Give Full Play to Foreign Exchange Inspection and Guard Against...

Title:Give Full Play to Foreign Exchange Inspection and Guard Against the Risks of Cross-Border Capital Flows

China Forex: In 2021，what measures did the Supervision and Inspection Department carry out? What are the outstanding features?

Hu Chunyu: In 2021，guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era，the foreign exchange inspection department under the strong leadership of the Party Central Committee，the State Council and the Party Group of the State Administration of Foreign Exchange (SAFE)，closely followed the work requirements of "based on the new development stage，implementing new development concepts，building a new development pattern，and achieving high-quality development"，and adhered to the bottom line thinking and the systematic concept. It spared no effort to build the law enforcement capacity，and effectively prevented the risk of abnormal flow of cross-border funds，making a good start for the "14th Five-Year Plan". In order to coordinate the epidemic prevention and control and economic and social development，ensure stability on the six fronts (employment，financial operations，foreign trade，foreign investment，domestic investment，and expectations) and security in the six areas (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)，and effectively prevent and minimize cross-border financial risks，the foreign exchange inspection department focused on rectifying illegal cross-border financial activities and cracking down on underground banks，cross-border gambling and illegal online foreign exchange speculation in 2021. The following work had been carried out.

First，we have adopted a zero-tolerance policy on illegal trading activities in underground banks，which effectively purified the foreign exchange market environment. Second，new breakthroughs have been made in preventing and controlling the "capital chain" of cross-border gambling. Third，we carry out in-depth and meticulous rectification of online foreign exchange speculation platforms. Fourth，we have given notification of typical cases to guide and warn the public.

China Forex: Compared with 2021，what situation will the foreign exchange inspection work confront in 2022? What are the plans and priorities?

Hu Chunyu: In 2021，facing the profound changes unseen in a century and the global COVID-19 pandemic，the domestic epidemic prevention and control and economic and social development tasks were arduous and demanding. Nevertheless，China's foreign exchange market withstood external shocks and maintained stability with the balance of payments in basic equilibrium. The Central Economic Work Conference pointed out three pressures on China's economy currently: contraction in demand，supply shocks，and lowered expectations. The changes unseen in a century have been accelerated by the pandemic，making the external environment more complex，severe and uncertain. In this context，the National Foreign Exchange Administration Work Conference emphasized that in 2022，we must correctly understand the major theoretical and practical issues in the new development stage，and prioritize stability while pursuing progress. We should coordinate development and security by implementing new development concepts and integrating into the new development pattern，and maintain stability of the foreign exchange market and the scale of foreign exchange reserves. Meanwhile，we need to deepen the reform and opening up in the field of foreign exchange to stabilize the macro economy，and preserve the healthy order of the foreign exchange market. Additionally，efforts should be made to ensure stability on the six fronts and security in the six areas，and stimulate high-quality economic development，so as to welcome the 20th National Congress of the Communist Party of China (CPC) with remarkable results.

In this situation，the foreign exchange inspection system will prioritize stability and highlight key tasks，for instance，guarding the bottom line of cross-border capital flow risks. We will focus on the following tasks in 2022.

First，strengthen off-site capacity to precisely crack down on foreign exchange violations. Second，clamp down on illegal financial activities to maintain a healthy order in the foreign exchange market. Third，exterminate false and deceptive foreign exchange transactions，and broaden the coverage of special inspections. Fourth，boost inspection efficiency and optimizing supervision methods. Fifth，improve the administration according to law，and strengthen the supervi