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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 in Shenzhen, Dalian , Qingdao , Xiamen , and Ningbo ; and all designated Chinese-funded foreign exchange banks: In order to expedite the reform of the verification and writing-off system for imports and exports and to achieve the transformation of foreign exchange administration for trade in goods from the current model to aggregate verification, off-site verification, and subject-based supervision, on May 1, 2010 the State Administration of Foreign Exchange (SAFE) launched a program for pilot implementation of the reform of the verification and writing-off system for foreign exchange payments for imports for trade in goods (hereinafter referred to as import verification reform) in seven regions, i.e., Tianjin, Jiangsu, Shandong, Hubei, Inner Mongolia, Fujian, and Qingdao. Based on the results, the SAFE has decided to promote implementation of the import verification reform throughout the country. The relevant issues concerning the reform are hereby notified as follows: 1. The import verification reform aims to promote the facilitation of trade, reduce operating costs for enterprises and banks, and meet the new requirements for foreign trade by transforming the methods and approaches for foreign exchange administration. It is based on authenticity principles and the human-oriented concepts. Efforts will be made to effectively check cross-border capital flows in violation of the laws and regulations by comprehensively looking at and comparing all the information available about cash and goods flows of enterprises and by enhancing constant and dynamic monitoring and analysis. To fulfill this goal, the foreign exchange authorities will collect complete information about foreign exchange payments for imports and the delivery of goods by enterprises and will carry out off-site aggregate comparisons on the strength of the information system, based on which the foreign exchange payments of enterprises for imports will be monitored and analyzed through off-site monitoring and a early-warning mechanism and abnormal conduct will be identified in a timely manner. Based on the information from the off-site monitoring, early warning, and on-site verification, efforts will be made to evaluate and categorize the enterprises. The basic idea of the reform is to achieve a transformation from case-by-case verification to aggregate verification for the administration of foreign exchange payments for imports, from on-site verification to off-site inspection, and from behavioral examination to subject supervision. 2. The Interim Measures for the Administration of Foreign Exchange Payments for the Import of Goods and its detailed rules for implementation (hereinafter referred to as the Interim Measures,see Appendices 1 & 2) shall enter into effect as of December 1, 2010. As of the date of implementation of the Interim Measures, import enterprises shall make foreign exchange payments for imports in compliance with the Interim Measures. The banks will handle foreign exchange payments for import enterprises in compliance with the Interim Measures. 3. The banks shall complete connection of the verification system for the collection and payment of foreign exchange under trade (hereinafter referred to as the verification system) to their business systems and the relevant configurations before November 30, 2010, and shall search the directory of the import enterprises, registration forms for foreign exchange payments for imports, grades for classified evaluation, and so on through the verification system as of the date when the Interim Measures are implemented. 4. The import verification reform is of great significance for promoting the facilitation of trade. The branches of the SAFE, in attaching great importance to the reform, will make the overall work arrangements and endeavor to fulfill the following tasks: 1) Unify awareness of the significance of the reform and play an active role in organizing and leading the reform. All branches shall fully understand the great significance of the import verification reform, form a reform leading group headed by a relevant director to lead and oversee the progress of the reform in their respective jurisdictions, and coordinate with the relevant departments to provide strong support for the reform. Work teams consisting of business and technical staff shall be formed under the reform leading group to be responsible for implementation of the reform and for dissemination and interpretation of the policies, providing business and technical support, feedback, and so forth within their jurisdictions. 2) Implement aggregate verification, dynamic monitoring, and classified administration to improve the effectiveness of the supervision by complying with the relevant provisions of the Interim Measures. 3) Strengthen publicity and training. By complying with the overall planning of the SAFE, the branches shall fulfill their duties to disseminate and interpret the policies through various methods and shall guide and urge banks and import enterprises in immediately comprehending the general idea of the reform and the purposes of the relevant policies. The branches shall provide training of various forms to functionaries of the foreign exchange authorities, banks, and import enterprises within their jurisdictions in an effort to facilitate their comprehension of business operations under the new policies and to ensure the effective implementation of the reform measures. 4) Provide strong technical support for the installation and commissioning of the software for the verification system used in enterprises and banks within their jurisdiction. 5) Report information about implementation of the import verification reform to the SAFE on a monthly basis. 5. Emergency measures In the event that the verification system malfunctions temporarily due to data-input failures and so forth, the branches shall promptly report the circumstance to the import verification reform office of the SAFE for resolution and shall record the relevant problems. During this period, the foreign exchange authorities shall create a ledger for the import payments for which they are responsible and accordingly shall make a business record. 6. Logging on to the verification system Address of the verification system (foreign exchange authority version) http://100.1.63.3:9001/SafeChk/; Address of the verification system (bank version): http://asone.safe:9101/asone/; Address of the verification system (corporate version): http://asone.safesvc.gov.cn/asone. Contact information for the import verification reform office of the SAFE: Tel.: 010-68402546 010-68402547 Fax: 010-68402594 E-mail addresses: (Intranet) tradebus@mail.safe tradetech@mail.safe (Extranet) tradebus@mail.safe.gov.cn tradetech@mail.safe.gov.cn All branches (foreign exchange administration departments) of the SAFE shall, as of the date of promulgation of this Circular, make preparations for the relevant work and shall forward this Circular to the central sub-branches (sub-branches), banks, and import enterprises within their jurisdictions as quickly as possible. affix1:Interim Measures for the Administration of Foreign Exchange Payments for the Import of Goods affix2:Detailed Rules for Implementation of the Interim Measures for the Administration of Foreign Exchange Payments for the Import of Goods 2010-10-27/en/2010/1027/711.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 in Shenzhen, Dalian , Qingdao , Xiamen , and Ningbo ; and all designated Chinese-funded foreign exchange banks: To promote the development of e-banking and online banking, to facilitate the handling of foreign exchange settlement and sales for individuals by designated foreign exchange banks (hereinafter referred to as the banks), and to regularize the administration of e-bank-based foreign exchange settlement and sales for individuals, the State Administration of Foreign Exchange (hereinafter referred to as the SAFE) has formulated the Interim Measures for the Administration of E-bank-based Foreign Exchange Settlement and Sales for Individuals (hereinafter referred to as the Interim Measures,see the Annex for details). Relevant issues concerning the Interim Measures are hereby notified as follows: 1. Banks shall commence e-bank-based foreign exchange settlement and sales for individuals in strict compliance with the Interim Measures. Banks that commence E-bank-based foreign exchange settlement for overseas individuals must have the technical capability to automatically extract information on the identity of the overseas individuals and to input the above information into the information system for the administration of foreign exchange settlement and sales for individuals in the form of Country Code + ID Card No.Banks that lack this technical ability can first commence foreign exchange settlement and sales for domestic individuals, and then file an application with the SAFE for the commencement of foreign exchange settlement and sales for overseas individuals when they are technically capable of providing such services. 2. Banks shall commence e-bank-based foreign exchange settlement and sales in strict compliance with the Circular of the State Administration of Foreign Exchange on Further Improving the Administration of Foreign Exchange Settlement and Sales for Individuals (Hui Fa [2009] No.56), so as to achieve unified management over foreign exchange settlement and sales by splitting large amounts of money into smaller parts through counters and e-channels. The branches and foreign exchange administration departments of the SAFE shall, upon receipt of this Circular, forward it immediately to the sub-branches, urban commercial banks, rural commercial banks, and foreign-funded banks within their jurisdictions. The designated Chinese-funded foreign exchange banks shall, upon receipt of this Circular, forward it immediately to their branches. If there are any problems arising from implementation of this Circular, please provide feedback on the relevant problems to the SAFE in a timely manner. Tel.: (Business) 010-68402449, 68402152 (Technology) 010-68402377 January 19, 2011 FILE: Interim Measures for the Administration of E-banking-based Foreign Exchange Settlement and Sales for Individuals 2011-03-15/en/2011/0315/720.html
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Provincial, autonomous region, and municipal branches and Foreign Exchange Administration departments of the SAFE, and the Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo branches of the SAFE: To satisfy the requirements of MNCs to uniformly use foreign exchange funds both in China and in other countries, to serve the real economy, to promote trade and investment facilitation, to support industrial restructuring and upgrading, and to explore exchange facilitation for investment and financing, the State Administration of Foreign Exchange (SAFE) has developed the Regulations on the Centralized Operation and Management of the Foreign Exchange Funds of MNCs (Interim) and is now issuing them to you for implementation. Appendix: Regulations on the Centralized Operation and Management of the Foreign Exchange Funds of MNCs (Interim) State Administration of Foreign Exchange April 18, 2014 FILE: Regulations on the Centralized Operations and Management of the Foreign Exchange Funds of MNCs (Interim) FILE: Appendix 1-5 2014-10-21/en/2014/1021/747.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: To further improve the regulatory system of foreign exchange administration and to facilitate trade investment, we hereby notify you regarding the validity of some regulatory for exchange administration documents as follows: I. Eighteen regulatory documents, of which the main content has been replaced by new content and does not conform to current management practices, shall be repealed. (Please refer to Annex 1 for a list.) II. Sixteen regulatory documents on foreign exchange administration, of which either the application period has expired or the objects under administration have ceased to exist, are rendered invalid and declared invalid. (Please refer to Annex 2 for a list.) The Circular will take effect as of the date of promulgation. Annex 1: Checklist of EighteenForeign Exchange Administration Regulatory Documents Repealed by the State Administration of Foreign Exchange. Annex 2: Checklist of Sixteen Regulatory Foreign Exchange Administration Documents Declared Invalid by the State Administration of Foreign Exchange. State Administration of Foreign Exchange September 22, 2014 FILE: Checklist of Eighteen Regulatory Foreign Exchange Administration Documents Repealed by the State Administration of Foreign Exchange FILE: Checklist of Sixteen Regulatory Foreign Exchange Administration Documents Declared Invalid by the State Administration of Foreign Exchange 2014-11-26/en/2014/1126/748.html
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A working conference of the People's Bank of China (PBOC), in conjunction with the national foreign exchange administration conference, was recently held in Kunming, Yunnan province. The conference studied and conveyed the gist of the results of Third Plenary Session of the Seventeenth Central Committee of the CPC, the Fourth Plenary Session of the Seventeenth Central Committee of the CPC, as well as the Central Economic Work Conference. The proceedings provided an overall summary of work related to foreign exchange administration in 2009 and set forth the tasks for foreign exchange administration in 2010 based on an in-depth analysis of current circumstances regarding the balance of payments and receipts and payments of foreign exchange. Yi Gang, deputy governor of the People's Bank of China and administrator of the State Administration of Foreign Exchange (SAFE), delivered a speech at the conference on foreign exchange administration work. Deng Xianhong, Fang Shangpu, Wang Xiaoyi, Li Chao, and other leaders of the SAFE, along with the relevant leaders of the divisions, overseas offices, and branches (foreign exchange administration departments) of the SAFE attended the conference. It was pointed out at the conference that in 2009, under the wise leadership of the Party Central Committee and the State Council and the precise guidance of the Party Committee of the PBOC, all foreign exchange administration departments carried out the scientific outlook on development in an all-around manner and earnestly implemented the overall planning of the Central Government on "Sustaining growth, accelerating restructuring, propelling reform, and improving the people's livelihood.In order to sustain the stable development of the foreign-related economy, efforts were made to adjust the direction and emphasis of foreign exchange administration in a timely manner by launching a series of measures to cope with the international financial crisis. The SAFE made efforts to further deepen the reform of the foreign exchange administration system, enhance the role of foreign exchange administration services to satisfy the needs of economic development, improve statistics and supervision of cross-border capital flows, guard against risks caused by abnormal cross-border capital flows, promote disclosure of information and government affairs, and increase the transparency of foreign exchange administration. Efforts were also made to improve the operation and management of foreign exchange reserves, to guarantee the security of foreign exchange reserve assets, and to obtain reasonable returns. All of these measures have played an active role in weathering the global financial crisis as well as in promoting the stable and rapid development of the national economy. It was emphasized at the conference that since the initiation of the reform and opening-up policy China has been active in becoming integrated in the economic globalization. Development of the foreign-related economy was achieved by leaps and bounds, along with a dramatic increase in cross-border foreign exchange receipts and payments. The constantly changing scale, frequency, and form of cross-border capital flows, rapid economic development, and increased opening to the outside world have presented increasing challenges to our countrys foreign exchange administration. Such circumstances require that the foreign exchange administration departments look at issues concerning Chinas economic and financial development from a global perspective, analyze Chinas foreign exchange administration within the framework of an open economy, and enhance the fundamental role of market forces in allocating foreign exchange resources. To this end, all personnel in the foreign exchange administration system should further carry out the scientific outlook on development, put into practice the gist of the contents of the Third Plenary Session of the Seventeenth Central Committee of the CPC, the Fourth Plenary Session of the Seventeenth Central Committee of the CPC, and the Central Economic Work Conference in an all-around manner, consolidate our conviction and work pragmatically to further strengthen and improve foreign exchange administration work, make great efforts to improve the status of the balance of payments, and promote a basic equilibrium in the balance of payments. These efforts should be conducted in compliance with the strategic planning of the Party Central Committee and the State Council to sustain the stable and rapid development of the national economy, so as to serve the comprehensive strategic aim of transforming the pattern of economic development and accelerating economic restructuring. The conference also studied and set the priorities for foreign exchange administration in 2010. These include: (1) Further emancipating our minds, upgrading concepts for foreign exchange administration, transforming administration methods, and enhancing a service consciousness; keeping risks controllable and as much as possible facilitating the operations of economic entities, gradually weakening ex-ante examination and approval, and strengthening ex-post monitoring and analysis; (2) complying with the overall requirements for economic development, further promoting the reforms on the verification of imports and exports, the development of the foreign exchange market, the administration of foreign exchange accounts, the diversification of channels for capital outflows and other key areas, and critical aspects of foreign exchange administration; (3) further improving supervision of abnormal cross-border fund flows, constructing a sound monitoring and warning system, an off-site inspection system, and an emergency management system, strengthening the monitoring and analysis of abnormal cross-border fund inflows and outflows, launching a special campaign to crack down on illegal activities by underground money shops, and preventing and diffusing the risks of cross-border capital flows; (4) boosting the integration of foreign exchange administration data with the administration system, promoting the comprehensive utilization of administration information, streamlining procedures for foreign exchange businesses, and improving the efficiency of monitoring and supervision and the service level; (5) constantly increasing the transparency of policies on foreign exchange administration, broadening the scope of release of statistical data on the balance of payments, reinforcing the integration of laws and regulations with respect to foreign exchange administration, and enhancing interactions and communications between the SAFE and the media and the general public; (6) further improving the foreign exchange reserves operation and management mechanism, enhancing the introduction and training of personnel, and striving to achieve security, and insure and increase the value of the foreign exchange reserve assets; (7) strengthening improvement of Party conduct, clean administration, and construction of the ranks of cadres, and enhancing the capability and level of administration according to the law. 2010-01-06/en/2010/0106/916.html
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Recently the People's Bank of China released data on the state's foreign exchange reserves as of the end of 2009. According to some analyses, in 2009 China witnessed an increase of USD453.1 billion in its foreign exchange reserves. Deducting the trade surplus of USD196.07 billion and the actually utilized foreign capital of USD90.03 billion during the same period, there is a balance of USD167 billion, which is regarded as unaccountable, that is, an inflow of hot money.A reporter interviewed a relevant official of the SAFE on this issue. Q: How do regard the estimation method for the newly-increased foreign exchange reserves minus the trade surplus and minus the actually utilized foreign capital equals hot money,which is presently widely used by the general public? A: We appreciate the analyses from the general public on the operating conditions of the balance of payments from different perspectives, as well as their suggestions on our work on foreign exchange administration. To be frank, the above estimation method is unscientific, thus the conclusion is misleading. With regard to the newly- increased balance of foreign exchange reserves, analysts should not only emphasize factors such as foreign trade conditions, foreign direct investment, and so forth, but also should take into consideration the conditions for cross-border fund flows for trade in service, individuals, external debts, and securities investment as well as the investment income of the foreign exchange reserves, currency conversion, and other factors. A simple deduction of the trade surplus and the actually utilized foreign exchange will not account for the so-called unaccountable reserves, let alone the inappropriate label of hot money. Q: Can you describe in detail how the newly-increased foreign exchange reserves should be analyzed by taking into account the investment income and currency conversion? A: We have noted that some media have taken into consideration the investment income and income from currency conversion to analyze the newly-increased foreign exchange reserves. As per the relevant requirements of the foreign exchange administration, for the time being we cannot disclose the specific data on the investment income and currency conversion. Nevertheless, selection of the relevant data can be used as a reference. For example, according to the changes in the exchange rate index of the USD against other major currencies which is compiled by the FED, the exchange rate of the USD depreciated by 8.5% in 2009. As shown in the data on the structure of global reserves released by the IMF, the non-dollar reserve assets account for nearly 40% of the total reserve assets. Hence, the appreciation of non-dollar assets against the USD in 2009 will inevitably lead to an increase in the balance of foreign exchange reserves in USD (income from currency conversion). As another instance, by use of the frequently-adopted Barclays Return Rate of the Global Bond Integrated Index, the annual average return rate from 2005 to 2009 was 4.8%. Based on that, the aggregate investment income from a certain amount of the balance of reserves for various years can be calculated, i.e., to what extent investment income contributed to the increase in the foreign exchange reserves. Although these analyses are only for reference, they will help prevent significant omissions in the selection of analytical methods, thus their conclusions will be more convincing. Q: Could the increase in foreign exchange reserves in 2009 be better explained, if investment income and currency conversion are taken into consideration? A: With regard to our data, the argument that the increase in foreign exchange reserves in 2009 is unaccountable is unreasonable. Q: Some argue that there will be increasing inflows of short-term speculative funds into China in 2010. How do you regard that? A: With the stable growth of the national economy and the constant decline in the USD interest rate in the past months, those entities involved in foreign exchange businesses (banks, enterprises, individuals, and so forth) are more likely to transfer their overseas assets back to China and to make settlements. Meanwhile, it is possible that some overseas speculative and arbitrage funds will flow into China by means of distribution and infiltration through such channels as trade, individual investment, foreign investment, and so forth. Currently, China maintains a certain level of control over capital accounts. Based on the premise to promote the facilitation of trade and investment, we will continue to intensify efforts to crack down on illegal flows of cross-border funds. Q: What about the progress and achievements in cracking down on illegal flows of cross-border funds during the past year? A: In 2009, by taking full advantage of the United Office for Cracking Down on Criminal Activities of Illegal Foreign Exchange Transactions and closely teaming up with the public security departments, we launched a series of campaigns to crack down on major cases of illegal flows of funds, such as underground money shops, online foreign exchange speculation, and so forth The SAFE uncovered 10 cases of underground money shops, 6 cases of online illegal foreign exchange speculation, and 11 cases of illegal trading of foreign exchange, and discovered more than 61 nests for illegal foreign exchange transactions, involving a total amount of USD3.54 billion. Q: What measures will the foreign exchange administration departments adopt to prevent the inflow of speculative and arbitrage funds in 2010? A: To prevent the inflow of speculative and arbitrage funds, which may affect the stability of the national economy and finance, we will take the following measures: (1) strengthening the construction of the statistical system for the balance of payments, establishing and improving monitoring, an early-warning system, and an emergency plan for the inflows and outflows of cross-border funds; (2) strengthening the administration of cross-border capital flows, continuing to crack down on illegal inflows of funds, and taking appropriate measures to control the channels for the excessive inflow of capital; (3) further promoting the convertibility of the capital accounts, broadening the channels for capital outflows, and facilitating the holding and use of foreign exchange by domestic institutions and individuals; and (4) taking comprehensive and effective measures to promote an equilibrium in the balance of payments by complying with the unified planning of the Central Government. 2010-01-19/en/2010/0119/918.html
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Recently, a summary and commendation conference on struggling against illegal and criminal foreign exchange activities in 2009 was held by the State Administration of Foreign Exchange (SAFE) and the Ministry of Public Security (MPS) in Zhuhai city of Guangdong province. The conference summarized progress by the SAFE and the MPS in cracking down on illegal and criminal activities in foreign exchange transactions, such as underground money shops, online foreign exchange speculation, and so forth, commended advanced organizations and individuals that performed outstandingly in struggling against such illegal and criminal activities, and devised a plan for relevant work regarding cracking down on illegal and criminal foreign exchange activities in 2010. Deng Xianhong, deputy administrator of the SAFE and Han Hao, deputy director-general of the Economic Crimes Investigation Department of the MPS, attended the conference and delivered speeches. In recent years, the foreign exchange administration departments and public security organs in various regions have attached priority to efforts to crack down on underground money shops, online foreign exchange speculation, and other illegal and criminal activities involving foreign exchange transactions, and have launched a battery of special collaborative campaigns to combat the above activities by making full use of their respective roles and strengths. A series of significant cases were investigated, which considerably frightened criminals and preserved normal order in the states administration of financial and foreign exchange affairs. Statistics show that in 2009 the foreign exchange administration departments and public security organs in various regions successfully uncovered 11 cases of underground money shops, 8 cases of online foreign exchange speculation, 11 cases of illegal foreign exchange transactions, and ferreted out more than 51 nests of illegal foreign exchange transactions, involving a total amount of more than RMB30 billion. The conference commended 26 advanced organizations and 63 individuals that had exhibited outstanding performance in cracking down on illegal and criminal foreign exchange activities in 2009, such as underground money shops and online foreign exchange speculation, and called on other foreign exchange administration departments and public security organs in various regions to learn from them. Meanwhile, the conference noted that the commended organizations and individuals should guard against arrogance and in the future should try even harder to achieve new progress in struggling against underground money shops, online foreign exchange speculation, and other illegal and criminal foreign exchange activities. It was pointed out at the conference that at present there are considerable uncertainties regarding the recovery of the global economy and the Chinese economy still faces many difficulties and challenges for sound development. These challenges will expose China to a more complicated situation in terms of cross-border fund flows and will place greater pressures and require even greater responsibility to strengthen supervision of cross-border fund flows. It is particularly important that in 2010, as the growth of foreign trade exports is beginning to be restored and the pace of foreign direct investment is likely to accelerate, there will be an increasing likelihood that overseas short-term arbitrage funds will flow into China through various channels. All these factors will impose greater pressures on net inflows of foreign exchange. The conference made plans to continue the struggle against illegal and criminal activities in foreign exchange transactions in 2010. The foreign exchange administration departments and public security organs in various regions will be required to make the most of their respective roles and advantages and to follow tips about significant illegal and criminal cases regarding foreign exchange transactions in a timely manner. The SAFE and the MPS will provide guidance and supervision over key cases of illegal and criminal foreign exchange activities. The foreign exchange administration departments and public security organs in various regions will be required to collaborate with the relevant departments to simultaneously crack down on and prevent illegal activities, to cleanse the market environment, to launch focused rectification campaigns in areas and places within their respective jurisdictions with frequent occurrences of illegal and criminal foreign exchange transaction activities, and to limit the space for the propagation of underground money shops and other illegal and criminal foreign exchange activities. These administration departments and organs will be required to actively disseminate information about the dangers of illegal and criminal foreign exchange activities, such as underground money shops, via various media. and to appeal for efforts by the masses to carry out foreign exchange transactions via legal channels. It was emphasized at the conference that in 2010 the foreign exchange administration departments and public security organs in various regions should further raise awareness and enhance a sense of responsibility and urgency for cracking down on illegal and criminal foreign exchange activities, such as underground money shops, online foreign exchange speculation, and so forth, by making full use of the cooperative strengths of the various departments in an effort to maintain normal financial order and social stability of the state. Intensified efforts should be made to crack down on such illegal and criminal activities with the aim of making new contributions to the preservation of the economic and financial security of the state as well as building a harmonious society. 2010-02-12/en/2010/0212/919.html
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Recently, a meeting was held by the State Administration of Foreign Exchange (SAFE) to plan for foreign exchange inspection work in 2010. In 2009 the foreign exchange administration departments at all levels earnestly implemented the overall planning for sustaining growth, preventing risks, and promoting an equilibrium in the balance of paymentsestablished by the SAFE for foreign exchange administration, and adopted a proactive posture to cope with the new challenges and new requirements brought about by the changes in external circumstances. New progress was made in the following areas: implementing special inspections and investigations; investigating and punishing illegal and criminal foreign exchange activities; promoting the construction of a cooperative mechanism for foreign exchange supervision; enhancing the approach for off-site inspections of foreign exchange transactions; strengthening the construction of internal control systems; carrying out major research programs; disseminating policy on a wide scale, and so forth. Satisfactory results were obtained. The meeting pointed out that with the greater complexity and volatility of the circumstances in the balance of payments in 2010, along with the growing uncertainties regarding cross-border foreign exchange fund flows and greater pressures caused by the increasing net inflows of foreign exchange, the foreign exchange administration departments at all levels will be required to give full play to their law enforcement role at the forefront of foreign exchange inspections, take full advantage of their role in detecting illegal foreign exchange activities, give full scope to the functions of the cooperative mechanism for foreign exchange supervision, conscientiously fulfill their duties to investigate and punish illegal foreign exchange activities, preserve law-based order in the foreign exchange market, and safeguard the financial security of the nation. The general idea behind foreign exchange inspection work for 2010 is as follows: tracking closely changes in the economic and financial situations both at home and abroad, actively enhancing the approaches for foreign exchange inspection work, carrying out special campaigns in an orderly manner for the inspection and investigation of abnormal cross-border fund flows, intensifying efforts to combat illegal foreign exchange activities such as underground money shops, online foreign exchange speculation, and so forth, and constantly enhancing the predictability, relevance, flexibility, and effectiveness of foreign exchange inspection work. The meeting also made plans for foreign exchange inspection work in 2010. Emphasis will be placed on special inspections of illegal foreign exchange fund inflows, which will be implemented in the first half of the year in 13 provinces and cities that have more foreign exchange business. The target of the inspections will mainly include trade in goods, trade in services, individual direct investment, foreign direct investment, balance of payments transactions under the external debt, and cross-border fund inflows. The foreign exchange administration departments at all levels will be required to carry out inspections in compliance with the principle of giving prominence to the central task, emphasizing the vital aspects of work, addressing both the symptoms and root causes of the problems, and adhering to overall planning and coordination. Efforts should be made to take full advantage of the information technologies and off-site approaches for the inspections. As far as working procedures are concerned, it is advisable that the departments screen and determine the transactions and entities that are regarded as abnormal at the initial stage, and carry out inspections to ascertain any illegal facts. Inspection procedures should be designed to cover all the major channels, items, and entities through which hot moneyflows, with the aim of ensuring high precision in cracking down on the illegal activities. Meanwhile, the departments should take into consideration the prevention of negative impacts on the normal trade and investment activities of economic entities undergoing inspections. Multiple approaches (administrative measures, legal measures, and so forth) should be adopted to punish the illegal fund inflows by enterprises and individuals that have been determined by the inspection personnel. Failure of the designated foreign exchange banks to fulfill their duties and the acts of wrongdoing by these banks should also be seriously punished through administrative and legal measures as well as by other means. Meanwhile, the foreign exchange administration departments at all levels will be required to strengthen their communications and coordination with the local governments, to give full play to the supervisory and coordination mechanisms, and to further enhance cooperation in foreign exchange supervision. 2010-03-22/en/2010/0322/922.html
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Recently, a meeting was held by the State Administration of Foreign Exchange (SAFE). The meeting summarized the work regarding foreign exchange administration under the current account in 2009 and established the plan for foreign exchange administration under the current account in 2010. In 2009 the SAFE put into practice the scientific outlook on development in an all-round manner for the administration of foreign exchange under the current account. Great efforts were made to promote the facilitation of trade, to enhance the investigation, monitoring, and analysis of foreign exchange administration under the current account, to further improve the off-site supervision mechanism for foreign exchange administration under the current account, and to actively guard against the risks brought about by cross-border fund flows. A wide array of measures was launched to promote the facilitation of trade. For example, with the aim of easing the pressures on the working funds of export enterprises to better combat the international financial crisis, enterprises with financial pressures were allowed to conduct the foreign exchange settlement prior to the foreign exchange verification and examination in an effort to progressively increase the proportion of foreign exchange collection for the processing trade; efforts were made to further standardize the administration of submission of tax certificates for foreign exchange payments to foreign countries and to facilitate foreign exchange payments to foreign countries under trade in services by institutions and individuals. Measures were also launched to improve foreign exchange administration under the current account and conscientiously guard against the risks brought about by cross-border fund flows. Such measures include the enhancement of administration of spin-offs for the settlement and sale of foreign exchange, the standardization of foreign exchange settlement by individuals by holding cash in foreign currencies, the standardization of administration of foreign exchange by domestic institutions for donation purposes, and so forth. While facilitating the receipt and payment of foreign exchange for donation purposes, emphasis was placed on the prevention of cross-border flows of abnormal funds through donation channels. The meeting set out the plan for the major tasks regarding foreign exchange administration under the current account for 2010, placing an emphasis on six key areas: (1) to carry out the reform of the verification and writing-off of exchange payments for imports, with the aim of freeing the majority of enterprises that follow normal procedures from the verification and writing-off procedures for their exchange payments for imports; in the meantime, to proceed with the reform of the verification and writing-off system for exchange collection from exports, so as to further promote the facilitation of trade; (2) to carry out pilot operations for the deposit of exchange collections from exports in overseas countries and regions by giving a green light to overseas deposits and operation of a certain proportion or the full amount of foreign exchange collection from exports by domestic institutions, with the aim of increasing the efficiency of the use of funds by enterprises; (3) to proceed with the reform of the foreign exchange administration for trade in services; to enhance examination of the authenticity of foreign exchange inflows under trade in services and to standardize the administration of foreign exchange inflows under trade in services in parallel with efforts to further facilitate normal external payments under trade in services; (4) to study and promote the reform of the foreign exchange account administration, and to emphasize the acceleration of construction of relevant policies, regulations, and business systems; (5) to improve the administration of foreign exchange transactions by individuals, to improve the administration of the online inspection of foreign exchange collections and settlements from exports and the administration of transit trade and sales-after-imports businesses, in order to effectively guard against the risks brought by the inflow of abnormal cross-border funds; (6) to intensify efforts to explore and improve off-site supervision of foreign exchange fund flows, to give full play to the role of the rapid feedback mechanism for trade in goods, trade in services, and foreign exchange receipts and payments by individuals, to enhance statistical analysis and monitoring and early warning of foreign exchange fund flows, and to enhance the level of off-site supervision of foreign exchange administration under the current account. 2010-03-19/en/2010/0319/921.html
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Recently, the State Administration of Foreign Exchange (SAFE) released data on foreign exchange settlement and sales on behalf of clients by banks and data on foreign-related receipts and payments of banks on behalf of clients. An official of the SAFE was interviewed on relevant issues. Q: What is the difference between foreign exchange settlement and sales by banks on behalf of clients and foreign exchange settlement and sales by banks? A: Foreign exchange settlement and sales by banks on behalf of clients refers to foreign exchange settlement and sales business conducted by designated foreign exchange banks for their clients, which reflects the scale of the foreign exchange settlement and sales by the designated foreign exchange banks for their institutional and individual clients. It excludes data on foreign exchange settlement and sales conducted by designated foreign exchange banks for themselves and data on inter-bank foreign exchange market transactions. Q: What is the relationship between the balance of foreign exchange settlement and sales by banks on behalf of clients and changes in the foreign exchange reserves during the same period? A: The balance of foreign exchange settlement and sales by banks on behalf of clients is the balance by the foreign exchange settlement and foreign exchange sales by banks on behalf of their clients, which will be offset by the banks through transactions on the inter-bank foreign exchange market; it is one of the major factors causing changes in the countrys foreign exchange reserves. However, there are other factors, such as foreign exchange settlement and sales by designated foreign exchange banks for themselves and changes in the composite positions of the foreign exchange settlement and sales by banks, which also contribute to changes in the foreign exchange reserves. Thus, the balance of foreign exchange settlement and sales by banks on behalf of clients is not equivalent to the changes in foreign exchange reserves during the same period. Q: What is the difference between data on foreign exchange settlement and sales on behalf of clients by banks and data on foreign-related receipts and payments of banks on behalf of clients? A: The data on foreign exchange settlement and sales on behalf of clients by banks are differentiated from the data on foreign-related receipts and payments of banks on behalf of clients in terms of both the scope of the statistical data and the time-point for the statistics. The foreign-related receipts and payments of banks on behalf of clients is a component of the balance of payments statistics, which reflects the condition of fund flows between the domestic non-bank sector and non-residents; the time when clients conduct foreign-related receipts and payments at domestic banks is regarded as the time point for the statistics. The statistics of foreign exchange settlement and sales on behalf of clients by banks do not comply with the principle of transactions between residents and non-residents; any transaction between the RMB and the foreign currencies at domestic bank counters (excluding transactions conducted by designated foreign exchange banks themselves) shall be incorporated into the scope of the statistics, and the time when the conversion between the RMB and the foreign currencies occurs shall be regarded as the time point for the statistics. Q: How should we understand the relationship between foreign-related receipts and payments of banks on behalf of clients and the balance of payments statistics? A: The foreign-related receipts and payments of banks on behalf of clients is an integral part of the balance of payments statistics, which reflects the scope of foreign-related receipts and payments between the domestic non-bank sector and non-residents via domestic banks, i.e., the condition of fund flows between the domestic non-bank sector and non-residents. It does not reflect the barter transactions and foreign-related transactions conducted by the banks themselves; the scope of the statistics of foreign-related receipts and payments of banks on behalf of clients is smaller than that of the balance of payments statistics. In addition, the accounting method for statistics on foreign-related receipts and payments of banks on behalf of clients carried out on a cash basis is different from the accrual basis of accounting required by the balance of payments statistics. 2010-03-31/en/2010/0331/924.html