Facilitating Current Account Transactions

China Forex:  What are the key objectives for the Current Account Department in 2018?

Liu Bin: In 2018，the Current Account Department will earnestly study and implement the spirit of the 19th National Congress of the Communist Party of China as well as the National Financial Work Conference and the Central Economic Work Conference. It will adhere to the general guideline of facilitating and liberalizing cross-border trade and investment，while enhancing a new pattern of reform and opening up to the outside world. It will also seek to safeguard the stability of the foreign exchange market and guard against risks from cross-border capital flows in order to ensure China's economic and financial security. In so doing it will also safeguard the authority of the Communist Party's Central Committee with its centralized and unified leadership and impose strict Party discipline. Ensuring regulatory compliance and the authenticity of transactions will be key tasks. The goals will be to uphold transaction convenience，maintain strict supervision and improve regulatory capabilities. This means further enhancing trade facilitation and serving the real economy as authorities seek to prevent risks from cross-border capital flows.

China Forex: The Communist Party's 19th National Congress  put forth proposals for pushing ahead with a new pattern of opening up to the outside world and implementing policies that promote a high level of trade and investment liberalization. Maintaining currency convertibility under the current account and facilitating trade and investment have long been key themes of foreign exchange management on the current account. What measures will be introduced this year to continue these general policies?

Liu Bin: In recent years，management of current account foreign exchange transactions has adhered to the principle of maintaining convertibility and facilitating trade and investment. Serving the real economy has been the starting point. Additionally，there have been continuous improvements in the effort to facilitate transactions under the current account and thereby create a more open and convenient business environment. In the past year，the State Administration of Foreign Exchange (SAFE) focused on areas such as electronic customs declarations in order to facilitate the authenticity of bank business in the area of trade payment remittances. It has jointly published documents with the Ministry of Commerce and other arms of the government to support comprehensive pilot areas for cross-border e-commerce，comprehensive trade services enterprises and other new business developments. Another area where progress has been made is in simplifying operational procedures in order to facilitate banks’ foreign exchange business and the submission of statistics. Furthermore，SAFE has been working to support the Ministry of Public Security in the upgrading of ID cards for foreigners with permanent residence status to facilitate bank foreign exchange settlements. It has also been formulating policies to facilitate the management of foreign exchange rate exposure in the leasing business for large-scale equipment and setting policies for overdue payments related to wage disbursement problems faced by multinational corporations.

In 2018，on the premise of guaranteeing the authenticity and compliance of transactions，SAFE will study new measures to adapt to supporting supervision methods of cross-border e-commerce，market procurement，foreign trade involving comprehensive service enterprises and foreign exchange transactions linked to commodity exchanges. It will formulate policies regarding payment agencies in cross-border foreign exchange fund movements to further standardize and support the development of new types of foreign exchange payments. It will achieve this by learning from international regulatory practices and observing developments in cross-border foreign exchange payments. It will study ways to simplify foreign exchange policies pertaining to capital of insurance companies in order to facilitate foreign exchange exposure risk management in the sector. At the same time it will work with the Ministry of Commerce and other departments to promote the steady growth of foreign trade.

China Forex: What are the specific considerations in supporting and fostering the development of new trade formats?

Liu Bin: New trade formats include cross-border e-commerce，market procurement，foreign trade comprehensive service enterprises，and foreign exchange settlements for forwards on commodity exchanges among other services. In recent years，new foreign trade formats and new models have thrived along with the deepening of reform and the rapid development of the "Internet Plus" concept and other innovations.

Compared with traditional methods，these new forms of trading differ significantly in the manner of operation as well as logistics and settlement requirements. This puts greater demands on foreign exchange regulators in the supervision of the current account.

In the recent past，we have seen some positive results from experimentation on the regulatory side. SAFE steadily promoted agency cross-border foreign exchange collection and payment services and vigorously supported the development of cross-border e-commerce and Internet payments. It extended the scope of the pilot programs for cross-border foreign exchange payment services on a nationwide scale，removing regional restrictions and decentralizing audit powers，while relaxing single transaction limits and expanding the scope of payments. As of November 2017，a total of 33 agencies had been approved for cross-border payments since