The Administration of Domestic Entities' Foreign Exchange Accounts Ⅰ

SAFE branches in all provinces, autonomous regions, municipalities directly under the Central Government, exchange administration offices, and SAFE branches in the cities of Shenzhen, Dalian, Qingdao, Xiamen, Ningbo, head offices of all designated Chinese-funded foreign exchange banks: 

In order to adapt to new circumstances after China's entry into the WTO, further improve the foreign exchange administration under current account, lower enterprises' operational costs, and promote the development of foreign trade and economic cooperation, the SAFE has decided to adjust policies on the administration of foreign exchange accounts under current account. A circular on relevant issues is given hereunder:

1. Further lower the threshold for Chinese-funded enterprises to open foreign exchange accounts, unify the requirements for opening foreign exchange accounts under current account for both Chinese-funded and enterprises with foreign investment. Any domestic entity authorized by or put on record in the competent administration agency to conduct foreign business or having foreign exchange proceeds under current account （including enterprise with foreign investment） may apply to the SAFE office in its locality for opening a foreign exchange account under current account.

2. The existing foreign exchange settlement account under current account and special foreign exchange account of an enterprise shall be consolidated into a foreign exchange account under current account. Foreign exchange account under current account shall be credited with foreign exchange proceeds from current transactions and debited with foreign exchange payments for current transactions and payments for capital transactions approved by a SAFE office.

3. Balance ceiling shall be set for all foreign exchange accounts under current account. The balance ceiling of a domestic entity''s foreign exchange account under current account shall be 20 percent of the amount of its foreign exchange proceeds from current transactions for the previous year in principle. If an entity that has no foreign exchange proceeds under current account for the previous year opens a new foreign exchange account under current account, the initial balance ceiling shall not exceed the equivalent of US$100,000 in principle.SAFE offices in all localities have the right to appropriately adjust the balance ceilings of foreign exchange accounts under current account of domestic entities under their jurisdiction in accordance with the business characteristics and actual needs of the entities and the regional grand total quota ratified by the SAFE, provided that the total of the balance ceilings of all the domestic entities'' foreign exchange accounts under current account do not exceed the regional quota.

4. Foreign exchange settlement accounts and special foreign exchange accounts opened before the implementation of this circular may be used in accordance with the original scope of receipts and payments and balance ceiling. However, domestic entities shall go through procedure of consolidating the accounts and deciding the new balance ceilings at the SAFE offices in their localities before December 31, 2003.SAFE offices in all localities may schedule the account consolidation and new balance ceiling ratification for domestic entities in their respective localities before December 31, 2003 in accordance with their supervision ability and the local conditions.

5. Employment of the management information system for foreign exchange account （hereinafter referred to as "MIS"） shall be energetically prompted. In areas where the MIS has been used and supervision over foreign exchange account under current account has been exercised through the MIS, the SAFE offices there may take flexible measures in supervising foreign exchange account under current account, such as further loosing the restriction on the number of foreign exchange accounts under current account, making no more annual inspection on foreign exchange accounts under current account, giving up the requirement on banks to submit paper-made statements related to foreign exchange accounts under current account.

6. This circular shall be implemented as from October 15, 2002. For matters clearly stipulated in this circular, this circular shall be followed, otherwise, current rules on the administration of foreign exchange account shall be followed.

On receiving this circular, all SAFE branches shall immediately transmit it to the sub-branches and foreign-funded banks under their jurisdiction. Head offices of all designated Chinese-funded foreign exchange banks shall transmit it to their branches and sub-branches as soon as possible. Any problem encountered during the implementation shall be reported in time to the Current Account Management Department of the SAFE.

September 9, 2002

Attachment: Detailed Implementing Rules on the Administration of Domestic Entities'' Foreign Exchange Accounts under Current Account

Chapter I General Provisions

Article 1 In accordance with Regulations on the Exchange System of the People''s Republic of China, the Rules on the Administration of Domestic Foreign Exchange Accounts, and the Circular on Further Adjusting Policies on the Administration of the Foreign Exchange Accounts Under Current Account, this Rules is enacted for the purpose of satisfying the needs of the new circumstances after China''s entry into the WTO, lowering enterprises'' operational costs, and further improving foreign exchange administration under current account.

Article 2 Domestic entities in this Rules refer to government agencies, enterprises and institutions, social organizations, and armed forces etc., including enterprises with foreign investment but not financial institutions.

Chapter II Opening and Use of a Foreign Exchange Account under Current Account

Article 3 A domestic entity satisfying either of the two conditions listed below may apply for opening a foreign exchange account under current account at the SAFE office in its locality.

1. Authorized by or put on record in a competent administration agency to run foreign business or having foreign exchange proceeds under current account;

2. Having foreign exchange proceeds from special sources and for prescribed purposes, such as donation, aid, and international postal remittance.