Laws of the People's Republic of China

State Administration of Foreign Exchange

Notice of the State Administration of Foreign Exchange on Relevant Issues concerning Foreign Exchange Control on Individual Foreign Trade Operations

Hui Fa [2004] No.86

August 10, 2004

The branches of the State Administration of Foreign Exchange (hereinafter referred to as SAFE) or the departments of foreign exchange control of all provinces, autonomous regions and municipalities directly under the Central Government, the branches of SAFE in Shenzhen, Dalian, Qingdao, Xiamen and Ningbo, and all Chinese-capital banks designated for the foreign exchange business:

In order to promote the development of foreign trade and the facilitation of it and to improve the foreign exchange control, this Notice is hereby promulgated as follows concerning the policy of foreign exchange control related to foreign trade in goods by individual foreign trade operators:

1.

"Individual foreign trade operators" used in the Notice refer to individuals who have gone through the industrial and commercial registration or other formalities for business operation according to law, obtained the individual license of the industrial and commercial business or other certificate of business operation, made registration for record according to the provisions of the competent department of commerce of the State Council (with the exception where no archive registration is required by law) and obtained the right of engaging in foreign trade operation.

2.

To engage in foreign trade operation, the individual foreign trade operator shall go through the formalities for access to China Electronic Port with the customs, and then go through the formalities for archive registration for the Roll of Import Entities Making External Payment of Foreign Exchange or the verification of receipt of foreign exchange by export with the foreign exchange bureau (hereinafter referred to as the "foreign exchange bureau") of the place where he has made his industrial and commercial registration or has obtained his business qualifications. Not until all the formalities mentioned above have been gone through can the individual foreign trade operator open any settlement account of individual foreign trade or handle any receipt or payment of foreign exchange.

3.

When making the archive registration for the Roll of Import Entities Making External Payment of Foreign Exchange or the verification of receipt of foreign exchange by export, the individual foreign trade operator shall provide the foreign exchange bureau with the following materials:

(1)

an application;

(2)

the original copy and the copy of his valid ID certificate;

(3)

the duplicate and the copy of his license of industrial and commercial business or other certificates of business operation obtained lawfully;

(4)

the original copy and the copy of the archive registration form of the foreign trade operator sealed with the archive registration print;

(5)

his registration certificate by the customs and its copy;

(6)

the code certificate of his organization and its copy;

(7)

his IC card of "China Electronic Port"; and(8) other materials required by the foreign exchange bureau.

The foreign exchange bureau shall handle relevant formalities for the individual foreign trade operator if all the materials mentioned above are inerrably submitted.

4.

The individual foreign trade operator may, with the approval of the foreign exchange bureau, open an individual settlement account of foreign trade according to the need of his operation.

To apply for an individual settlement account of foreign trade, the individual foreign trade operator shall submit to the foreign exchange bureau the following materials:

(1)

an application for opening an account in writing ;

(2)

the original copy and the copy of his valid ID certificate;

(3)

the original copy and the copy of the archive registration form of the foreign trade operator sealed with the archive registration print;

(4)

the code certificate of his organization and its copy; and

(5)

other materials required by the foreign exchange bureau.

After checking and verifying all the materials mentioned above and finding no inerrability in them, the foreign exchange bureau shall issue an Approval for Current Operation, by which the individual foreign trade operator may open an account with a bank engaging in foreign exchange business in his place (hereinafter referred to as the "bank"). When opening an individual settlement account of foreign trade for an individual, the bank shall add the word "individual" to the account title.

5.

The foreign trade settlement accounts of individual foreign trade operators shall be incorporated into the information system of foreign exchange account management. The limits thereon shall be fixed at 100% of the actual receipt of foreign exchange under the trade of individual foreign trade operators in goods.

The access procedures and technical regulations on the incorporation of foreign trade settlement accounts of individual foreign trade operators into the information system of foreign exchange account management shall be issued by the SAFE separately. Before such issuance, formalities of foreign exchange control such as opening and closing of accounts mentioned above shall be handled by hand temporarily.

The collection and payment in the foreign trade settlement account of a foreign trade operator means the collection and payment of foreign exchange under the import and export of goods, including incidental the collection and payment under the trade in goods.

6.

The foreign trade settlement account is a foreign exchange account so that no foreign cash can be deposited in or withdrawn from it.

Foreign exchange fund may be transferred between the individual foreign trade settlement account and the individual foreign currency savings account of the same person, however, the fund transferred from the individual savings account to the foreign trade settlement account shall be limited to external payment on the date of such transfer and can not be made for settlement of exchange. Fund in the individual foreign trade settlement account may be transferred to the individual foreign cash savings account, however, fund in the individual foreign cash savings account may not be transferred to the individual foreign trade settlement account.

7.

In his operation of foreign trade in goods, the individual foreign trade operator may make purchase, external payment and settlement of foreign exchange either directly with the bank or through his individual foreign trade settlement account. However, they can go through formalities for external payment of foreign exchange neither directly through the individual foreign currency savings account nor through other foreign currency savings accounts of the operator used alternatively or together.

8.

Where any price of goods needs to be paid in advance externally under the trade in goods and one payment of equivalence is below US$30,000(including US$30,000), the individual foreign trade operator shall go through the formalities for the external payment with the bank by presenting relevant certifying materials such as the import contract, the verification form of payment of foreign exchange by import and the proforma invoice. Where one payment of equivalence is beyond US$30,000, the individual foreign trade operator shall present the import contract, the verification form of payment of foreign exchange by import, the proforma invoice and the letter of guarantee for such payment in advance.

9.

The foreign exchange receipt of the individual foreign trade operator from export of goods may be directly settled, or settled through depositing it in his individual foreign trade settlement account, or settled through depositing it in his individual foreign trade settlement account and then transferring it to his individual foreign currency savings account.

(1)

Where the amount in a lump sum is equal to or below the equivalent of US$10,000, the operator shall settle the foreign exchange directly with the bank by presenting his ID certificate;

(2)

Where the amount in a lump sum or the cumulative sum in one day is more than the equivalent of US$10,000:

(a)

If the transaction is to be settled in form of letter of credit, letter of guarantee or documentary collection, the operator shall go through the formalities for the settlement of foreign exchange by presenting the valid commercial documents in any kind of such forms.

(b)

If the transaction is to be settled in form of remittance and the settlement of foreign exchange in self-operated export is directly done or after depositing into the individual foreign trade settlement account, the operator shall go through the formalities for settlement of foreign exchange with the bank after the verification of its authenticity by the bank by presenting the relevant certifying documents such as his ID certificate, the export entry and the verification form of receipt of foreign exchange by export.

(3)

In the case of settlement of foreign exchange through depositing into the individual foreign trade settlement account and transferring to the individual foreign currency savings account, in addition to the provisions of the two preceding items, the Circular of the State Administration of Foreign Exchange on Problems Related to the Standardization of the Management of Residents' Personal Foreign Exchange Settlement (SAFE No. 18 [2004]) shall be abided by.

10.

As to the method of supervision under which a verification form of receipt of foreign exchange by export is required for export entry, the individual foreign trade operator shall apply to the foreign exchange bureau for the verification form in accordance with the relevant present provisions. The foreign exchange bureau shall, according to the situation of the operator's business and the verification performance, determine the number of verification forms to be issued and issue them to the operator. Any new individual foreign trade operator applying for verification forms for the first time, in addition, shall present the original copy and the copy of the relevant contract to the foreign exchange bureau which shall determine the number of verification forms to be issued and issue them to the operator according to the concrete situation after auditing.

11.

In case individuals receive funds from abroad or making external payment in the operation of foreign trade, they shall handle statistical declaration of international balance of payment in accordance with the provisions of the Measures for the Statistical Declaration of International Balance of Payment and other relevant provisions and fill corresponding corporate declaration forms.

12.

The receipt and payment of foreign exchange of the individual foreign trade operator under the technology import and export and the service trade shall be handled in accordance with the relevant provisions concerning the control of foreign exchange under non-trade account of domestic institutions. Individuals' receipt and payment of foreign exchange under capital and financial accounts shall be handled in accordance with the relevant present provisions concerning the foreign exchange control.

This Circular shall not apply to individual foreign operators' operation of any border trade or foreign trade in goods in any special economic zones such as bonded areas or export processing areas.

13.

Individual foreign trade operators shall accept the supervision and inspection of the foreign exchange bureau. The foreign exchange bureau shall, pursuant to the Regulations of the People's Republic of China on Foreign Exchange Control and other regulations on foreign exchange control, impose punishment on any individual foreign trade operator who violates this Circular or any other provisions on foreign exchange control. If the violation constitutes a crime, the judicial departments shall investigate the violator for criminal responsibility.

14.

Other matters on foreign exchange control not covered or clearly provided herein shall be handled by referring to the current policy for control of foreign exchange related to foreign trade activities by domestic institutions.

This Circular shall go into effect 30 days later after its promulgation. After receiving this Notice, each branch of the SAFE and department of foreign exchange shall promptly transmit the Notice to the sub-branches and banks under its jurisdiction and make it public. Each Chinese-capital bank designated for foreign exchange business shall promptly transmit the Notice to its affiliated branches and sub-branches. Any question occurred in the implementation of this Notice shall be fed back promptly to the SAFE.