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In order to further improve the administration of foreign exchange collection and settlement in commodity trade, facilitate the enterprises in their normal capital use and intensify the effectiveness of the administration of the authenticity of foreign exchange in trade and sustain the international payment balance, we hereby notify the relevant issues as follows: 1. The branches and foreign exchange business departments of the State Administration of Foreign Exchange (hereinafter referred to as the Foreign Exchange Bureau) shall adopt a classified administration of foreign exchange in trade as to the foreign exchange collection entities. 2. All foreign exchange administrations shall conduct an examination on the foreign exchange collection entities. Where any entity foreign exchange collection is under any of the following circumstances, it shall be included into the list of "enterprises under focused supervision": (1) Where any foreign exchange collected under the trade item within 1 year has a balance of 10% or above as compared to the total receivable foreign exchange under the trade item for the contemporary period; (2) Where any entity was punished by the foreign exchange administration for its violation of the provisions on the administration of foreign exchange within 1 year; or (3) Where any entity shall, in the view of the foreign exchange administration, be included into the list of "enterprises under focused supervision" in light of its credit records and term for business initiation. 3. As to any foreign exchange collection entity that has any special demand in such aspect as production, operation and capital settlement regarding the export of vessels and large complete set of equipments as well as any foreign exchange collection entity that has a balance of no more than US$ 0.5 million of equivalent value between the foreign exchange collected under its trade item within 1 year and the receivable foreign exchange under the trade item for the contemporary period, the requirements as prescribed in item (1), Article 2 herein may be properly released upon the examination and approval of the Foreign Exchange Bureau. 4. The administration method of collecting and settling the foreign exchange under the trade item through the settlement account of foreign exchange or payment of foreign exchange shall be abolished. A foreign exchange collection entity that is not listed as an "enterprise under focused supervision" may directly handle the collection and settlement of foreign exchange according to the relevant provisions. As to any foreign exchange collection entity listed as an "enterprise under focused supervision", the settlement of foreign exchange for all its incomes under the current item shall be subject to strict examination and approval according to the provisions of the present Circular. 5. As to any foreign exchange collection entity marked as an "enterprise under focused supervision", where its foreign exchange under the current item is directly settled or settled upon being entered into the current item, it shall make a written explanation on the nature of foreign exchange settlement to the designated foreign exchange bank (hereinafter referred to as the bank) and handle the relevant formalities according to the following provisions: (1) As to any foreign exchange income generated from transit trade for which payment is made before collection, it shall handle the foreign exchange settlement upon the strength of the original of the verification and write-off form of import in trade (the page to be kept by enterprise), to which the bank seal is affixed, as well as the contract on transit trade; As to any foreign exchange income generated from transit trade for which collection is made before payment, no foreign exchange settlement may be made before the external payment in the transit trade is concluded. When the external payment is concluded, the remnant amount of foreign exchange can be settled upon the strength of the original of the verification and write-off form of import in trade (the page to be kept by enterprise), to which the bank seal is affixed, and the contract on transit trade; (2) As to any other sum under the trade item (including the goods price subject to advance collection in export), the foreign exchange shall be settled upon the strength of the original of the declaration form of exported goods corresponding to the collection of foreign exchange, on which the serial number of the verification and write-off form of foreign exchange collection in export is indicated, as well as the export contract; (3) As to such affiliated expenses in trade as commissions (agency fees) and freight/insurance costs, the relevant foreign exchange can be settled upon the strength of the relevant contract (agreement) and invoices. Any foreign exchange income not generated from trade under any item can be settled upon the strength of the relevant contract (agreement) and relevant invoices. After the bank has handled the formalities for foreign exchange settlement for an "enterprise under focused supervision", it shall indicate the relevant amount and date of foreign exchange settlement on the relevant original of instruments and reserve the original of written explanation as well as the original or photocopy of relevant instruments according to the relevant provisions. 6. As to any foreign exchange collection entity that has been listed into the "enterprises under focused supervision" and fails to provide the materials as prescribed in Article 5 to prove the nature of foreign exchange collection, the bank shall not handle any formality for foreign exchange settlement in the absence of the approval of the foreign exchange administration. 7. Where any group company adopts the concentrated collection and payment as well as concentrated administration of foreign exchange capital under the current item, as is approved by the foreign exchange administration, a member company thereof that has been listed as an "enterprise under focused supervision" shall not join the concentrated collection and payment as well as concentrated administration of foreign exchange capital under the current item of its group company. In the case of any violation of the relevant provisions, the qualification of the group company for concentrated collection and payment as well as concentrated administration of foreign exchange capital shall be cancelled. 8. As to the entrance of foreign exchange collected from trade into account or any application for the refunding of settled foreign exchange for any reason, the foreign exchange administration shall, according to the relevant provisions of the Detailed Rules for Implementing the Measures for the Administration of Verification and Write-off of Foreign Exchange Collected in Export (hereinafter referred to as the "Detailed Rules") (No. 107 [2003] of the State Administration of Foreign Exchange), conduct strict examination and approval according to the relevant provisions. Where any overseas foreign exchange capital is mistakenly remitted into the territory of China and has not yet been written off, the relevant foreign exchange collection entity shall provide not only the materials as prescribed in paragraph 4, Article 66 of the Detailed Rules but also the written statements produced by the bank so as to clarify the payment time of foreign exchange, the serial number of declared international payment as well as whether the collected foreign exchange has been settled. 9. The foreign exchange administration shall conduct an examination on the listed "enterprises under focused supervision" on an annual basis, and report the result to the State Administration of Foreign Exchange for archival filing and to other foreign exchange bureaus at well. All foreign exchange administrations shall provide to the banks within its jurisdiction the list of "enterprises under focused supervision" as reported by its jurisdiction region or any other region in written or electronic form and shall notify the relevant foreign exchange collection entities of the determination of the list of "enterprises under focused supervision". 10. The bank shall, in strict accordance with the present Circular and other relevant provisions on foreign exchange, intensify the examination on the authentication of foreign exchange capital inflow in trade. Where any bank violates the provisions of the present Circular by handling the formalities for any foreign exchange settlement, it shall be punished according to the provisions of Article 42 of the Regulation of the People's Republic of China on Foreign Exchange Administration. Where any bank or foreign exchange collection entity violates the present Circular or any other provision, it shall be punished according to the Regulation of the People's Republic of China on Foreign Exchange Administration and other provisions on foreign exchange administration. 11. All foreign exchange administrations shall intensify the supervision over the bank and the "enterprises under focused supervision" and attach more attention to the analysis, verification and elimination of any abnormal instance and transfer any violation of the provisions on foreign exchange administration to the verification department of foreign exchange for investigation and punishment in a timely manner. 12. The present Circular shall not apply to the enterprises in the bonded areas, bonded harbors, export processing areas, bonded logistic parks and bonded logistic centers. 13. The present Circular shall come into force as of November 1, 2006. Any capital that has been entered into the account for foreign exchange settlement before the implementation of the present Circular shall be transferred into the account of foreign exchange under the current item. In case any previous provision conflicts with the present Circular, the present Circular shall prevail. All branches of the State Administration of Foreign Exchange shall, after receiving the present Circular, forward it to the central sub-branches, sub-branches, foreign-funded banks, local commercial banks and relevant entities within their jurisdictions. All Chinese-funded designated foreign exchange banks shall, after receiving the present Circular, forward it to the branches and sub-branches within their jurisdictions as soon as possible. In the case of any problem arising in the process of implementation, please feed it back to the Administrative Department of Current Item of the State Administration of Foreign Exchange in a timely manner. |
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