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To press ahead with the foreign exchange administration reform, promote trade and investment facilitation, support the growth of the real economy and guard against the risks arising from cross-border capital flows, the State Administration of Foreign Exchange (SAFE) recently issued the Circular of the State Administration of Foreign Exchange on Further Promoting Trade and Investment Facilitation and Improving Authenticity Review (Huifa No. 7 [2016], "Circular"). The Circular sets out 9 measures in 4 aspects: First, expanding inflows and increasing supply of foreign exchange. The lower limits of positions of banks in the settlement and sales of foreign exchange will be extended. The more the negative positions banks hold, the easier it will be for banks to collect and supply foreign exchange to enhance the self-adjustment capability of foreign exchange markets and provide better financial services for the real economy to guard against exchange rate risks. Policies for the administration of foreign exchange settlement for the external debt of Chinese and foreign-funded enterprises will be unified, with the external debt of Chinese non-financial institutions to be subject to foreign exchange settlement in accordance with the provisions on external debt administration for foreign-funded enterprises. The foreign exchange receipts by Class-A enterprises from trading (other than foreign exchange refunds and offshore entrepot transactions) will temporarily not be recorded in the accounts pending verification for receipts from exports, but will be directly recorded in the foreign exchange accounts under the current account or settled. Procedures for receipts and settlements of foreign exchange by companies will be simplified to reduce the cost of funds for doing so. Second, intensifying document reviews and standardizing management. The requirements on document reviews for offshore entrepot transactions for trade in goods will be specified, with the receipt and payment of the same offshore entrepot transaction to be processed by the same outlet of the bank in the same currency (foreign currency or RMB). The receipts and payments for offshore entrepot transactions will be suspended for Class-B enterprises subject to foreign exchange administration for trade in goods. The outward remittance administration will be standardized for foreign exchange profits from direct investments. The requirements on document reviews for handling outward remittances of the profit equivalent to more than USD 50,000 (exclusive) by banks for domestic institutions will be specified. The measures for the administration of risk reminder notifications will be standardized for trade in goods. Risk reminders will be sent to companies with unusual receipts and payments of foreign exchange for trade in goods. Third, products will be diversified to hedge exchange rate risks. Banks will be allowed to handle the net delivery of forward transactions for foreign exchange settlement for institutional customers to satisfy their needs to hold foreign currency assets while guarding against exchange rate risks. Fourth, regulations will be streamlined and rules of punishments will be specified. The Circular of the State Administration of Foreign Exchange on Relevant Issues Concerning Strengthening Administration of Inflows of Foreign Exchange Funds (Huifa No. 20 [2013]) will be abolished. It is specified that any companies violating the Circular will be punished in accordance with the Regulations on Foreign Exchange Administration. The Circular shall take effect as of the date of promulgation. 2016-07-11/en/2016/0711/1201.html
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The State Administration of Foreign Exchange (SAFE) released statistics on foreign exchange settlement and sales by banks and foreign-related receipts and payments through banks in April 2016. The SAFE press spokesperson answered media questions on recent cross-border capital flows. Q: China's cross-border capital outflow pressure was eased in the first quarter this year, are there any new developments in April? A: The gradual easing of cross-border outflow pressure of the first quarter continued in April. Since the beginning of this year, both the deficit in foreign exchange settlement and sales and the deficit in foreign-related receipts and payments of banks have been on the decline. In April 2016, banks' deficit in foreign exchange settlement and sales stood at USD 23.7 billion, down by 35percent month on month. In January to March, banks' deficit in foreign exchange settlement and sales was USD 54.4 billion, USD 33.9 billion and USD 36.4 billion respectively. In April, the non-banking sectors posted a deficit in foreign-related receipts and payments of USD 8.9 billion, down by 66 percent month on month. Specifically, the net outflow of foreign exchange funds hit USD 2 billion, down by 67 percent month on month. In January to March, the net outflow of cross-border capital was USD 55.8 billion, USD 30.5 billion and USD 26.1 billion respectively and the net outflow of foreign exchange was USD 20.1 billion, USD 10.5 billion and USD 5.9 billion respectively. Besides, the balance of foreign exchange reserves rebounded in two consecutive months, with an increase of USD 10.3 billion and USD 7.1 billion in March and April respectively. The details are as follows: Firstly, domestic players were less willing to buy foreign exchange, and their external debt repayment continued to slow down. In April, the foreign exchange sale ratio (or the ratio of foreign exchange purchased by clients from banks to their foreign-related foreign exchange payments) that measures the motivation to buy foreign exchange was 75 percent, down 5 percentage points from the first quarter. Meanwhile, the balance of import financing such as refinancing and forward L/C dropped by USD 1.3 billion, which was 88% lower than the monthly average fall for the first quarter. Secondly, enterprises and individuals were more willing to settle exchange settlement but less willing to hold foreign exchange. In April 2016, the foreign exchange settlement ratio (or the ratio of foreign exchange sales to banks by clients to their foreign-related foreign exchange receipts) that measures the willingness to settle foreign exchange was 63 percent, 4 percentage points higher than the first quarter. In the same period, the balance of foreign exchange deposit increased by USD 900 million, which contracted by 93 percent from the monthly average growth for the first quarter. Since the beginning of this year, China has been under easing pressure from cross-border capital outflows, which reflects the changes in internal and external market environments. In the near future, China's economy will continue to operate within the reasonable range and at a relatively high rate compared with those of the rest of the world, which will be conducive to the overall stability of China's cross-border capital flows. 2016-07-11/en/2016/0711/1199.html
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To further satisfy individuals' currency exchange demand for cross-border transactions, the State Administration of Foreign Exchange (SAFE) recently released the Circular of the State Administration of Foreign Exchange on Printing and Distributing the Regulations on Management of Currency Exchange Agencies and Self-service Currency Exchange Machines (Huifa No. 11 [2016], "Regulations") to improve management of currency exchange agencies and self-service currency exchange machines. The Regulations is in line with the reform ideas of further streamlining administration and delegating powers and optimizing currency exchange services. The highlights are as follows: first, administration streamlining and power delegation will be promoted. Ex-ante market access management will be canceled, with no ex-ante access approval required from foreign exchange authorities for currency exchange agencies and self-service foreign exchange machines to provide currency exchange services. Second, the ways of regulation will be changed. Banks will be required to push forward and incorporate management of currency exchange agencies and self-service foreign exchange machines into their internal management, engage in the currency exchange business prudentially and in compliance with regulations and foreign exchange authorities will focus on enhancing ex-post and internal control inspections of banks. Third, business scope is defined. Currency exchange agencies and self-service currency exchange machines are positioned as the extension of banks' teller business to enhance the service capability and diversify channels to facilitate individual currency exchange. Fourth, business management will be improved to guard against money laundering risk. It is stressed that individuals should exchange foreign currency banknotes for RMB banknotes with currency exchange agencies and self-service currency exchange machines within the limit, which will not affect the annual limit of USD 50,000 or the equivalent on foreign exchange settlement for individuals. Fifth, regulations integration will be pressed ahead with. Three regulations on foreign exchange administration for currency exchange are integrated and abolished to facilitate understanding and implementation of foreign exchange administration policies by market players. The Regulations shall come into force as of the date of issuance . 2016-07-11/en/2016/0711/1200.html
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FILE: Template on International Reserves аnd Foreign Currency Liquidity(аs аt Sep 30 2017) 2017-10-31/en/2017/1031/1346.html
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FILE: Template on International Reserves аnd Foreign Currency Liquidity(аs аt Mar 31 2018) 2018-04-28/en/2018/0428/1427.html
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On May 19, 2017, the State Administration of Foreign Exchange (SAFE) holds a seminar with foreign-funded enterprises. The seminar was chaired by Pan Gongsheng, administrator of the SAFE, and attended by many foreign-funded enterprises such as Ericsson, Caterpillar, Alps, Thyssenkrupp, Dell, ABB, Mars, and Johnson Controls. Representatives present introduced the operations of their enterprises and provided constructive ideas on foreign exchange administration based on their practices. According to Administrator Pan, China's cross-border capital flows are recovering with a good momentum for growth and finding an equilibrium. A stable and benign foreign exchange market is favorable for foreign-funded enterprises' operations in China, while maintaining the stability of the foreign exchange market requires the cooperation and concerted efforts of regulators and the market. Foreign exchange authorities will persevere in reform and opening up, and enhancing cross-border trade and investment facilitation to better serve the real economy, while guarding against risks arising from cross-border capital flows, and maintaining the stability of the foreign exchange market, so as to provide a healthy and benign market environment for market participants. 2017-05-19/en/2017/0519/1268.html
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On March 22, 2016, Pan Gongsheng, deputy governor of the People's Bank of China and administrator of the State Administration of Foreign Exchange (SAFE), met with Leo Melamed, lifelong chairman emeritus of CME Group in Beijing. Yang Guozhong, deputy administrator of the SAFE, was present at the meeting. Both sides exchanged ideas on issues such as macroeconomic conditions in the US and China, China's balance of payments and the prospects for cooperation between the US and China in foreign exchange markets. 2016-08-30/en/2016/0830/1203.html
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On March 22, 2016, Pan Gongsheng, deputy governor of the People's Bank of China and administrator of the State Administration of Foreign Exchange, met with Ray Dalio, chairman of Bridgewater Associates in Beijing. Both sides exchanged ideas on issues such as conditions of the global economy and financial markets, China's economic development and the balance of payments. 2016-08-30/en/2016/0830/1202.html
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The State Administration of Foreign Exchange (SAFE) has recently held the Branch Directors Seminar 2016 in Beijing to implement the plans of the CPC Central Committee and the State Council, and study and analyze domestic and foreign economic and financial conditions as well as China's foreign exchange situation, with focus on training and discussions on the priorities of foreign exchange administration. Pan Gongsheng, administrator and secretary of the Party Leadership Group of the SAFE, delivered a special lecture to an audience of deputy administrators, and heads of SAFE branches (foreign exchange administrative departments) and SAFE organizations. Pan pointed out that in face of the complex economic and financial conditions both at home and abroad since the beginning of 2016, foreign exchange authorities, under the leadership of the CPC Central Committee and the State Council, and the guidance of the CPC Committee of the People's Bank of China (PBC), have been committed to tackling tough problems of reform head on, such as pushing forward administration streamlining and power delegation, reforming foreign exchange administration for QFIIs, refining policies for foreign exchange settlement under the capital account, cooperating with the PBC to roll out nationwide the macro-prudential management policy for full-scale cross-border financing, and boosting the opening up of the inter-bank bonds market. On the other hand, foreign exchange authorities have focused on intensifying risk prevention and control, enhancing authenticity and compliance management, cracking down on foreign exchange irregularities, and maintaining the stability of foreign exchange markets. Further, foreign exchange authorities have strengthened the operation and management of foreign exchange reserves to ensure security, liquidity, value maintenance and growth. Pan stressed that the current foreign exchange situation should be objectively assessed and accurately understood. Since the beginning of this year, China's economy has run stably, featuring a basic equilibrium between supply and demand in foreign exchange markets and much lower pressure from cross-border capital outflows. Despite the complex economic environment and many uncertainties worldwide, China's economy has stayed stable. The transformation of the growth model and structural adjustments have been stably pushed forward, the quality of economic growth has been improved, the surplus in the current account has been sustained, and foreign exchange reserves have been sufficient, indicating that China is highly attractive to long-term capital. In the future, China's cross-border capital flows are expected to remain stable. According to Pan, officials of foreign exchange authorities should follow the gist of President Xi Jinping's speech at the meeting to celebrate the 95 anniversary of CPC, and plans of the CPC Central Committee, the State Council and the PBC to deliver a good performance in the subsequent work of foreign exchange administration, with focus on pushing forward the capital account convertibility, boosting the development of foreign exchange markets and guarding against risks arising from cross-border capital flows, for the purpose of serving the real economy and enhancing the efficiency of foreign exchange resource allocation. First, foreign exchange authorities shall press ahead with foreign exchange administration reform in key areas, accelerate the development of foreign exchange markets, push forward the capital account convertibility, and ensure good communication with markets, so as to further promote trade and investment facilitation. Second, foreign exchange authorities shall intensify cross-border capital monitoring and early warning, support banks to refine the self-discipline mechanism and conduct authenticity and compliance reviews, and continue to maintain a tough stance on foreign exchange irregularities like underground banks to safeguard China's economic and financial security. Third, foreign exchange authorities shall optimize the operation and management of foreign exchange reserves to make use of the role of foreign exchange reserves in safeguarding the balance of payments. Fourth, foreign exchange authorities shall organize training and education programs for officials to learn Party rules and regulations and the gist of President Xi Jinping's speeches as well as growing into a qualified Party member, so as to implement the requirements on comprehensively strengthening Party discipline. In addition, discussions were held on current foreign exchange situation and experts and scholars were invited to give lectures at the Seminar. 2016-11-08/en/2016/1108/1221.html
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The State Administration of Foreign Exchange (SAFE) has recently published the data on banks' foreign exchange sales and settlements as well as the foreign-related receipts and payments via banks for July 2016. The SAFE press spokesperson answered media questions on recent cross-border capital flows. Q: The pressure from cross-border capital outflows has been relieved in the first half of this year. What would you say about July? A: China's cross-border capital flows fluctuated within a normal range in July. First, the deficit in banks' foreign exchange sales and settlements represented a month-on-month increase, but that of non-banking sectors such as enterprises and individuals remained relatively stable. In July, the banking sector recorded a deficit of USD 31.7 billion in foreign exchange sales and settlements, higher than the monthly average of USD 16.3 billion in the second quarter, but lower than the monthly average of USD 41.6 billion in the first quarter. In particular, the non-banking sectors registered a deficit of USD 19.8 billion in foreign exchange sales and settlements, up by 12% month-on-month, but at a low level in the year to date. Second, the non-banking sectors registered a deficit in foreign-related receipts and payments again, but the deficit was low. In July, the deficit was USD 31.9 billion, including a deficit of USD 1.3 billion in foreign exchange receipts and payments. In the first four months, China posted a deficit of USD 20.1 billion, USD 10.5 billion, USD 5.9 billion and USD 2 billion in foreign exchange receipts and payments respectively, but registered surpluses in May and June. The short-term impact from Britain's exit from the EU and seasonal factors contributed to stronger net demand for foreign exchange in July. In July, Britain's exit from the EU led to volatilities in international financial markets and helped strengthen the dollars but dragged down the RMB exchange rate. Under such circumstances, Chinese market players became less willing to settle foreign exchange. In the month, the ratio of foreign exchange sold by bank customers to foreign-related foreign exchange receipts was 58%, down by 3 percentage points from June. As global markets tended to be stabilized, the supply and demand for foreign exchange in China was less impacted and fell within control. On the other hand, as July is traditionally the month when foreign-funded enterprises remit out profits and overseas listed companies distribute dividends and bonuses, the ROI-related demand for foreign exchange rose, which is also a key cause behind the heavy deficit in foreign exchange sales and settlements of banks themselves who hold overseas listed shares; what's more, as individuals' purchases of foreign exchange for overseas travel and study are high during the summer vacation, foreign exchange purchases under travel went up by 12% month-on-month in July. Positive factors in favor of the equilibrium of supply and demand for foreign exchange continued to emerge. First, the foreign exchange sales rate, or the ratio of purchases of foreign exchange from banks to the payments of foreign-related foreign exchange was 69% in July, down by 5 percentage points month-on-month. In particular, although individuals' purchases of foreign exchange presented seasonal rises, yet purchases of foreign exchange under travel dropped by 7% year-on-year in the month, indicating stable market sentiment for the moment. Second, foreign exchange financing through certain channels continued to pick up in the month, and the balance of cross-border foreign exchange financing for imports such as refinancing and forward L/C rose by USD 3.4 billion from the end of June, representing the fifth month of bouncing back, and showing enterprises' deleveraging of external debt continued to slow down. In conclusion, China's cross-border capital flows have fluctuated within a normal range recently, without changing the pattern of mid and long-term stability, and will continue to develop toward a stronger equilibrium between inflows and outflows in the future. 2016-11-08/en/2016/1108/1222.html