China’s State Administration of Foreign Exchange (SAFE) announced it will further deepen the administration reform on forex to safeguard the development of the forex markets.
The SADE also aims to streamline administration and delegate powers, support the development of the real economy, and guard against the risks arising from cross-border capital flows, according to a statement on its website.
In this regard, the SAFE has released a circular with the proposed measures, which will take effect as of the date of promulgation.
The SAFE intends to implement nine measures in three aspects – by deepeing reforms to enhance the level of trade and investment facilitation; by refining management to strengthen authenticity and compliance reviews; and by stepping up efforts in statistics to coordinate management of domestic and foreign currencies.
Following are the specific measures that the SAFE will take to deepen the forex administration reform:
- expanding the scope of foreign exchange settlements for domestic foreign exchange loans;
- allowing funds for overseas loans under domestic guarantees to be transferred back for domestic use
- increasing the share of deposits absorbed by the international foreign exchange master account with domestic banks for domestic use
- allowing overseas institutions in pilot free trade zones to go through foreign exchange settlements through the non-resident account
- further standardizing foreign exchange administration for trade in goods and requiring exporters to collect foreign exchange in time
- continuing to implement and refine the outward remittance management policy for foreign exchange profits from direct investment, and clarifying the requirements on documents and endorsement for the outward remittance of foreign exchange profits of the equivalent of USD 50,000 (exclusive), and that the losses of the previous years should be duly made up for before remitting profits outward
- making sure that any domestic institution explains to the bank the sources of investment funds and the purposes (use plan) of the funds, and present to the bank the resolutions of the board of directors (or the resolutions of the partners), contracts and other authenticity evidencing materials, when going through ODI registration and remittance procedures
- any domestic institution who has retained overseas its export revenues or revenues from trade in services due to various reasons, but fails to undergo registration and filing procedures or submit information for the administration of foreign exchange as planned shall report relevant information to the local foreign exchange authority within one month after the Circular is released
- the integrated macro-prudential management of domestic and foreign currencies will be adopted for the overseas lending business of domestic institutions. In the overseas lending business of a domestic institution, the sum of the balance of overseas loans denominated in domestic currency and the balance of overseas loans denominated in foreign currencies shall not exceed 30% of its owner’s equity in the audited financial statements for the previous year
The SAFE is a deputy-ministerial-level state administration. There are several departments within the SAFE and a few institutions affiliated with it. The association is in charge of implementing supervision and checking of foreign exchange in China.