Laws of the People's Republic of China

The State Administration of Foreign Exchanges

Circular of the State Administration of Foreign Exchanges on Issues Relating to Adjustment on the Policies for Management of the Foreign Exchange Accounts in Current Accounts under International Contracting Projects

HuiFa [2003] No.90

August 5, 2003

Bureaus and departments of state administration of foreign exchanges of the provinces, autonomous regions and municipalities directly under the Central Government, branches of the Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo, as well as designated banks of foreign exchanges:

On October 15, 2002, the SAFE promulgated and implemented the Circular of the State Administration of Foreign Exchanges on Issues Relating to Further Adjustment on the Policies for Management of the Foreign Exchange Accounts in Current Accounts (HuiFa [2002] No. 87), decided to repeal the restrictions for separate opening of the foreign exchange accounts in current accounts for Chinese-invested enterprises, combined the settlement accounts of foreign exchanges and special accounts into the foreign exchange accounts in current accounts and uniformly adopted the quota management over the foreign exchange accounts in current accounts and the management policies for unification of the foreign exchange accounts in current accounts for both Chinese-invested and foreign-invested enterprises. In view of the implementation of the above-mentioned policies, the new policies have facilitated the operation activities of enterprises in the market economic conditions, reduced the operation costs of the enterprises, promoted the reforms on the system of settlement and sales of foreign exchanges, thus obtaining good results. In order to keep on promoting the reforms on the management policies for the foreign exchange accounts in current accounts, and adapt to the demands for the enterprises in improving their international competitiveness in the market economic activities, the SAFE has decided to make proper adjustment on the policies for the management of the foreign exchanges in current accounts under international contracting projects. Here is to notify you of the following issues concerned:

I.

The foreign exchange accounts in the current accounts relating to the following items shall be listed for management in the foreign exchange accounts of current accounts for special sources and designated usages, with the quota verified at 100% of the foreign exchange revenues.

(I)

foreign exchange accounts in the current accounts for international contracting projects and international labor;

(II)

foreign exchange accounts in the current accounts for international ocean shipping and shipping forwarding and cargo forwardingŁ»

(III)

foreign exchange accounts in the current accounts for international bid invitation;

(IV)

foreign exchange accounts in the current accounts for provisional collection and payment to be transferred to other domestic institutions or individuals upon overseas revenue of foreign exchanges.

II.

The domestic institutions that have opened foreign exchange accounts in the current accounts in compliance with the provisions of Article 1 of the Circular may apply with the branches of local foreign exchange administration (hereinafter referred to as the foreign exchange administration) for adjustment of their quota upon the implementation of the Circular, and the foreign exchange administration shall handle with the formalities for verification of the alteration of the foreign exchange accounts in the current accounts according to the provisions of the Circular.

III.

The domestic institutions eligible for the provisions of Article 1 of the Circular that have not opened foreign exchange accounts in the current accounts may apply with the foreign exchange administration for opening of such accounts according to the actual requirements, and the foreign exchange administration shall verify and approve for their opening of accounts and verify and determine their account quota.

IV.

When verifying and approving for opening of foreign exchanges accounts in current accounts or adjusting the account quota of domestic institutions according to the provision of Article 1 of the Circular by the bureaus and branches of foreign exchange administration, the total quota of the foreign exchanges accounts in current accounts under their jurisdiction may exceed the total quota of the same jurisdiction verified by the SAFE; and the SAFE will newly adjust and distribute the total quota of the jurisdiction of the bureaus and branches based on the adjustment on the policies for the management of the foreign exchanges accounts in current accounts.

V.

In terms of the policies for the management of other foreign exchanges accounts in current accounts not mentioned in the Circular, the Circular of the State Administration of Foreign Exchanges on Issues Relating to Further Adjustment on the Policies for Management of the Foreign Exchange Accounts in Current Accounts and the Implementation Rules for the Management of the Foreign Exchange Accounts in Current Accounts of Domestic Institutions shall apply.

VI.

The Circular shall come into force on September 1, 2003 and in case of any discrepancy between the previous provisions and the Circular, the Circular shall prevail.

Upon the receipt, the bureaus shall distribute the Circular to the subordinate sub-bureaus, designated banks of foreign exchanges and the relevant units as soon as possible, and by the end of September 2003, submit the adjustment on the quota of the foreign exchange accounts under currents accounts of their jurisdiction to the Management Department of Current Accounts under the SAFE. The designated Chinese-invested banks of foreign exchanges shall distribute the Circular to their subordinate branches and sub-branches as soon ass possible upon receipt of the Circular. In case of any problems encountered during enforcement, please feedback in timely to the Management Department of Current Accounts under the SAFE.