The National Work Conference on Foreign Exchange Administration was recently held in Beijing . At the conference, the gist of the Third Plenary Session of the 17th Central Committee of the CPC and the Central Economic Work Conference were studied and conveyed, foreign exchange administration work in 2008 was summed up, there was an analysis of the current situation, challenges, and opportunities facing foreign exchange administration, and arrangements were made for foreign exchange administration work in 2009.
At the conference, Ms. Hu Xiaolian, deputy governor of the PBOC and administrator of the SAFE, delivered a report on foreign exchange administration. Present were deputy administrators of the State Administration of Foreign Exchange Deng Xianhong, Fang Shangpu, Wang Xiaoyi and Li Chao.
The year 2008 witnessed a complex and ever-changing economic situation both at home and abroad. The foreign exchange administration departments, in accordance with the unified arrangements of the Party Central Committee and State Council, adjusted the direction and focus of foreign exchange administration in a timely manner, actively promoted facilitation of trade and investment, improved  management of balanced foreign exchange capital flows, strengthened monitoring and early warning of cross-border capital flows, made effective preparations for emergency plans for risk prevention, and strived to improve the balance of payments situation. All the work made new achievements. The status of the balance of payments was improved. The ratio of the current account surplus to GDP declined. Foreign capital inflows enjoyed steady growth. The growth rate of external debts slowed down and the surplus in the balance of payments steadily smoothed the slowdown in the rapid growth; the foreign exchange administration departments made new progress in the promotion of facilitation of trade and investment, carried out a pilot licensed foreign currency exchange business, enlarged the main transaction parties in the inter-bank foreign exchange market, made great efforts to provide foreign exchange services for the Olympic Games, and actively assisted earthquake relief work. They increased the proportion of foreign exchange settlement for advance receipts in goods according to the changing situation to provide support for general enterprises to cope with the international financial crisis; they further strengthened regulation of cross-border capital flows, revised and implemented the Regulations on Foreign Exchange Administration, intensified review of the authenticity and consistency of foreign exchange capital flows in trade and goods, strengthened monitoring and management of foreign exchange flows in direct investment, and carried out assessments measures of the banks performance in implementing the provisions of foreign exchange administration, thereby further giving play to the mechanisms for regulation and coordination of abnormal foreign exchange capital flows and cracking down on the illegal activities of underground banks. The operation and management of foreign exchange reserves have withstood a significant test. Meanwhile, the foreign exchange administration departments adopted a prudent approach toward the international financial crisis sweeping across the globe and instituted timely emergency response mechanisms, reinforced research and decision-making, intensified risk management and internal control and supervision, and reasonably arranged the currency asset structure to realize the preservation and appreciation of national foreign exchange reserves. The basic work of foreign exchange administration was further solidified and the monitoring and early-warning system for the balance of payments was further improved. Great efforts have been made in investigation and research while the supervision and restrictions over the power of administrative examination and approval have been intensified.
Hu Xiaolian proposed that, while affirming our achievements, we should also clearly understand the complicated and serious domestic and international situation in 2009 and fully estimate the difficulties and challenges lying ahead in foreign exchange administration. Affected by the world economic recession and financial turbulence, the abnormal cross-border capital flows will bring about potential risks. Due to the uncertainties in capital flows, the deteriorating external environment for international trade and investment, and increased business risks, it is still an arduous task to improve the status of the balance of payments and to guard against international economic risks.  Although the challenges facing us are severe, the pressures and drives are mutually dependent and the opportunities and challenges coexist. At present, national macro-policies such as expanding domestic demand provide a foundation for promoting the balance of payments equilibrium, while the market-oriented reforms of the prices of resources, energy, and other key items provide a powerful safeguard for improving the adjustment mechanism for the balance of payments market.  The fall in the prices of international energy and resources has provided favorable conditions for enterprises to carry out foreign investment in a safe and orderly way on the basis of strengthened risk prevention and management. The larger scope for demand of RMB for trade valuation and settlement has increased, which is beneficial for the areas along the coast and borders to create a more efficient and convenient environment for trade development. To this end, we should consolidate our conviction, draw on the advantages and avoid the disadvantages, and more conscientiously implement the scientific outlook on development, properly handle the relationship between the balanced management of foreign exchange and the focus of supervision under the complex circumstances, the relationship between continuity and flexibility of foreign exchange administration policies, and the relationship between strengthening foreign exchange administration and promoting market-oriented reforms, and we should keep abreast of the times to create a favorable environment for stable and rapid economic development.
At the conference, arrangements were also made for the major foreign exchange administration work for 2009. Hu Xiaolian stressed the need to fully implement the gist of the Third Plenary Session of the 17th Central Committee of the CPC and the Central Economic Work Conference, to put the scientific outlook on development into practice, and to actively implement the strategic plans of the Central Government to maintain stable and rapid development of the national economy under the guidance of Deng Xiaoping Theory and the Three Represents.  She also stressed the need to enhance the innovation and mechanisms of the foreign exchange administration system, actively promote facilitation of trade and investment, improve the system for balanced management of cross-border capital flows, further improve the status of the balance of payments, and strengthen monitoring and early warning of the balance of payments as well as risk management of foreign reserves to safeguard national economic and financial security; to further improve foreign exchange administration work in accordance with the general ideas of Maintaining Growth, Preventing Risks, and Promoting Balance. Maintaining Growth means actively implementing the general requirements of the Central Government to maintain stable and rapid economic development as the primary task of economic work in 2009; to promote the reform of the verification system for imports and exports, improve foreign exchange administration of trade in services, support the opening up and healthy development of the services sector, do a good job in the pilot RMB settlement of international trade, and to allow foreign exchange administration to play a greater role in economic growth with the promotion of facilitation of trade and investment as the starting point and ultimate goal. Preventing Risksmeans intensified efforts in monitoring, early warning, and crisis response to the balance of payments, establishing a two-way monitoring and early-warning framework for balance of payment risks, and further improving the emergency safeguard system for the balance of payments; improving the management of external claims and liabilities and direct investment, further guiding the standard development of Chinas foreign exchange market, devoting more efforts to inspections on the compliance of foreign exchange businesses and cracking down on various illegal activities of foreign exchange; and further strengthening the risk management of reserves operations and guaranteeing the role of foreign exchange reserves as a final protection in risk management. Promoting Balancemeans further improving the status of the balance of payments and coordinating with the relevant departments to effectively expand domestic demand and make structural adjustments; continuing to improve the balanced management of cross-border capital flows, steadily promoting the foreign exchange system reform in an orderly manner, and gradually establishing systems and mechanisms that contribute to an adjustment in the balance of payments.
Finally, Hu Xiaolian pointed out emphatically that foreign exchange administration departments should regard the studies and practices of the scientific outlook on development as a powerful driving force to improve work, bring their thoughts in line with the analysis of the current situation and decision-making arrangements of the Central Government, and make greater efforts to study the situation. At the same time, foreign exchange administration departments should strengthen the anti-corruption campaign and construction of the cadre ranks, carry out administrative affairs in strict accordance with the law, improve the internal management system, make more efforts in internal control and supervisory inspections, reinforce the mechanisms for supervisory restricting powers, and further enhance the level of Party conduct and clean governance.