On April 8, the State Administration of Foreign Exchange (SAFE) posted the Notice of the State Administration of Foreign Exchange on Reform of the Administration of Foreign Exchange Capital Surrender of Foreign-funded Enterprises (the Notice) and decided to reform the administration of foreign exchange capital of foreign-funded enterprises across China. The Notice clarifies that enterprises may choose the time to settle the foreign exchange capital. The use of capital and settled funds of foreign-funded enterprises should meet the relevant rules and be under administration of negative list. This rules shall come into effect on June 1.

 

The main content of the Notice include: first, will-based management will be exercised over foreign exchange capital of foreign-funded enterprises and enterprises may choose the time of settlement of foreign exchange capital on their own discretion; second, the use of foreign-funded enterprise capital and settled funds should meet the relevant provisions and the negative list management will be exercised to the use of capital; third, efforts will be made to facilitate foreign-funded enterprises to make equity investment with RMB obtained from settlement of foreign exchange capital; fourth, efforts will be made to further standardize payment management of settled capital and banks should be liable for the authenticity verification under the three principles of practices; fifth, efforts will be made to clarify and simplify the settlement of foreign exchange capital under the other direct investment items and administration of use; sixth, SAFE will strengthen in-process and afterwards management and further enhance afterwards supervision and investigation of violation.

 

The will-based settlement of foreign exchange capital of foreign-funded enterprises means that enterprises may settle the foreign exchange capital with verification of rights and interests of the monetary contribution of the SAFE (or registration of monetary contribution entry registration of the bank) according to the actual operation requirements of the enterprises. The proportion of will-based settlement of foreign exchange capital is 100% temporarily. SAFE may re-adjust the aforesaid proportion according to the international balance of payments. It is said that the implementation of the Notice will fully bestow the liberty and option of settlement of foreign exchange capital to enterprises, provide for the policy space for enterprises to avoid risks of exchange rate fluctuation, help lower the social costs, further facilitate trade and investment and earnestly serve development of the real economy.

 

Source: Guangzhou Daily, April 9, 2015