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	NOTICE OF THE STATE ADMINISTRATION OF FOREIGN EXCHANGE CONCERNING FOREIGN EXCHANGE CURRENT ACCOUNTS ADMINISTRATION ADJUSTMENT

	(No. 87 [2002] of the State Administration of Foreign Exchange promulgated on September 9, 2002, which shall come into force as of October 15, 2002)


SUBJECT : CURRENT ACCOUNTS ADMINISTRATION ADJUSTMENT
ISSUING DEPARTMENT : STATE ADMINISTRATION OF EXCHANGE
ISSUE DATE : 09/09/2002
IMPLEMENT DATE : 10/15/2002
LENGTH : 673 words
TEXT :

In light of the new situation after China joined World Trade Organization and in order to improve the administration of foreign exchange current accounts, to help enterprises lower the operation cost, and to promote foreign trade and economic cooperation, the State Administration of Foreign Exchange has decided to adjust the policies concerning the administration of foreign exchange current accounts.

I. Lower the criteria for opening foreign exchange current accounts by domestic companies and unify the conditions for opening foreign exchange current accounts by domestic and foreign-invested companies. Companies in China (including foreign-invested companies) that are approved by or registered at the competent authority to do trading with foreign companies or to have foreign exchange income under current accounts may apply to the State Administration of Foreign Exchange (hereinafter referred to SAFE) or its branch offices (hereinafter referred to "AFE(s) ") in the places where the companies are located for opening foreign exchange current accounts.

II. To consolidate the present foreign exchange settlement account and the foreign exchange special account into one single foreign exchange current account. Income of such a foreign exchange current account will be the foreign exchange income under current account and the payment from it will be the foreign exchange payment under current account and the foreign exchange payment under capital account approved by AFE.

III. To uniformly apply a quota management for the foreign exchange current account. The quota for the foreign exchange current account of an institution in China shall be 20% of the total foreign exchange income of the institution in the previous year. In case the institution did not have any foreign exchange income under current account in the year prior to its application for opening of the foreign exchange current account, the initial quota shall be no more than US$100,000.

AFEs at all places may, according to the nature and actual need of the institutions in their places and under the total quotas approved by SAFE for their regions, may adjust the quotas of the foreign exchange current accounts of specific institutions in their regions, provided that the sum of the quotas of institutions in their regions does not exceed the regional total quota.

IV. Institutions are allowed to continue to use their foreign exchange settlement accounts and their foreign exchange special accounts according to the approved scope of income and payment and the approved quotas. However, such institutions are required to go to AFEs in their places to consolidate the two accounts into one single foreign exchange current account and to apply for a new quota thereof.

AFEs at all places may, in light of their control capacity and the actual conditions in their places, choose their own appropriate time to handle applications for the consolidation of the two foreign exchange accounts and for new quotas before December 31, 2003.

V. To promote the application of the information system for foreign exchange account control. In places where such information system has been in use and where the effective control has been implemented through such information system, AFEs may adopt a more flexible control over the foreign exchange current accounts by relaxing the limit over the number of such accounts allowed to be opened, by not requiring an annual review over such accounts, or by not requesting banks to submit paper reports on such accounts.

VI This Notice shall enter into force on October 15, 2002. Matters stipulated in this Notice shall be regulated in accordance with this Notice and matters not stipulated in this Notice shall be regulated in accordance with the exiting rules and regulations on control of foreign exchange accounts.

The branch offices of SAFE shall distribute this Notice as soon as possible to all sub-branches and all foreign banks in China; the headquarters of the domestic designated forex banks shall distribute this Notice as soon as possible to all branches. Problems arising from the implementation of this Notice shall be reported to SAFE as soon as possible.

Attachment: Detailed Rules for Regulating Foreign Exchange Current Accounts of Institutions in China (omitted)