The State Administration of Foreign Exchange (SAFE) has recently released the Circular of the State Administration of Foreign Exchange on Supporting the Development of New Forms of Trade (SAFE Document No. 11 [2020]) (“Circular”). Wang Chunying, press spokesperson and chief economist of the SAFE, answered media questions on relevant issues.
1. What is the policy background for the Circular?
A: The Communist Party of China (CPC) Central Committee and the State Council have introduced many support policies for the development of new forms of trade, such as cross-border ecommerce, market procurement trade and comprehensive foreign trade services. Boosting the development of new forms of trade has become an integral part of the efforts to accelerate the building of new competitive advantages for trade and drive high-quality trade development. Compared with traditional trade, the new forms of trade, featuring diversified market players and frequent online transactions, have a strong demand for efficient and convenient financial services. To better support their development, we must ensure stability in employment, financial operations, foreign trade, foreign investment, domestic investment, and expectations. Additionally it is necessary to ensure security in job, basic living needs, operations of market entities, food and energy security, stable industrial and supply chains, and the normal functioning of primary-level governments（known as “six priorities”）. So as for the aim of “six priorities” and stability in six areas, the SAFE published this Circular to optimize foreign exchange policies for new forms of trade and increase facilitation for trade and foreign exchange receipts and payments, on the basis of the inputs from market players of new forms of trade and experience gained from piloting, and with a view to further energizing the market and promoting healthy and fast development of new forms of trade.
2. What is the overall consideration behind the Circular?
A: The Circular is focused on addressing inconvenience in settling small-amount, frequent and electronic transactions under new forms of trade. In policy design, the Circular is intended to encourage innovation and promote inclusiveness and prudence to actively adapt to the actual needs for the development of new forms of trade. Following the requirements of “serving the real economy, facilitating opening up, tracking transactions and keeping risks under control”, the Circular is designed to loosen foreign exchange policies, optimize foreign exchange services, facilitate foreign exchange business processing, and implement credit restrictions and classified management that feature “more convenient exchanges for more compliant transactions” for new forms of trade.
3. What policy facilitation will the Circular offer market players?
A: According to the Circular, the foreign exchange settlement model will be optimized, the scope of receipts and payments under the foreign exchange account will be expanded, and more online processing will be enabled for new forms of trade, so as to reduce comprehensive costs for market players while increasing cross-border settlement efficiency. Specifically, the policy facilitation the Circular will offer includes the following:
Foreign exchange administration will be relaxed. First, settlements for exports by cross-border ecommerce players will be facilitated. Net settlements will be allowed between expenses on overseas warehousing, logistics and taxes, and export proceeds for cross-border ecommerce players. Second, cross-border advance payment will be optimized for relevant taxes and fees for cross-border ecommerce players. Enterprises will be allowed to pay relevant warehousing and logistics charges, taxes and fees for their overseas customers in advance. Third, efforts will be made to meet individuals’ needs for the foreign exchange settlement under foreign trade. Individuals will be allowed to handle foreign exchange settlements under cross-border ecommerce and market procurement trade through the foreign exchange account. Fourth, settlement for market procurement trade will be improved. For market players having filed with the market procurement trade platform, banks can handle their foreign exchange receipts and settlements with the customs declaration entrusted to a third party, based on the information available on the platform. Fifth, comprehensive foreign trade service providers will be supported to handle foreign exchange receipts from exports for their clients. Any technically eligible comprehensive foreign trade service provider will be allowed to handle for its customers foreign exchange receipts from exports on a commission basis, via a bank that is capable of verifying the electronic transaction information.
Additionally, foreign exchange services will be improved. First, settlement channels for new forms of trade will be expanded, by supporting eligible banks to handle foreign exchange businesses based on electronic transaction information. Second, enterprises will be facilitated in remote handling of foreign exchange businesses. Enterprises will be given direct access to the SAFE system to report trade, declare the balance of payments, and handle other foreign exchange businesses online. Third, declarations of foreign-related receipts and payments for micro transactions will be optimized. Enterprises will be enabled to make summary declarations of small-amount foreign-related receipts and payments in their names to meet their requirements for declaration for export tax refunding and financing. Fourth, innovative development in new forms of trade will be tracked continuously to actively respond to new demand of market players for foreign exchange businesses.
4. What further considerations does the SAFE have to support the development of foreign trade?
A: The SAFE will continue to follow the decisions and arrangements of the CPC Central Committee and the State Council and work hard to make a big push to ensure “six priorities” and stability in six areas. It will further deepen reforms in foreign exchange administration and launch more foreign exchange facilitation services to support resumption of work, better meet the demand for innovative trade development and boost high-quality trade development, and ultimately to support China’s efforts to open our door wider to the world.