Q&A on Supporting the Development of New Forms of Trade Through ...

The State Administration of Foreign Exchange (SAFE) recently released its 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，SAFE's press spokesperson and chief economist，answered media questions on the policy document.

01

Q: What is the background behind the release of 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.

02

Q: 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.

03

Q: What policy facilitation will the Circular offer market players?

A: According to the Circular，the foreign exchange settlement mode