![]() However, with the issuance of the notice on further simplifying and improving the foreign exchange management policies for direct investment on June 1, 2015, the foreign exchange annual inspection for foreign investors was cancelled. Additionally, an authorized domestic CPA firm had to issue a foreign exchange annual inspection report. Previously, SAFE required all FIEs to submit a statement of foreign investors’ equity in order to clarify and demonstrate the proposed outflow and inflow of foreign currency. This means that out of the total investment of an FIE, a certain percentage must be comprised of capital contributed by the investors. ![]() The capital account, on the other hand, deals with capital import and export, direct investments, and loan and securities, including principal repayment on foreign debts, overseas investments, investment in FIEs, and more.Īccording to SAFE rules, incorporated foreign-invested enterprises (FIEs) are subject to the general debt to equity ratio requirement. The current account applies to ordinary recurring business transactions, including trading receipts and payments, payment of interest on foreign debt, and repatriation of after-tax profits and dividends, amongst other transactions. In the Chinese foreign exchange system, there are two main accounts: the current account and the capital account. SAFE’s approval or record-filing is required for a range of transactions involving inbound and outbound forex payments. SAFE is the administrative agency responsible for managing foreign exchange activities in China, setting relevant regulations, and administering China’s foreign exchange reserves. The main bodies responsible for overseeing the flow of foreign exchange is the State Administration of Foreign Exchange (SAFE) and the People’s Bank of China (PBOC), the central bank. If successful, regulators will likely expand liberalizations nationally. Currently, the government is using China (Shanghai) pilot free trade zone to test full currency convertibility and further liberalizations for foreign investors. This means that money cannot be freely moved into or out of the country unless it abides by strict foreign exchange rules.Ĭhina made promises to liberalize its foreign exchange market when acceding to the World Trade Organization (WTO), but changes are being introduced gradually. ![]() In China, companies, banks, and individuals must comply with a “closed” capital account policy. ![]()
0 Comments
Leave a Reply.AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |