. This applies to small and medium enterprises (SMEs) and individuals. Such an approach is designed to reduce the burden of on reporting entities, given the characteristics of their foreign-related economic transactions. The relevant intermediaries include banks, insurance companies, securities and fund companies, and institutions engaging in securities registration and settlement as well as custody of funds. 4. What is the meaning of “foreign financial assets and liabilities”? A: According to the revised Methods, the statistical scope of the balance of payments is expanded to include foreign financial assets and liabilities of Chinese residents. Simply put, assets with corresponding creditors and debtors are financial assets, including stocks, bonds, financial derivatives, deposits, loans, trade credits, and other receivables and payables. These assets are financial assets for the creditors and liabilities for the debtors. In contrast, there are non-financial assets, or assets without corresponding debtors, such as machinery equipment, inventories, gems, and intangible assets. To better understand the operations of the reporting entities, the SAFE enumerated the concept in the Notice of the State Administration of Foreign Exchange on Issuing Statistical Systems for Foreign Financial Assets, Liabilities, and Trading (Huifa [2013] No.43). 5. After the revised Methods have been implemented, how will Chinese individuals report their foreign financial assets? A: During the recent years Chinese individuals have made foreign financial investments based primarily on the system for qualified domestic institutional investors (QDII). Data on the stock of financial assets generated from these investments are primarily collected through the QDII custodian banks. The SAFE currently does not require individuals to report their stock of foreign financial assets. But as China's economy develops rapidly, individuals will have a broader range of channels for making foreign financial investments, and financial assets will continue to expand in size. To improve the quality of the statistical data, the revised Methods begin by improving the relevant systems and clarifying the obligations of individuals within China in terms of reporting their foreign financial assets and liabilities. The rules for the new Methods will be introduced in detail in the future, focusing on supervising the major financial investments made by Chinese individuals and easing controls over minor investments, with the aim of reducing the reporting burdens. 6. What penalties will be imposed if entities fail to report the BOP statistics? A: According to the revised Methods, the SAFE, or its branches/sub-branches, will penalize institutions and individuals that fail to report the BOP statistics in accordance with Article 48 of the Regulations of the People’s Republic of China on Foreign Exchange Administration. Penalties include warnings by foreign exchange administration authorities issued to the violating institutions and to individuals and orders that they correct their violations; institutions will be fined by a maximum of RMB300,000 and individuals will be fined by a maximum of RMB50,000 . 7. How will the SAFE ensure the timeliness, accuracy, and integrity of the BOP statistical data that are reported? A: China has created a complete and effective administrative system for collecting the BOP statistics. Further, the SAFE will take the following measures to ensure the timeliness, accuracy, and integrity of the BOP statistical data that are reported after the revised Methods are implemented. First, further improving the relevant laws and regulations. With implementation of the new Methods, the SAFE will standardize the content of the data and the channels for collection of the BOP statistics in accordance with the implementation rules and normative documents and will clarify the reporting obligations and channels for the relevant institutions and individuals. The SAFE has recently revised the Statistical System for Foreign Financial Assets, Liabilities, and Trading in line with the statistical scope of the “foreign financial assets and liabilities” highlighted in the new Methods. It will continue to supplement and improve the standards and rules for statistical reporting in light of the development of foreign exchange business and statistical needs. Second, enhancing the building of a data acquisition system to make overall improvements in the quality of the statistical data. The SAFE will accelerate development of a data submission system that will be aligned with the revised Methods and will provide banks and other reporting entities with rapid-reporting access. This will help the SAFE to employ wide-scale IT applications in terms of data collection, summaries, and processing. Third, intensify training and verification efforts. The foreign exchange administration authorities at all levels will provide data- reporting institutions such as banks with regular business training to improve the professional expertise of those statisticians involved in balance-of-payments transactions. The authorities will also conduct off-site verifications of the BOP statistical data that has been reported, track the quality of the relevant data in a timely manner, and even conduct on-site verifications if necessary. 8. What is the purpose of the BOP statistical data? Will the new Methods play an active role in combating corruption, money laundering, and tax evasion? A: According to Article 16 of the new Methods, “The SAFE and its branches and sub-branches shall keep the reported data strictly confidential and shall use them only for BOP statistical efforts. Unless otherwise provided by law, BOPS statisticians shall not provide the reported data to any institutions and individuals in any form.” Thus, the reported data on the BOP statistics are primarily used by the SAFE for monitoring and analyzing the foreign exchange situation and cross-border capital flows, and for compiling foreign-related macro-economic statistical data, including balance-of-payments statements, the international investment position, and foreign-related receipts and payments through banks. Thus far, independent management systems and data sources have been created to combat corruption, money laundering, and tax evasion. Unless otherwise provided for by the law, the SAFE will not provide the reported statistical data on the BOP to the above administrative authorities. These authorities shall not combat or penalize illegal practices by using the above data. 9. With the implementation of the new Methods, more entities will be required to report the BOP statistics. Will this contravene those policies that have been designed to facilitate external investments? A: No, it will not. First, as we allow the market to play a decisive role in allocating resources so as to facilitate external investments, China will be exposed to growing external economic risks. Only by acquiring timely, accurate, and integrated BOP statistical data can the potential risks be effectively warded off, thereby creating conditions for a bi-directional opening-up of the capital market. Second, in the wake of the global financial crisis, the major economies have imposed more stringent statistical requirements on foreign-related transactions by expanding the scope of the statistics, increasing the statistical elements, and enhancing the timeliness of the statistics. Major economic organizations including the IMF have increased the statistical standards for foreign-related transactions. China has tightened its requirements on reporting the BOP statistics in accordance with international conventions. Third, with implementation of the new Methods, the SAFE will develop scientific rules to reduce the burdens on the reporting entities by optimizing the channels and simplifying the procedures, thus enabling the entities to engage in more efficient reporting. The SAFE will also disclose the relevant BOP statistical data in a timely manner, thus revealing the development of China's foreign-related economy, with the aim of providing data support to develop investment strategies and to mitigate risks. 2013-12-31/en/2013/1231/1098.html
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A recap meeting on carrying out the CPC's mass line campaign was recently held by the State Administration of Foreign Exchange (SAFE) to study the spirit of the speech delivered by General Secretary Xi Jinping at the CPC meeting for summarizing the first stage of the mass line campaign and for making plans for the second stage, and to sum up the SAFE's efforts in carrying out the campaign and to make plans for implementation of the "two programs and one plan," i.e., The Rectification and Implementation Program for Carrying Out the CPC's Mass Line Campaign by the Party Leadership Group of the NDRC, The Special Rectification Program for Carrying Out the CPC's Mass Line Campaign by the Party Leadership Group of the NDRC, and The Plan for Developing Systems for Carrying Out the CPC's Mass Line Campaign by the Party Leadership Group of the NDRC. Yi Gang, secretary and administrator of the Party Leadership Group and group leader of the Educational Practice Group, chaired the meeting and, on behalf of the SAFE Party Leadership Group, summed up the SAFE's efforts in implementing the campaign. The twenty-ninth Supervisory Team of the CPC's mass line campaign attended the meeting. Zhang Geng, head of the Supervisory Team, confirmed the achievements made by the SAFE in implementing the campaign and offered guidance on carrying out the spirit of Xi's speech and on further rectifying and carrying out the campaign. Also present were deputy administrators, heads of the discipline team, chief economists, chief accountants, and CPC members and officials, as well as heads of public institutions directly under the SAFE. It was agreed by the participants that Xi's profound speech is thought-provoking, relevant, and instructive, and is of significance for guiding the SAFE to sum up the mass line campaign. The meeting pointed out that under the guidance of the twenty-ninth Supervisory Team, CPC organizations at all levels, and CPC members of the SAFE, while focusing on building a progressive and clean government, have worked pragmatically for the people, have studied the CPC's mass line theories, have examined and corrected undesirable work styles, including formalism, bureaucracy, hedonism, and extravagance, have carried out rigorous criticisms and self-criticisms, and have worked hard to ensure verification and implementation, thus realizing obvious improvements in terms of awareness, reform and practice, and system building. As a result, CPC cadres and members have secured their ideals and beliefs, and their thinking and understanding have improved significantly. To be specific, the SAFE carried out “five shifts” in the concept and methodology of foreign exchange administration, straightened out the laws and regulations and streamlined administration, delegated power to lower levels more rigorously, deepened the results of the reform of the institutional mechanisms, and worked very hard to clean up undesirable work styles so as to achieve practical results. The meeting stressed that CPC organizations at all levels and CPC members of the SAFE must comply with the requirements of the twenty-ninth Supervisory Team of the CPC's mass line campaign to learn and implement the spirit of General Secretary Xi’s speech and align their thoughts and actions with the plans of the central government so as to perform their tasks well. Specifically, efforts should be made to improve the political life of the CPC by drawing on the valuable experiences of the first stage of the campaign, to clean up undesirable work styles as a long-term task, and to advance implementation of the "two programs and one plan" by focusing on verification and implementation and strengthening systemic construction, and especially rigorously combating formalism, bureaucracy, hedonism, and extravagance. As required by the meeting, all branches and sub-branches of the SAFE should participate in the second stage of the campaign under the leadership of the local branches of the People’s Bank of China. Drawing on the experiences of the first stage of the campaign, they are expected to improve their across-the-board capabilities to perform their tasks, enhance the cleaning up of undesirable work styles in the spirit of reform and innovation, and gather strength from the results of correcting undesirable work styles for deepening the reforms in an all-round way and with the aim of driving foreign exchange administration to a new high. 2014-01-24/en/2014/0124/1104.html