Steadily Promote the High-standard Opening-up under Capital Account...

Title:Steadily Promote the High-standard Opening-up under Capital Account to Serve High-quality Development of the Real Economy

XIAO  Sheng

Director-General of SAFE’s Capital Account Management Department

China Forex: Under the current domestic and international economic and financial situation，what are the general guidelines of foreign exchange administration under capital account in 2023?

XIAO Sheng: In 2023，in regard to the foreign exchange administration under capital account，we will adhere to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era，fully implement the guiding principles of the 20th National Congress of the Communist Party of China (CPC)，as well as the arrangements made at the Central Economic Work Conference. To ensure a better coordinated approach to development and security，we will continue to uphold the general principle of seeking progress while maintaining stability. Meanwhile，we will continue to deepen reform in key areas and promote high-standard opening-up under capital account by using the experience of selected units to encourage work in the whole area and keep seeking breakthroughs at critical points. Besides，we will strive to improve cross-border investment and financing facilitation in key areas to effectively serve high-quality economic development. We will tighten in-process and ex-post controls as well as the supervision and management of internal control to avoid the occurrence of systemic risks.

China Forex: Regarding the foreign exchange administration under capital account in 2022，much work has been done to deepen the reform of capital account management and promote the high-standard opening-up of the capital account. What other measures will be introduced in 2023?

XIAO Sheng:  In 2023，in terms of foreign exchange administration under capital account，we will ensure development and security in a better coordinated manner. Through deepening reform and facilitation，we will continue to promote a two-way opening-up of the financial market to a high standard. We will also actively introduce foreign exchange administration policies under capital account that are conducive to the stable operation of the economy and support the development of the real economy.

First，orderly expand pilot high-level opening-up programs for cross-border trade and investment. By tracking and evaluating the implementation of the pilot programs for high-level opening-up of trade and investment in the four pilot regions，We will take into consideration of the regional realities and the effects of those pilot programs，and steadily improve high-level opening-up in the regions and expand other pilot programs to effectively enhance cross-border trade and investment，which will enable more entities to enjoy the policy dividends in these pilot regions.

Second，develop and optimize the policy framework of the “high version + low version” integrated capital pool for the domestic and foreign currencies of multinational corporations. We will examine and introduce pilot policies on “low version” capital pools for multinational corporations and upgrade the pilot policies on “high version”. We will steadily expand the pilot policies to facilitate the coordinated use of cross-border funds by business groups in different sizes. At the same time，we will establish a sound risk prevention mechanism to effectively guard against the risks of cross-border capital flows.

Third，examine and and formulate policies on integrating domestic and foreign currencies in the cross-border transfer of bank credit assets. In accordance with the principle of serving entities and controlling risks，we will study and formulate pilot policies on integrating domestic and foreign currencies in the cross-border transfer of bank credit assets，and promote the standardized development of trial services.

Fourth，continue to advance the high-level opening-up of the financial market. We will further promote the institutional opening of the bond market. Notably，we will continue to improve the management of funds invested by foreign institutions in the domestic bond market while improving foreign exchange administration policies for foreign institutions to issue Panda Bonds to make the domestic bond market more attractive to foreign institutions. Besides，we will continue to deepen the reform of the foreign exchange administration under the Qualified Institutional Investor system. On the one hand，we will further simplify and improve the foreign exchange administration of Qualified Foreign Institutional Investors (QFII/RQFII) and continue to facilitate foreign institutions’ investments in securities in China. On the other hand，we will continue to regulate and guide the healthy development of the business of Qualified Domestic Institutional Investors (QDII).

Fifth，promote regional financial opening-up in a steady and orderly manner. As a means to implement the national and regional development strategies，we will support the reform and innovation of foreign exchange administration under the capital account in special regions，such as Hainan Free Trade Port，Guangdong-Hong Kong-Macao Greater Bay Area，and Shanghai International Financial Center，in light of local conditions.

China Forex: According to 2022 Central Economic Work Conference，it proposed that work should start from impro