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The State Administration of Foreign Exchange (SAFE) has recently disseminated the preliminary data in the Balance of Payments for the first quarter of 2018, and its press spokesperson answered media questions on relevant issues. Q: Could you brief us on the new characteristics of the balance of payments for the first quarter of 2018? A: The preliminary data in the Balance of Payments for the first quarter show that the current account was in deficit, the financial account (excluding reserve assets) (including net errors and omissions for the quarter, the same below) was in surplus, and reserve assets rose, with the main new characteristics as follows: First, the deficit in the current account was caused by seasonal factors and rapid increase in import of goods. In the first quarter, the current account recorded a deficit of USD 28.2 billion, with a surplus of USD 53.4 billion under trade in goods in the Balance of Payments, down by 35% year on year. To be specific, export of goods was USD 529.6 billion, up by 11% year on year, and import of goods was USD 476.2 billion, up by 21% year on year. The import growth outpaced the export growth, further balancing trade in goods. Moreover, as Chinese people are on holidays at the beginning of the year, the balance of trade in goods for the first quarter is usually at the low level of the year. It is expected that the receipt and payment under the current account will remain in a reasonable range throughout the year. Second, the financial account excluding reserve assets was in surplus, featuring net cross-border capital inflows. In the first quarter of 2018, the financial account excluding reserve assets registered a surplus of USD 54.5 billion, and cross-border capital recorded net inflows, which has been so since the second quarter of 2017. Third, FDI rose rapidly, suggesting overseas investors are optimistic about China's economic prospects. In the first quarter, China posted USD 50.2 billion in net inflows of direct investment, which was three times higher than that in the same period last year. For composition, ODI recorded net outflows of USD 18.1 billion, down by 12% year on year; and FDI registered net inflows of USD 68.2 billion, 1.1 times higher than that in the same period last year. Fourth, reserve assets continued to increase, resulting in an adaptive equilibrium in the balance of payments. In the first quarter, China's reserve assets rose by USD 26.2 billion due to BOP transactions (excluding non-transaction factors like foreign exchange rate and price). Specifically, foreign exchange reserves went up by USD 26.6 billion, compared with a decrease of USD 2.5 billion in the same period last year. Overall, China's balance of payments maintained a basic equilibrium in the first quarter, with cross-border capital continuing with net inflows, and reserve assets rising stably, indicating a solid foundation for the overall equilibrium in the balance of payments in the future. 2018-05-04/en/2018/0612/1437.html
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The State Administration of Foreign Exchange (SAFE) has recently disseminated China's external debt data as at the end of March 2018, and an official from the SAFE answered media questions on recent situations of China's external debt. Q: Could you brief us on China's external debt for the first quarter of 2018? A: China's external debt continued rising in the first quarter of 2018. As at the end of March 2018, China's full-scale outstanding external debt registered USD 1.8435 trillion (in both domestic and foreign currencies), up by USD 132.9 billion or 7.8% quarter on quarter, primarily driven by the increases in currencies and deposits as well as debt securities. To be specific, the increases in currencies and deposits contributed 36% of the growth in total external debt, owing to the increased deposits of foreign non-resident institutions and individuals in domestic banks; the rise in debt securities accounted for 34% of the growth in total external debt, attributable to the strong interest of foreign non-resident institutions in investing in China's bond market. Q: What would you say about China's foreign debt situations? A: Overall, the rise in China's foreign external debt mirrored China's economic growth and wider opening up. First, China's economy got off to a good start in the first quarter. Its GDP grew by 6.8% year on year and foreign trade, 9.4% year on year, indicating the quality and benefits of China's economic growth have been improving, thus laying a foundation for the continued increase in its external debt. Second, as the domestic bond market has been further liberalized, coupled with the good performance of China's bond market in the year to date, foreign institutional investors have become enthusiastic for buying more RMB bonds in the Chinese market, and nearly 80% of them invested in medium and long-term bonds. As a result, the share of debt securities in full-scale external debt rose from 8% at the end of 2014 to 21% at the end of March, which has become the new growth driver of China's external debt, and also shows foreign investors' solid confidence in China's economy. Next, the SAFE will keep a keen eye on the changes in domestic and international conditions, improve the external debt and capital flow management system under the macro-prudential management framework. While boosting the facilitation of cross-border investments and financing, the SAFE will strengthen ongoing and ex-post monitoring and analysis to guard against the risks arising from unusual cross-border capital flows and safeguard China's economic and financial security. 2018-06-29/en/2018/0709/1445.html
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Q: The latest data on foreign exchange reserves disseminated by the People's Bank of China show that China's foreign exchange reserves by the end of April 2018 fell by USD 18 billion month on month. Could you tell us why? What will be the trends in the future? A: As at the end of April 2018, China registered USD 3.1249 trillion in foreign exchange reserves, down by USD 18 billion or 0.57% month on month. In April, China's cross-border capital flows remained stable and the supply and demand in the foreign exchange market maintained an equilibrium. Under the combined impact of an increase of more than 2% in the US Dollar Index on the international financial markets, the depreciation of major non-USD currencies against the USD and callback of asset prices, China's foreign exchange reserves declined slightly. Since the beginning of this year, China's economic performance has got off to a good start, with transformation and upgrading deepened and quality and benefit rising. The RMB exchange rate against the USD fluctuated in two ways and stayed stable, expectations of the foreign exchange rate rationally diverged, and the supply and demand of foreign exchange found an adaptive equilibrium. Looking ahead, China's economy will be well positioned for stable development with a strong momentum for growth. As the new landscape of opening up is advanced and the financial market is liberalized in two directions, China's cross-border capital will keep overall balance between inflows and outflows. At the same time, despite uncertainties, the world economy will continue to recover. As both domestic and overseas factors play their roles, China's foreign exchange reserves are expected to remain stable on the whole. 2018-05-07/en/2018/0612/1438.html
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FILE: Template on International Reserves аnd Foreign Currency Liquidity (as at Jan 31 2017).xls 2017-02-28/en/2018/0626/1441.html
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Q: The latest foreign exchange reserves data disseminated by the People's Bank of China show that China's foreign exchange reserves for May dropped by USD 14.2 billion month on month. Could you tell us why? What will be the future trends of foreign exchange reserves? A: As at the end of May 2018, China's foreign exchange reserves recorded USD 3.1106 trillion, down by USD 14.2 billion or 0.46% month on month. China's foreign exchange market performed stably in May. The US Dollar Index in global financial markets picked up by 2.3%, because non-USD currencies declined against the US dollars, but asset prices rose. As a result, China's foreign exchange reserves fell slightly. In the year to date, China's economy has gained momentum for growth. To be specific, production demand rose steadily, employment and prices remained stable, economic structure was optimized and upgraded, and quality benefits were improved. The foreign exchange supply and demand has remained balanced, and cross-border capital flows of market participants have found an equilibrium. Looking ahead, China's economy will be fully able and sophisticated to maintain stability with a strong momentum for growth. On that basis, China's foreign exchange market will adapt better to changes in external environment and continue the landscape of rational and balanced cross-border capital flows. On the other hand, as the global economy continues to recover, economies' growth will be diverged, indicating the financial market will still be faced with uncertainties. Under such factors at home and abroad, China's foreign exchange reserves are expected to stay stable. 2018-06-07/en/2018/0613/1440.html
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The branches and foreign exchange administration departments of the State Administration of Foreign Exchange (SAFE) in all provinces, autonomous regions, and municipalities directly under the Central Government, and the SAFE branches in Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo, the insurance group (holding) companies, the insurance companies, the insurance asset management companies and the designated China-funded foreign exchange banks: To further drive efforts of streamlining administration and delegating power to lower levels, improve the foreign exchange administration of insurance business, and guard against financial risks, the relevant issues with regard to the foreign exchange administration of insurance business are hereby notified as follows: I. An insurance company may handle the settlement of foreign exchange capital and funds raised through overseas IPO with a financial institution engaging in foreign exchange business (“financial institution”) according to the actual operating requirements. (I) Insurance companies are required to report the current year plan and previous year results of their foreign exchange settlement to the local SAFE branch or foreign exchange administrative department (“the local SAFE branch”) by the end of January each year, and submit the following documents: 1. Description of business operations, including, but not limited to, source of foreign exchange capital, amount and purpose of foreign exchange settlement, mismatch between assets in domestic and foreign currencies, and utilization of funds settled during the previous year; 2. Relevant supporting documents. Any foreign exchange settlement exceeding the reported plan and single transaction exceeding USD 50 million (inclusive) shall be reported by the insurance company concerned to the local SAFE branch in advance. (II) Financial institutions shall abide by the principles of “knowing your customer”, “knowing your business” and “due diligence” to examine the authenticity of documents for foreign exchange settlement, including: 1. foreign exchange settlement application, including, but not limited to, source of foreign exchange funds, amount and purpose of foreign exchange settlement; 2. plan for utilizing funds with foreign exchange settled and the supporting materials; 3. the audited balance sheets and income statements in RMB and foreign currency for the previous year; or the balance sheet and income statement for the recent period from an insurance company established for less than one year; or the balance sheet and income statement disclosed for the most recent period from a listed insurance company which has not disclosed its balance sheet and income statement for the previous year. (III) The RMB funds settled shall be used for purposes meeting the requirements prescribed by the insurance authority and the SAFE, such as setup of new branch office, daily operating expense, payment for domestic equity investment and RMB deposit margin. II. After completing relevant business filing with competent insurance authorities, the insurance agents and brokers can transfer the funds for insurance-related collection and payment for clients in the original currency through their foreign exchange accounts under the current account, with indemnities eligible for settlement or purchase of foreign exchange. (I) Insurance agents and brokers shall report to the local SAFE branch their current year plan for insurance-related foreign exchange collection and payment for clients by the end of January each year, and the business operations for the last quarter within the first 5 working days of each quarter, and submit the following documents: 1. Description of business operations, including, but not limited to, foreign exchange collection and payment for clients under insurance , list of overseas insurance partners, amount of foreign exchange collection and payment; and for settlement or purchase of foreign exchange for indemnities, the description should also include basic information on the settlement or purchase of foreign exchange for indemnities, amount of insurance indemnities and the corresponding amount of foreign exchange collection and payment, amount of foreign exchange settlement or purchase; 2. Relevant supporting documents. Any foreign exchange settlement or purchase exceeding the reported plan and single transaction exceeding USD 50 million (inclusive) shall be reported by the insurance agent or broker concerned to the local SAFE branch in advance. (II) When insurance agents and brokers conduct foreign exchange settlement of indemnities under insurance-related collection and payment for clients, the funds settled shall be transferred directly to the account of the recipient; for indemnities funds paid for clients to the account of the recipient, the funds settled can be retained by the insurance agents and brokers. Financial institutions shall examine the authenticity of foreign exchange settlement, and relevant materials include: 1. Description of business operations, including, but not limited to, reason for foreign exchange settlement, name of recipient of indemnities, opening bank account number; 2. Letter of proxy for foreign exchange settlement written by the recipient; 3. Plan for foreign exchange collection and payment for clients under insurance; 4. Other supporting documents required by financial institutions. Where insurance agents and brokers conduct foreign exchange purchase for indemnities under insurance-related collection and payment for clients, financial institutions shall examine the authenticity of the transaction. III. Insurance companies and their branches which have serious violations of laws and regulations and have received administrative penalties by the competent insurance authorities or the SAFE within the last three years are not eligible to apply for foreign exchange insurance business. IV. Insurance companies and their branches in any of the following circumstances, and insurance agents or brokers and their branches in the circumstance set out in this Paragraph (III) shall report to the local SAFE branch and submit an explanation letter within 20 working days since the case occurred or was found out. The local SAFE branch may request, where appropriate, the insurance companies, insurance agents or brokers and their branches to rectify, and acceptance of new foreign exchange insurance business shall be suspended during the period of rectification. (I) No foreign exchange insurance business has been undertaken for two consecutive years after the business license is issued; (II) Take-over announcement by the insurance authority has been received or there exist significant potential risks; (III) Having committed serious violations of laws and regulations and having received administrative penalties by the insurance authority or the SAFE. V. To ensure the compliance of cross-border collection and payment, domestic transfer, settlement and sales of foreign exchange conducted by insurance companies, insurance agents and brokers and their branches, the local SAFE branch shall perform supervision and management on the transactions, and conduct verification and inspection according to the law. VI. Where cross-border collection and payment, domestic transfer, settlement and sales of foreign exchange conducted by financial institutions, insurance companies, insurance agents and brokers and their branches violate relevant provisions in this Circular, the foreign exchange authorities shall impose punishment according to the Regulations of the People’s Republic of China on Foreign Exchange Administration and other regulations. VII. For the purpose of the Circular, an insurance company refers to the commercial insurance company or policy insurance company which is established and duly registered with the approval from the competent authority in the insurance industry. This Circular also applies to insurance group (holding) companies and insurance asset management companies. VIII. This Circular shall come into force as of July 1, 2019. Insurance group (holding) companies, insurance companies, insurance asset management companies, insurance agents and brokers shall report to the local SAFE branches their plans for settlement of foreign exchange capital and foreign exchange funds raised through overseas IPO, or foreign exchange collection and payment for clients under insurance for the second half of 2019 before June 30, 2019. Article 34 in the Circular of the State Administration of Foreign Exchange on Printing and Issuing Guidelines for Foreign Exchange Administration for Insurance Business (Huifa No. 6 [2015]) shall be rescinded at the same time; where there is inconsistency between the original Article 4 and 30 and this Circular, this Circular shall prevail. This Circular shall prevail in case of inconsistencies between other relevant regulations and this Circular. Upon receipt of this Circular, the SAFE branches and foreign exchange administrative departments should immediately forward it to the central sub-branches, sub-branches, local commercial banks, and foreign banks within their respective jurisdiction. Upon receiving this Circular, the insurance companies and the designated China-funded foreign exchange banks should promptly forward it to their branches. If you have any questions during the execution of these documents, please promptly contact the Current Account Management Department of the SAFE. Please follow the Circular in your implementation. The State Administration of Foreign Exchange May 31, 2019 2019-06-05/en/2019/0605/1520.html
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The State Administration of Foreign Exchange (SAFE) has recently issued the Circular on Further Facilitating Insurance Companies in Settlement of Foreign Exchange Capital (Huifa No. 17 [2019], hereinafter referred to as Circular). The official of the SAFE has answered press questions on relevant issues. 1. Could you brief us on the background of the Circular? A: In recent years, the SAFE has been actively serving China's new pattern of all-round opening-up, deepening reform and opening up in foreign exchange, driving the reform of "delegation, administration and service”, and constantly improving the capacity and level of foreign exchange administration to serve the real economy. In March 2015, reform on insurance-related foreign exchange administration was carried out to streamline business application materials and approval procedures, and improve the efficiency of foreign exchange insurance business. With the constant expansion of opening-up and the development of financial marketization, insurance companies have raised new demands for fund facilitation of foreign exchange insurance business. On the basis of fully investigating the demands of market entities and soliciting opinions from various parties, the SAFE has further promoted administration streamlining and power delegation, improved foreign exchange administration of insurance business, made research and issued the Circular. II. What are the main contents of the Circular? A: The Circular adheres to the "principle of actual demand", cancels the approval procedure for settlement of foreign exchange capital of insurance companies, improves the fund use efficiency of insurance companies, clarifies that financial institutions operating foreign exchange business (“financial institutions”) should conduct authenticity examination of business in accordance with the "three principles of business development", and standardizes the management of foreign exchange insurance business. The main contents include: The first is to cancel the approval procedure for settlement of foreign exchange capital of insurance companies and implement the discretionary foreign exchange settlement system. An insurance company may, according to actual operating requirements, handle the settlement of foreign exchange capital and funds raised through overseas IPO with a financial institution so as to improve the fund utilization efficiency of the insurance company. The second is to allow insurance intermediaries to conduct foreign exchange settlement or purchase of indemnities under insurance-related collection and payment for clients. Financial institutions shall examine the authenticity of foreign exchange settlement or purchase. The insurance agencies and insurance brokers that meet the requirements of the competent insurance authorities may directly handle foreign exchange settlement of indemnity funds under the insurance-related collection and payment for clients with a financial institution provided that the recipient of indemnities presents a power of attorney for foreign exchange settlement, so as to improve the payout efficiency with RMB for cross-border insurance-related collection and payment for clients. The third is to improve the ongoing and ex-post regulation of insurance-related foreign exchange business. The business compliance requirements of insurance institutions such as negative issues report shall be refined to ensure the healthy development of foreign exchange insurance business. III. What is the main consideration that allows insurance intermediaries to conduct foreign exchange settlement for indemnity funds under collection and payment for clients? A: With the constant expansion of opening-up and the development of financial marketization, in the efforts of serving the Belt and Road construction, more and more insurance intermediaries, especially insurance agencies and insurance brokers, are going global to serve cross-border insurance business. In the survey of market entities, some insurance intermediaries reflect the problem in RMB payout efficiency of cross-border insurance-related collection and payment service for clients. For example, due to the sudden occurrence of maritime and marine travel business, if the insurance intermediaries are not allowed to conduct exchange settlement of indemnity funds under the insurance-related collection and payment for clients, they will not be able to directly pay RMB to the policyholders, thus affecting the timeliness of relief efforts. The relaxing of the requirement for settlement of indemnity funds under collection and payment for clients by insurance intermediaries can effectively solve this problem and better serve the Belt and Road construction. IV. What contents shall be included in the independent report of negative issues of insurance institutions according to the Circular? A: The Circular adds a new management mode for insurance institutions to actively report negative issues. The reported items of insurance companies include: no foreign exchange insurance business undertaken for two consecutive years after obtaining the license to operate foreign exchange insurance business, being taken over by the insurance regulatory authorities, committing serious violation of laws and regulations and receiving administrative penalties. The reported items of insurance agencies and brokers include having committed serious violations of laws and regulations and having received administrative penalties. Local SAFE branches may require insurance institutions, if needed, to make rectification in order to effectively guard against financial risks. 2019-06-05/en/2019/0605/1522.html
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The branches and foreign exchange administration departments of the State Administration of Foreign Exchange (SAFE) in all provinces, autonomous regions, and municipalities directly under the Central Government, the branches in Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo, and all designated Chinese-funded foreign exchange banks, In order to facilitate the settlement of cross-border e-commerce, promote the healthy development of foreign exchange business of payment institutions and prevent risks from foreign exchange payment, the SAFE formulated the Measures for the Administration of Foreign Exchange Business of Payment Institutions (“the Measures”, please see the Appendix) based on summarizing the pilot experience of cross-border foreign exchange payment business of payment institutions. Relevant issues are notified as follows: I. Payment institutions that participated in the pilot program on cross-border foreign exchange payment business before the implementation of the Measures shall, within three months from the implementation date of the Measures, conduct directory registration with the branches and foreign exchange administration departments of the SAFE (“the SAFE branches”) at the place of registration in line with the requirements of the Measures. II. Banks may, with reference to Article 12 of the Measures, apply to provide settlement and sales of foreign exchange and relevant fund receipt and payment services to cross-border e-commerce operators and consumers who purchase goods or services by presenting electronic transaction information, provided that the banks meet the requirements on transaction information collection and authenticity verification. III. In order to ensure the smooth transition of pilot business of payment institutions on cross-border foreign exchange payment, each SAFE branch shall accurately convey the policy requirements to the payment institutions within its jurisdiction, make scientific deployment of personnel and properly perform all kinds of work for implementation of the Measures. IV. This Circular shall come into force as of the date of promulgation. In case of any inconsistency between the previous provisions and this Circular, this Circular shall prevail. The Circular of the State Administration of Foreign Exchange on the Implementation of the Pilot Program of Cross-border Foreign Exchange Payment Business through Payment Institutions (Huifa No.7 [2015]) will be abolished. Upon receipt of this Circular, the SAFE branches should immediately forward it to the central sub-branches (sub-branches), local commercial banks, and foreign banks within their respective jurisdiction, and all designated Chinese-funded foreign exchange banks should promptly forward it to their branches. Appendix: Measures for the Administration of Foreign Exchange Business of Payment Institutions State Administration of Foreign Exchange April 29, 2019 2019-04-29/en/2019/0429/1525.html
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The People's Bank of China, the Ministry of Public Security of the PRC and the State Administration of Foreign Exchange issued the following reminder: Recently, some online platforms have been illegally engaged in foreign exchange margin transactions (also called foreign exchange security deposit, generally referring to such circumstance where customers invest in a certain amount of funds as deposit and conduct foreign exchange transactions within expanded investment amount at a certain leverage multiple), which has severely disrupted the financial order, resulted in property loss of the social public, causing adverse impacts and engendering serious potential risks: I. So far, the People's Bank of China, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission as well as the State Administration of Foreign Exchange and its branches haven't approved any institution to engage in foreign exchange margin business either directly or on an agency basis. II. In accordance with the Circular on Sternly Investigating and Punishing Illegal Foreign Exchange Futures Transactions and Foreign Exchange Margin Trading Activities (Zhengjianfazi No. 165 [1994]), any unauthorized transaction of foreign exchange margin by an unapproved institution is illegal; it is also an offence for a client (organization or individual) to entrust an unapproved institution to conduct foreign exchange margin transactions (whether in foreign currency or renminbi as security deposit). III. The public should be fully aware of the risks involved in foreign exchange margin activities, improve risk prevention awareness and ability, and guard against property losses caused by illegal transactions. IV. The general public should actively report to the relevant authorities if they find clues of illegal and criminal activities. 2018-09-14/en/2018/0914/1530.html
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To implement the spirit of the 19th National Congress of the CPC, further promote the reform of “delegation, administration and service” and drive the healthy development of foreign exchange insurance market, the State Administration of Foreign Exchange (SAFE) recently issued the Circular on Further Facilitating Insurance Companies in Settlement of Foreign Exchange Capital (Huifa No. 17 [2019], “the Circular”), in a bid to promote the facilitation of the exchange of insurance-related foreign exchange funds. The Circular mainly contains the following contents. The first is to cancel the approval for settlement of foreign exchange capital of insurance companies and implement the discretionary foreign exchange settlement system. An insurance company may handle the settlement of foreign exchange capital and funds raised through overseas IPO with a financial institution engaging in foreign exchange business (“financial institution”) according to the actual operating requirements. The second is to allow insurance intermediaries to conduct foreign exchange settlement or purchase for indemnities under insurance-related collection and payments for clients. Financial institutions shall examine the authenticity of foreign exchange settlement or purchase. The insurance agencies and insurance brokers that meet the requirements of the competent insurance authorities may directly handle foreign exchange settlement of indemnities under the insurance-related collection and payment for clients with a financial institution provided that the recipient of indemnities presents a power of attorney for foreign exchange settlement. The third is to improve the ongoing and ex-post regulation of foreign exchange insurance business. Business compliance requirements for insurance institutions such as reporting on negative issues shall be refined. The Circular will come into force on July 1, 2019. 2019-06-05/en/2019/0605/1521.html