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Since the beginning of 2018, the State Administration of Foreign Exchange (SAFE) has implemented the spirit of the 19th CPC National Congress and the arrangements of the CPC Central Committee and the State Council, with focus on serving the real economy, defending against financial risks and deepening financial reforms. The SAFE has tightened regulations of the foreign exchange market, maintaining a tough stance against violations of the laws and regulations on foreign exchange, stepping up punishments and cracking down on false transactions, frauds, illegal arbitrages and other behaviors involving the departure of financial capital from the real economy into the virtual economy, so as to safeguard the healthy and good market order. In accordance with the Regulation of the People's Republic of China on the Disclosure of Government Information (Decree No. 492 of the State Council), a selection of typical cases where foreign exchange regulations were violated are presented as follows: Case 1: Entrepot trade handled by Hengfeng Bank Wenzhou Branch against regulations In January 2016, without carrying out the required due diligence investigations into the authenticity of entrepot trade, Hengfeng Bank Wenzhou Branch handled the payments of foreign exchange for entrepot trade based on the false bills of lading presented. The bank violated Article 12 of the Regulations of the People's Republic of China on Foreign Exchange Administration. In accordance with Article 47 of the Regulations, it was fined RMB 1.464 million. Case 2: Entrepot trade handled by Bank of Communications Xiamen Branch Guanyinshan Sub-branch against regulations From February to July 2016, without carrying out the required due diligence investigations into the authenticity of entrepot trade, Bank of Communications Xiamen Branch Guanyinshan Sub-branch handled the sales of foreign exchange for entrepot trade based on the false bills of lading presented. The bank violated Article 12 of the Regulations of the People's Republic of China on Foreign Exchange Administration. In accordance with Article 47 of the Regulations, it was fined RMB 4 million and suspended from selling foreign exchange to companies for three months, with senior executives and other persons directly liable for the violation ordered to take responsibility. Case 3: Entrepot trade handled by Bank of Tianjin Shanghai Branch against regulations From March to April 2016, without carrying out the required due diligence investigations into the authenticity of entrepot trade, the Bank of Tianjin Shanghai Branch handled the payments of foreign exchange for entrepot trade based on the false bills of lading presented. The bank violated Article 12 of the Regulations of the People's Republic of China on Foreign Exchange Administration. In accordance with Article 47 of the Regulations, the bank was fined RMB 800,000. Case 4: Onshore guarantees by HSBC Beijing Branch for offshore loans against regulations From August 2014 to June 2017, HSBC Beijing Branch handled the payments of foreign exchange for the execution and performance of the contracts on onshore guarantees for offshore loans, without carrying out the required due diligence investigations into the purposes of the loans and relevant transaction backgrounds. The bank violated Article 12 and 28 of the Regulations on Foreign Exchange Administration for Cross-border Guarantees. In accordance with Article 47 of the Regulations of the People's Republic of China on Foreign Exchange Administration, a total of RMB 8.4222 million was fined and confiscated. Case 5: Onshore guarantees by China Merchants Bank Xiamen Branch Jiahe Sub-branch for offshore loans against regulations From July 2014 to July 2016, China Merchants Bank Xiamen Branch Jiahe Sub-branch handled the payments of foreign exchange for the execution and performance of the contracts on onshore guarantees for offshore loans, without carrying out the required due diligence investigations into the qualifications of the debtors, purposes of the loans, expected sources of repayments, and relevant transaction backgrounds. The bank violated Article 12 and 28 of the Regulations on Foreign Exchange Administration for Cross-border Guarantees. In accordance with Article 47 of the Regulations of the People's Republic of China on Foreign Exchange Administration, a total of RMB 4.3319 million was fined and confiscated. Case 6: Onshore guarantees by China Minsheng Bank Xi'an Branch for offshore loans against regulations From December 2014 to December 2016, China Minsheng Bank Xi'an Branch handled the payments of foreign exchange for the execution and performance of the contracts on onshore guarantees for offshore loans, without carrying out the required due diligence investigations into the qualifications of the debtors, purposes of the loans, expected sources of repayments, and relevant transaction backgrounds. The bank violated Article 12 and 28 of the Regulations on Foreign Exchange Administration for Cross-border Guarantees. In accordance with Article 47 of the Regulations of the People's Republic of China on Foreign Exchange Administration, a total of RMB 6.454 million was fined and confiscated, and its senior executives and other persons directly liable for the violation were ordered to take responsibility. Case 7: Onshore guarantees by IBK (China) Tianjin Branch Xiqing Sub-branch for offshore loans against regulations From June 2015 to June 2017, IBK (China) Tianjin Branch Xiqing Sub-branch handled the payments of foreign exchange for the execution and performance of the contracts on onshore guarantees for offshore loans, without carrying out the required due diligence investigations into the qualifications of the debtors, expected sources of repayments, and relevant transaction backgrounds. The bank violated Article 12 and 28 of the Regulations on Foreign Exchange Administration for Cross-border Guarantees. In accordance with Article 47 of the Regulations of the People's Republic of China on Foreign Exchange Administration, RMB 1.022 million was fined and confiscated. Case 8: Split-up sales and payments of individual foreign exchange handled by China Construction Bank Lianjiang Sub-branch against regulations From June 2016 to June 2017, China Construction Bank Lianjiang Sub-branch handled split-up sales and payments of individual foreign exchange against regulations. The bank violated Article 7 of the Measures for the Administration of Individual Foreign Exchange. In accordance with Article 47 of the Regulations of the People's Republic of China on Foreign Exchange Administration, RMB 600,000 was fined. Case 9: Foreign exchange evasion by Solvay Biochemicals (Taixing) Co., Ltd. From November 2012 to December 2013, Solvay Biochemicals (Taixing) Co., Ltd. paid advance of EUR 2.2768 million and USD 50,500 based on the expired contracts, without importing anything. The company violated Article 12 of the Regulations of the People's Republic of China on Foreign Exchange Administration and was involved in foreign exchange evasion. In accordance with Article 39 of the Regulations, the company was fined RMB 923,900. Case 10: Foreign exchange evasion by Yantai Pingrui Trade Co., Ltd. From August to September 2015, Yantai Pingrui Trade Co., Ltd. paid foreign exchange of USD 17.0682 million, based on the fabricated backgrounds of the entrepot trade, the bills of lading of a third party, false contracts and invoices. The company violated Article 12 of the Regulations of the People's Republic of China on Foreign Exchange Administration and was involved in foreign exchange evasion. In accordance with Article 39 of the Regulations, the company was fined RMB 5.45 million. Case 11: Foreign exchange evasion by Qingdao Zhonglin Yongsheng International Trade Co., Ltd. From January to August 2016, Qingdao Zhonglin Yongsheng International Trade Co., Ltd. paid foreign exchange of USD 9.38 million, based on the fabricated backgrounds of the entrepot trade, and the bills of lading of third parties. The company violated Article 12 of the Regulations of the People's Republic of China on Foreign Exchange Administration and was involved in foreign exchange evasion. In accordance with Article 39 of the Regulations, the company was fined RMB 3.10 million. Case 12: Foreign exchange evasion by Shandong Hengjing Property Co., Ltd. From November 2016 to April 2017, Shandong Hengjing Property Co., Ltd. transferred USD 1.8879 million overseas based on the annual quotas of 30 Chinese citizens for buying foreign exchange. The company violated Article 12 of the Regulations of the People's Republic of China on Foreign Exchange Administration and was involved in foreign exchange evasion. In accordance with Article 39 of the Regulations, the company was fined RMB 644,200. Case 13: Illegal foreign exchange settlement by Changshu Zhongguan Metallic Materials Co., Ltd. From March 2015 to April 2016, Changshu Zhongguan Metallic Materials Co., Ltd. went through trade finance processes and settled foreign exchange of USD 4.18 million, with the false customs export declaration forms presented. The company violated Article 12 of the Regulations of the People's Republic of China on Foreign Exchange Administration and was involved in illegal foreign exchange settlement. In accordance with Article 41 of the Regulations, the company was fined RMB 1.33 million. Case 14: Illegal purchases and sales of foreign exchange by Mr. Guo, native of Henan From April 2011 to September 2014, to transfer his assets overseas without abiding by the law, Mr. Guo transferred RMB 104.9292 million into a domestic account controlled by an underground bank, exchanged the money into foreign exchange and then transferred the foreign exchange via the underground bank into his overseas account. Guo violated Article 30 of the Measures for the Administration of Individual Foreign Exchange and was considered breaking the laws on the purchases and sales of foreign exchange. In accordance with Article 45 of the Regulations of the People's Republic of China on Foreign Exchange Administration, Guo was fined RMB 8.35 million. Case 15: Illegal purchases and sales of foreign exchange by Mr. Zhao, native of Zhejiang From January 2014 to June 2016, to transfer his assets overseas without abiding by the law, Mr. Zhao transferred RMB 18.0060 million into a domestic account controlled by an underground bank, exchanged the money into foreign exchange and then transferred the foreign exchange via the underground bank into his overseas account. Zhao violated Article 30 of the Measures for the Administration of Individual Foreign Exchange and was considered breaking the laws on the purchases and sales of foreign exchange. In accordance with Article 45 of the Regulations of the People's Republic of China on Foreign Exchange Administration, Zhao was fined RMB 1.62 million. Case 16: Illegal purchases and sales of foreign exchange by Mr. Zhao, native of Guangdong From October 2015 to September 2016, to transfer his assets overseas without abiding by the law, Mr. Zhao exchanged his money into foreign exchange and then transferred the foreign exchange via the underground bank into his overseas account. The money involved totaled USD 2.2114 million. Zhao violated Article 30 of the Measures for the Administration of Individual Foreign Exchange and was considered breaking the laws on the purchases and sales of foreign exchange. In accordance with Article 45 of the Regulations of the People's Republic of China on Foreign Exchange Administration, Zhao was fined RMB 797,800. Case 17: Purchases and sales of foreign exchange by Mr. Du, native of Sichuan, without approval From July to September 2016, without respecting the bank card management regulations, Mr. Du swiped his RMB cards many times via the overseas POS machines to exchange his money into HK dollars in cash. The money involved was RMB 6.7911 million. Du violated Article 30 of the Measures for the Administration of Individual Foreign Exchange and was involved in the purchases and sales of foreign exchange without approval. In accordance with Article 45 of the Regulations of the People's Republic of China on Foreign Exchange Administration, Du was fined RMB 1.0187 million. Case 18: Purchases and sales of foreign exchange by Mr. Wang, native of Fujian, without approval In January 2017, to obtain illegal gains, Mr. Wang received RMB 11.2926 million through another person's account and sold HK dollars without approval. Wang violated Article 30 of the Measures for the Administration of Individual Foreign Exchange and was involved in the purchases and sales of foreign exchange without approval. In accordance with Article 45 of the Regulations of the People's Republic of China on Foreign Exchange Administration, Wang was fined RMB 1.07 million. Case 19: Foreign exchange evasion by Mr. Wang, native of Sichuan, through split-up From January to April 2016, to transfer his assets overseas without abiding by the law, Mr. Wang split up his personal assets and bought foreign exchange based on the annual quotas of 46 Chinese persons for purchasing foreign exchange and then transferred the foreign exchange into the overseas accounts. The funds thus transferred totaled HKD 17.8476 million. Wang violated Article 7 of the Measures for the Administration of Individual Foreign Exchange and was involved in foreign exchange evasion. In accordance with Article 39 of the Regulations of the People's Republic of China on Foreign Exchange Administration, Wang was fined RMB 800,000. Case 20: Foreign exchange evasion by Mr. Zhang, native of Jiangsu, through split-up From January to December 2016, to transfer his assets overseas without abiding by the law, Mr. Zhang split up his personal assets and bought foreign exchange based on the annual quotas of 41 Chinese persons for buying foreign exchange and then transferred the foreign exchange into the overseas accounts. The funds thus transferred totaled USD 1.8459 million. Zhang violated Article 7 of the Measures for the Administration of Individual Foreign Exchange and was involved in foreign exchange evasion. In accordance with Article 39 of the Regulations of the People's Republic of China on Foreign Exchange Administration, Wang was fined RMB 615,200. Case 21: Foreign exchange evasion by Mr. Qiu, native of Jiangsu, through split-up From September 2016 to January 2017, to transfer his assets overseas without abiding by the law, Mr. Qiu split up his personal assets and bought foreign exchange based on the annual quotas of 69 Chinese persons for buying foreign exchange and then transferred the foreign exchange into the overseas accounts. The funds thus transferred totaled USD 3.4949 million. Qiu violated Article 7 of the Measures for the Administration of Individual Foreign Exchange and was involved in foreign exchange evasion. In accordance with Article 39 of the Regulations of the People's Republic of China on Foreign Exchange Administration, Wang was fined RMB 1.60 million. 2018-08-16/en/2018/0829/1452.html
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On the morning of August 2, the State Administration of Foreign Exchange (SAFE) held a video conferencing for the second half of 2018. The purposes of this meeting were to study and implement the arrangements of the CPC Central Committee and the State Council for the economic and financial undertakings, summarize the work of the first half, analyze the economic and financial environments both at home and abroad and the conditions of the foreign exchange market, and study and make arrangements for key tasks of foreign exchange administration for the second half. Pan Gongsheng, secretary of the CPC Leadership and administrator of the SAFE, delivered a work report. The meeting believed that in the year to date, foreign exchange authorities have studied, promoted and implemented Xi Jinping thought on socialism with Chinese characteristics for a new era and the spirit of the 19th CPC National Congress. Under the leadership of the CPC Central Committee and the State Council and the guidance of the People's Bank of China, they have implemented the requirements on Party self-governance, the general work guideline of making progress while maintaining stability, the new development philosophy and the requirements on high-quality development. With a focus on the supply-side structural reform, they have been committed to serving the development of the real economy, deepening the reform and opening up of foreign exchange administration, and guarding against risks associated with cross-border capital flows, successfully defending the economic and financial security of China. First, with political development as the top priority, foreign exchange authorities have remained committed to ensuring the "two safeguards" and stricter exercise of Party self-governance. Following the earnest intraparty political norm, they have implemented the system for collective activities within the Party. They have performed their principal responsibilities and ensured successful retrospective self-check of rectifications. With a focus on Party discipline, they have intensified management of Party officials and intensified the accountability for supervision and discipline enforcement. They have implemented the CPC Central Committee's eight-point decision on improving Party and government conduct, working ceaselessly to improve Party conduct and enforce Party discipline. Second, they have deepened the reform of delegation, regulation and service, with the levels of trade and investment liberalization and facilitation raised. They have devoted themselves to boosting the two-way opening up of the financial sector, and systematically advancing the capital account convertibility. To support the Belt and Road Initiative, they have promoted regional opening up and innovation to strengthen the roles of foreign exchange administration in serving the real economy. Third, they have been committed to guarding against risks arising from cross-border capital flows, and cracking down on violations of foreign exchange laws and regulations to safeguard the health and good order of the foreign exchange market. Fourth, they have intensified the building of operation and management capabilities of foreign exchange reserves, and continued to optimize asset arrangements to further diversify the utilization. The meeting pointed out that China's economy stayed stable and gathered momentum in the first half. The cross-border capital flows were steady, the supply and demand found a basic equilibrium in the foreign exchange market, and the receipts and payments under the current account remained reasonable, contributing to a stronger balance between the internal and external economies. Despite tremendous changes in the external environment, China's economy has achieved more resilient and higher-quality growth as the supply-side structural reform is advanced and economic restructuring is optimized. With an overall equilibrium in the balance of payments, adequate foreign exchange reserves, extensive experience and sufficient policy tools, we are confident about the stable operation of the foreign exchange market. The meeting stressed that, in the second half, foreign exchange authorities need to continue studying, promoting and implementing Xi Jinping thought on socialism with Chinese characteristics for a new era and the spirit of the 19th CPC National Congress. With thoroughly studying, fully understanding and effectively implementing the thought and the spirit as their top priority, they should maintain political integrity, think in terms of the big picture, follow the leadership core, and keep in alignment with the central Party leadership and have full confidence in the path, theory, system, and culture of socialism with Chinese characteristics, so as to make sure that they become highly aligned with the CPC Central Committee with Comrade Xi Jinping at its core in thoughts, politics and action. Following the strategic arrangements laid out at the 19th CPC National Congress, they should adhere to the general work guideline of making progress while maintaining stability, advance the supply-side structural reform, boost the two-way opening up of the financial market and ensure three breakthroughs, in a bid to promote the stability and health of China's economic growth. According to the meeting, focus should be on the following in the second half: first, with political development as the top priority, foreign exchange authorities should endeavor to ensure the leadership of the Party in foreign exchange administration. Following the political discipline and rules of the Party, they should be committed to developing the active and healthy political culture within the Party. They should conduct four forms of oversight over discipline compliance and consolidate and build on the advances made in implementing CPC Central Committee's eight-point decision on improving Party and government conduct. They should cultivate professional and high-quality officials teams who are loyal to the Party, have moral integrity, and demonstrate a keen sense of responsibility, for foreign exchange administration, so as to forever preserve their political characteristics. Second, they should deepen the foreign exchange administration reforms, and open the foreign exchange market wider to make new ground in pursuing opening-up on all fronts. They should systematically ensure the RMB capital account convertibility to guarantee the legal rights and interests of foreign investments. They should diversify the products and trading tools, increase the number of domestic and foreign participants to build an open and competitive foreign exchange market. While enhancing trade and investment liberalization and facilitation, they should support the development of new formats and models of trade and ensure sound foreign exchange administration services for the first China International Import Expo. To support the Belt and Road Initiative, they should advance the pilot programs for the reform and opening up of foreign exchange administration such as free trade zones and free trade ports. Third, they should adopt a multipronged approach to guarding against and addressing significant risks associated with foreign exchange. While establishing and improving the management framework of "macro-prudence + micro-regulation" for cross-border capital flows, they should crack down on false and fraudulent transactions, underground banks, and illegal foreign exchange trading platforms and other violations of foreign exchange laws to safeguard the sound order in the foreign exchange market and the country's economic and financial security. Fourth, they should work to ensure the security, liquidity, value growth and maintenance of foreign exchange reserves to serve government strategies. The meeting called on officials and staff of foreign exchange authorities to get united around the CPC Central Committee with President Xi Jinping at its core and follow the guidance of Xi Jinping thought on socialism with Chinese characteristics for a new era, and to bear the weight of responsibility and work diligently to make notable achievements in foreign exchange administration, and to effectively implement the decisions and arrangements of the CPC Central Committee and the State Council to deliver a good result for the upcoming 40th anniversary of reform and opening up. Members of the CPC Leadership, chief accountants, chief economists and heads of departments and units of the SAFE attended the meeting at the main venue, while members of the leaderships and department heads of SAFE branches (foreign exchange administrative departments), and heads of central sub-branches were present at local venues. 2018-08-02/en/2018/0808/1448.html
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Pursuant to the Regulations of the People’s Republic of China on Foreign Exchange Administration and the relevant regulations, the State Administration of Foreign Exchange has formulated the Regulations on Foreign Exchange Administration for Domestic Securities Investments by Qualified Foreign Institutional Investors, which are hereby promulgated and shall enter into effect as of the date of promulgation. Appendix: Regulations on Foreign Exchange Administration for Domestic Securities Investments by Qualified Foreign Institutional Investors State Administration of Foreign Exchange June 10, 2018 2018-06-12/en/2018/0612/1453.html
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The State Administration of Foreign Exchange (SAFE) has recently released the preliminary data in the Balance of Payments for the second quarter and the first half of 2018. Its press spokesperson has answered media questions on relevant issues. Q: Could you brief us on the new characteristics of the balance of payments for the second quarter of 2018, relative to the first quarter? A: The preliminary data in the Balance of Payments for the second quarter show that China's BOP maintained a basic equilibrium and reserve assets rose. Below are the new characteristics: First, the current account was in surplus, with a higher surplus under trade in goods, and a stable deficit under trade in services. In the second quarter, the current account recorded a surplus of USD 5.8 billion, including a surplus of USD 104.2 billion under trade in goods, and a deficit of USD 73.7 billion under trade in services in the Balance of Payments. Transportation, travel and intellectual property fees remained in deficit. Second, the financial account excluding reserve assets continued to be in surplus, featuring net cross-border capital inflows. In the second quarter, the financial account excluding reserve assets registered a surplus of USD 18.2 billion, and cross-border capital continued with net inflows that started from the first quarter of 2017. Third, FDI stayed high. In the second quarter, China posted USD 29.9 billion in net inflows of direct investment. ODI recorded net outflows of USD 28.7 billion, and FDI registered net inflows of USD 58.6 billion, which was high. Fourth, reserve assets increased slightly. In the second quarter, China's reserve assets rose by USD 23.9 billion due to BOP transactions (excluding non-transaction factors like foreign exchange rate and price). Specifically, foreign exchange reserves went up by USD 22.9 billion. Overall, China's balance of payments maintained a basic equilibrium in the second quarter. It is noteworthy that the receipts and payments under the current account have entered an equilibrium range in recent years, with a slight surplus or deficit counted as a basic equilibrium. Going forward, the balance of the current account is expected to stay within a reasonable range, and the BOP will continue with an overall equilibrium. 2018-08-06/en/2018/0806/1449.html
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Since the beginning of 2018, the State Administration of Foreign Exchange (SAFE) has implemented the spirit of the 19th CPC National Congress, the Central Economic Work Conference and the National Financial Work Conference, with a focus on deepening reform in key areas and working on legislation and files consolidation in key areas. To make it easier for the public to inquire and use, the SAFE has recently updated the Catalogue of Effective Laws and Regulations on Foreign Exchange Administration (Catalogue). The Catalogue classifies 220 policies, laws and regulations on foreign exchange administration released as of June 30, 2018 into eight major categories, namely, Comprehensive Foreign Exchange Administration, Foreign Exchange Administration under the Current Account, Foreign Exchange Administration under the Capital Account, Regulation of the Foreign Exchange Business of Financial Institutions, RMB Exchange Rate and Foreign Exchange Market, BOP and Foreign Exchange Statistics, Foreign Exchange Inspections and Applicable Regulations, and Foreign Exchange Technical Management, and into several sub-items further by type of business. The files added to the Catalogue this time around involve statistical survey of trade credit, domestic securities investments of qualified foreign institutional investors, onshore guarantees for offshore loans by insurance institutions, improvement of foreign exchange administration related to forward foreign exchange sales and settlements, statistical system of FDI, and assessment of the implementation of foreign exchange administration regulations among banks. Going forward, the SAFE will continue to carry out the arrangements of the CPC Central Committee and the State Council, with a focus on deepening the reform of foreign exchange administration, and advancing legislation and files consolidation in key areas, so as to facilitate the understanding and use of foreign exchange administration regulations by banks, companies and individuals, promote liberalization and facilitation of trade and investment and improve the service level for the real economy. 2018-07-31/en/2018/0731/1450.html
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Since the beginning of 2018, the State Administration of Foreign Exchange (SAFE) has implemented the arrangements of the CPC Central Committee and the State Council on making breakthroughs in defending against and addressing financial risks. While deepening the reform and opening up of foreign exchange administration and supporting the development of the real economy, the SAFE has been dedicated to safeguarding the health and good order of the foreign exchange market. It has organized special inspections of key players and businesses such as banks, third-party payment institutions and entrepot trade, cracking down on behaviors violating the foreign exchange law and regulations. In the first half, it identified and dealt with 1,354 cases violating foreign exchange regulations, fined and confiscated RMB 345 million, up by 19.7% and 59.5% year on year respectively. To be specific, there were 455 cases on violating financial institutions, 340 on violating companies and 559 on violating individuals. Next the SAFE will continue to deepen the foreign exchange administration reform and boost the liberalization of the financial market to serve the new landscape of comprehensive opening up in China. It will endeavor to ensure the stability, continuity and consistency of cross-cycle foreign exchange administrative law enforcement. It will be committed to cracking down on false transactions, frauds, illegal arbitrages and other behaviors involving the departure of financial capital from the real economy into the virtual economy, as well as underground banks and illegal foreign exchange trading platforms, and other behaviors violating the law and regulations, in a bid to ensure the health and good order of the foreign exchange market and safeguard the economic and financial security in China. 2018-07-24/en/2018/0724/1447.html
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Document of People's Bank of China and State Administration of Foreign Exchange 2018-06-12/en/2018/0612/1454.html
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FILE：Annual Report of the State Administration of Foreign Exchange (2017) 2018-08-22/en/2018/0822/1451.html
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Recently, with the approval of the State Council, the State Administration of Foreign Exchange decided to cancel the investment quota restrictions for qualified foreign institutional investors (QFII) and RMB qualified foreign institutional investors (RQFII) (hereinafter referred to as "qualified foreign investors").Wang Chunying, spokeswoman and chief economist of State Administration of Foreign Exchange, answered questions from reporters. Q:What is the background of abolishing the investment quota restrictions on qualified foreign institutional investors (QFII) and RMB qualified foreign institutional investors (RQFII)? A: In 2002 and 2011, China launched Qualified Foreign Institutional Investor (QFII) and RMB Qualified Foreign Institutional Investor (RQFII) respectively. Qualified foreign investor scheme is one of the main channels for foreign investors to invest in domestic financial markets, an important institutional arrangement to enhance the convertibility of RMB under capital account, and has played a positive role in the steady opening up and further development of China's financial market. In recent years,State Administration of Foreign Exchange has earnestly implemented the deployment of the CPC Central Committee and the State Council on promoting the new pattern of comprehensive opening up, deepened the reform of the qualified foreign investor scheme, improved prudential management, abolished the restriction on repatriation of funds and the lock-in period requirements, and allowed qualified foreign investors to hedge their foreign exchange risks regarding their securities assets in China, which greatly facilitated foreign investors to invest in domestic financial markets. Subsequently, the investment demand of foreign investors in China's financial market has been on the rise,with China's stocks and bonds being included in main international indexes, such as MSCI, FTSE Russell, S&P Dow Jones and Bloomberg-Barclays index, and the weights being steadily increased. The abolition of the investment quota restriction for qualified foreign investors is a major reform of the State Administration of Foreign Exchange to deepen the reform and opening up of the financial market, and serve the new pattern of comprehensive opening up, as well as a reform measure to further meet the investment needs of foreign investors in China's financial market. Q:What are the legitimate foreign exchange procedures for qualified foreign investors to invest in the domestic securities market after the quota restrictions are lifted? A: Next, the State Administration of Foreign Exchange (SAFE) will immediately revise the Regulations on Foreign Exchange Administration of Domestic Securities Investment by Qualified Foreign Institutional Investors (SAFE Announcement No.1 of 2018) and other relevant regulations, to make it clear that the investment quota of individual qualified foreign investor will no longer need to be approved. At that time, after obtaining relevant qualifications approved by the securities regulatory authorities, the foreign investors shall entrust a domestic custodian bank to gothrough relevant registration procedures, and open a special fund account in the custodian bank and handle the follow-up remittance of funds and exchange business, with the registration certificate issued by the State Administration of Foreign Exchange. Q:Will the restrictions on the pilot countries and regions of qualified foreign institutional investors (RQFII) be lifted? A: Yes, the limitations on the pilot countries and regions of RQFII will be lifted, together with the abolition of restrictions on the investment quota of qualified foreign investors. Qualified foreign institutions around the world are welcome to use overseas RMB to carryout domestic securities investment. The abolition of restrictions on RQFII pilot countries and regions will further facilitate foreign investors to invest in the domestic securities market and enhance the depth and breadth of China's financial market. 2019-09-10/en/2019/0910/1553.html
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The State Administration of Foreign Exchange (SAFE) has recently disseminated the data on banks' foreign exchange settlement and sales and banks' foreign-related receipts and payments for customers for July 2019. SAFE Spokesperson and Chief Economist Wang Chunying answers media questions on foreign exchange receipts and payments for July 2019. Q: What were the characteristics of China’s foreign exchange receipts and payments in July 2019? What changes have occurred recently? A: Banks' foreign exchange settlement and sales and foreign-related receipts and payments were further balanced in July, indicating stable performance of the foreign exchange market. First, the deficit in banks' settlement and sales of foreign exchange registered a remarkable contraction. Banks' foreign exchange settlement and sales recorded a deficit of USD 6.1 billion in the month, down by 68% month on month. Other supply and demand factors e.g. forward settlement and sales of foreign exchange as well as options transactions indicate that supply and demand were basically balanced in the foreign exchange market. Second, non-banking sectors posted a balance in foreign-related receipts and payments. Non-banking sectors like enterprises and individuals recorded a slight deficit of USD 2.1 billion in foreign-related receipts and payments in July, versus a deficit of USD 9.1 billion in June. Moreover, expectations in the foreign exchange market remained stable, and cross-border capital flows through major channels were stable and growing. On the one hand, market players were more willing to settle than to buy foreign exchange. The foreign exchange settlement ratio that measures the willingness to settle foreign exchange, or the foreign exchange sold by customers to banks as a percentage of their foreign-related foreign exchange income, was 67%, up by 5 percentage points month on month. The foreign exchange sales ratio that measures the willingness to buy foreign exchange, or the ratio of foreign exchange purchased by customers from banks to the customer's foreign-related foreign exchange payments was 69%, down by 1 percentage point from the previous month. On the other hand, ongoing net cross-border capital inflows were recorded under enterprises' trade in goods and direct investment, and foreign exchange purchases by individuals were further stabilized. In July, foreign-related receipts and payments and foreign exchange settlement and sales under trade in goods represented higher month-on-month surpluses, foreign-related receipts and payments and foreign exchange settlement and sales under direct investment and portfolio investment registered stable surpluses, while foreign exchange purchased by individuals fell by 8% year on year. China's foreign exchange market has been in good order since the beginning of August. After the US unexpectedly announced the tariff measures at the beginning of August, global financial markets have responded dramatically and the RMB exchange rate also has undergone short-term adjustments. The foreign-related transactions by Chinese market players including enterprises and individuals show that banks' foreign exchange settlement and sales have registered a slight surplus, and cross-border receipts and payments have stayed basically stable since the beginning of August. This suggests that domestic economic fundamentals have played a significant role in underpinning the stability of China's foreign exchange market, and also indicates that as it becomes more mature and rational, China's foreign exchange market can better respond and adapt to the changing external environment. China will continue to ensure the continuity and stability of its foreign exchange administration policies, and step up efforts to liberalize and facilitate cross-border trade and investment, so as to lay a more solid foundation for stable performance of its foreign exchange market to serve the development of the real economy and the new landscape of comprehensive opening up. 2019-08-19/en/2019/0819/1548.html