A recent symposium attended by the director-generals of the branches of the State Administration of Foreign Exchange (SAFE) was held in Hohhot, capital of the Inner Mongolia Autonomous Region. The participants earnestly carried out the decisions and planning of the Party Central Committee and the State Council on the current economic situation and the economic work for the latter half of this year, reviewed and summarized foreign exchange administration work from the beginning of 2010, conducted in-depth analyses of the current economic, financial, and foreign exchange situations both at home and abroad, and studied and mapped out the major tasks for foreign exchange administration during the next stage. Mr. Yi Gang, deputy governor of the Peoples Bank of China and administrator of the SAFE, delivered a work report. Deputy director-generals, chief economists, and chief accountants of the SAFE were also present at the meeting.

It was pointed out at the meeting that since the beginning of 2010, the foreign exchange administration departments have earnestly carried out the scientific outlook on development, transformed conscientiously the concepts and methods of foreign exchange administration, promoted progressively reform in major areas and in key aspects of foreign exchange administration, and implemented various tasks according to the established plans. The progress can be encapsulated in the following seven points:

(1)   Constantly promoting trade facilitation, carrying out pilot reforms of verification and writing-off systems for imports, realizing the transformation from deal-by-deal verification to aggregate inspection, from on-site verification to off-site verification, as well as from behavioral supervision to entity supervision;

(2)   Launching special intensive campaigns intensively to crack down on the inflow of hot money,by which 3.47 million deals of cross-border transactions involving an accumulated amount of over USD440 billion were examined. So far, 197 cases of suspected regulation violations have been ascertained, among which 150 cases have been filed and 42 have been settled. As to other cases, efforts are being made to determine the nature of the relevant illegal acts in an orderly manner and to impose corresponding penalties;

(3)   Further improving the transparency of foreign exchange administration, intensifying efforts to integrate and sort out foreign exchange administration laws and regulations, making great efforts to publicize and disseminate basic knowledge about foreign exchange administration, interpreting foreign exchange administration policies, and responding actively to social concerns;

(4)   Further facilitating foreign exchange receipts and payments and transactions of market entities, streamlining administrative procedures for the examination and approval of foreign exchange businesses under the capital account, carrying out pilot operations of exchange settlements and sales for individuals via e-banking, and providing the Green Channel as a preferential policy for combating earthquakes, carrying out relief work, and ensuring the success of the World Expo 2010 Shanghai;

(5)    Strengthening the statistics and monitoring of cross-border fund flows, standardizing foreign exchange administration for overseas direct investments by domestic banks, and completing implementation of systems for assessments of bank compliance with the regulations of foreign exchange administration on a nationwide scale;

(6)    Perfecting the operation and management of foreign exchange reserves, strengthening risk management and internal controls, and constantly enhancing the level of operations and management of foreign exchange reserves;

(7)    Strengthening the construction of an honest and clean party work style and government, and enhancing internal management and construction of personnel internal control systems.

It was pointed out at the meeting that under the macro-economic circumstances both at home and abroad, the first half of 2010 saw relatively brisk foreign exchange receipt and payment activities. On the whole, compared to expectations the appreciation of the Renminbi has been slackening. It is estimated that during the latter half of 2010, the country will still confront a complex situation for foreign exchange receipts and payments, combined with a certain degree of uncertainty. For this reason, efforts shall be made to closely monitor the situation, to carry out in-depth assessments of the risks, as well as to formulate effective programs and measures to cope with the situation.

It was proposed at the meeting that during the next stage foreign exchange administration departments at all levels should speed up the transformation of the concepts and methods for the administration of foreign exchange, and make great efforts to promote reform in the major areas of foreign exchange administration. Efforts should be made in the following eight areas:

(1)   Implementing on a wider scale the reform of the verification and writing-off for imports and exports, earnestly summarizing experiences from the pilot reforms of verification and writing-off of foreign exchange imports, which shall be implemented on a nationwide scale when the essential requirements are satisfied; initiating reform of verification and writing-off of foreign exchange collection from exports with the appropriate timing, and continuing to promote trade facilitation;

(2)   Continuing to fulfill duties to ascertain and impose penalties on cases ferreted out by the special campaigns to crack down on the inflow of hot money, and maintaining the seriousness of combating hot money;

(3)   Promoting the integration of data and systems and enhancing the level of comprehensive utilization, monitoring, and analysis of the relevant data, so as to meet the requirements for statistical monitoring, analysis, and early warning, management, inspections, and so forth;

(4)   Promoting the reform of the capital account with a special focus on selected items required to keep risks under control;

(5)   Actively promoting the development of the foreign exchange market in coordination with the reform of the RMB exchange rate formation mechanism, studying the addition of transaction instruments that meet the requirements of the market, and strengthening supervision and guidance over market makers;

(6)   Further improving the transparency of foreign exchange administration and continuing to promote the integration and sorting out of the laws and regulations, so as to perfect the overall legal framework; further enhancing communication with the media and the general public on popular issues of social concern;

(7)   Strengthening the operation and management of foreign exchange reserves, further expanding and perfecting investment channels and platform construction, and optimizing the currency and capital structure;

(8)    Implementing the gist of the National Talent Work Conference, continuing to enhance construction of honest and clean party work styles, government, cadre ranks, and control systems.