Trade Finance and Foreign Trade Stabilization
The renminbi was made convertible on the current account in 1996. Since that watershed policy shift,current account foreign exchange management has been guided by the principles of convertibility and business facilitation. Authorities have also sought to spur innovation and improve their management measures to provide sufficient freedom and convenience for cross-border fund settlements. China Forex interviewed Sun Jianbo,general manager of the international business department at China Construction Bank,to assess these policies and review their impact on day to day operations. According to the bank executive,efforts to facilitate current account transactions have kept pace with market requirements. These efforts also demonstrate how foreign exchange management supports the development of the real economy by streamlining administration,delegating authority,providing proper management and optimizing service. Commercial banks still need to adopt modern technology and strengthen their ability to serve the real economy in order to play an active role in maintaining the stability of foreign trade. They must also improve their internal management mechanism and ensure foreign exchange regulatory compliance.
China Forex: For many years,foreign exchange management related to the current account has been guided by the principle of upholding convertibility and facilitating legitimate business transactions. How effective has China's current account management been in achieving these objectives?
Sun Jianbo: Reforms in the goods trade in 2012 and the service trade in 2013 were major initiatives that promoted easier policies on the current account. Banks have increasingly become aware of the effects of these reforms in their daily business operations. The revamping of current account regulations has provided a clearer basis for financial institutions to handle daily transactions. At the same time,the rules clarify the responsibilities of financial institutions and strengthen due diligence requirements for reviews by financial institutions. In addition,import and export verification will be integrated to enhance convenience for enterprises. At present,current account facilitation is moving ahead with the times along with a deepening of the reform program,and this has achieved remarkable results.
China Forex: There is a new business model for foreign trade. Innovation in foreign trade,such as cross-border e-commerce,opens up new areas of potential in international business for commercial banks. In your opinion,what should commercial banks do to actively explore new possibilities in these areas? What has China Construction Bank (CCB) done in response to the facilitation measures of the State Administration of Foreign Exchange (SAFE) in support of the development of new formats for foreign trade?
Sun Jianbo: It is important for commercial banks to support the new business model of foreign trade in order to implement the directives of the Communist Party's Central Committee aimed at stabilizing foreign trade and serving the real economy. The new foreign trade format includes cross-border e-commerce,market procurement,overseas warehouses,and foreign trade enterprises that provide comprehensive services. In recent years it has become a driving force in the development of the nation's foreign trade,with a growth rate that far exceeds that of traditional foreign trade. In order to grasp the development opportunities,China Construction Bank has integrated online and offline services. Its cross-border e+ platform provides foreign trade enterprises with foreign exchange settlement services,such as foreign exchange sales,international income and expenditure reporting,trade finance,and account management. At the same time,the bank has actively worked with the Department of Port Control at the General Administration of Customs,becoming the first bank to sign a cooperation agreement that has resulted in direct system linkage,supporting the construction of a single window for China's international trade. Companies no longer need to submit paper data or scanned documents,and this improves efficiency in processing trade-related information.
In supporting the development of new formats of trade,SAFE has actively tried to improve its regulatory management model and the way it interacts with market players. First,in step with SAFE's efforts to make it easier to comply with regulatory requirements,China Construction Bank has implemented trial verification of electronic documents of foreign exchange receipts and payments related to the trade in goods. This has made greater convenience available to high-caliber enterprises. The bank has vigorously promoted the introduction of e-banking channels and encouraged the adoption of online tools,such as mobile banking,self-service terminals and other electronic channels in handling foreign exchange settlement of various kinds.
China Construction Bank has been actively participating in the construction of a cross-border business blockchain service platform,providing support in technical requirements and applications. CCB was part of the first group of banks approved for participation in the pilot program. CCB also created a successful online banking interface with the foreign exchange monitoring system for internet-based trade in goods. That in turn has improved business processing efficiency with better risk control.
China Forex: On January 2,2019,SAFE announced pilot programs for trade facilitation in the Guangdong-Hong Kong-Macao Greater Bay Area as well as Shanghai and Zhejiang Province. What is your assessment of the pilot programs? What should commercial banks do in order to actively participate in this pilot program? What attempts have been made by CCB to enhance international business?
Sun Jianbo: The implementation of the pilot policy for facilitating the goods trade serves as a vivid manifestation of foreign exchange management reforms supporting the development of the real economy. This has been achieved through streamlining administrati