Foreign Exchange Management Supports High-Quality Belt and Road Cooperation
Author: Editorial Department of China Forex
The year 2023 marks the 10th anniversary of the Belt and Road Initiative (BRI). Over the past decade，China's foreign exchange regulator has diligently implemented the decisions and directives of the CPC Central Committee and the State Council. This commitment has led to a continuous deepening of reforms and increased openness in the field of foreign exchange，facilitating cross-border trade，investment，and financing while supporting high-quality Belt and Road cooperation.
China's Economic Ties with the Nations Involved in the BRI Have Grown Steadily
In the last ten years，China's economic engagement with BRI participant countries has witnessed substantial growth. This is evident in a significant rise in foreign-related receipts and payments，a robust expansion of trade in goods and services，and heightened investment and financing activities.
Concerning foreign-related receipts and payments，China recorded a remarkable US$1,186.6 billion from BRI countries in 2022，with expenditures totaling US$1,073.2 billion. This translates to an overall volume of receipts and payments exceeding US$2,000 billion，marking a substantial increase of 199%，207%，and 203% compared to a decade ago.
In terms of trade in goods and services，the value of goods traded between China and BRI countries amounted to US$1,578.4 billion in 2022，2.5 times the figure from 10 years ago. The trade in goods receipts and payments accounted for 24% of China’s total trade in goods during the same period，reflecting an 8-percentage point increase compared to a decade ago. Total receipts and payments for trade in services reached US$119.1 billion，3.3 times the amount from a decade ago. The receipts and payments for trade in services constituted 16% of China’s total receipts and payments for trade in services during the same period，representing a 6 percentage point increase from 10 years ago.
The magnitude of cross-border receipts and payments within the capital and financial accounts between China and BRI countries increased considerably in 2022. The total value of these transactions reached US$533.1 billion，marking an 8.9-fold surge from a decade ago.
China's Foreign Exchange Regulator Actively Support the Belt and Road Cooperation
China's foreign exchange regulator has actively enacted multiple strategies over the past decade to boost the efficiency of financial foreign exchange services，further propel Belt and Road cooperation，and achieve noteworthy results.
The foreign exchange market's role in supporting the BRI has steadily strengthened，contributing to improved trade and investment facilitation. Currently，the bank’s foreign exchange market accommodates more than 40 listed currencies，effectively covering the primary currencies used for cross-border receipts and payments within China. This capability satisfactorily meets the demand for fundamental foreign exchange transactions and addresses exchange rate hedging requirements arising from cross-border investment and corporate financing activities. This not only assists enterprises in reducing exchange costs，promoting trade liberalization and investment facilitation but also facilitates Belt and Road financial institutions in conducting RMB-related capital exchanges and managing exchange rate risks. In line with the "mature before launch" principle，China is gradually increasing the range of currencies listed in its interbank forex market to include countries with significant economic and trade ties to China. This initiative aims to boost market activity and liquidity through various measures，such as introducing overseas quote banks and waiving transaction fees.
Foreign exchange reserves support Belt and Road cooperation at multiple levels. China has taken the lead in establishing the Silk Road Fund，China-Latin America Production Capacity Cooperation and Investment Fund，and China-Africa Industrial Capacity Cooperation Fund. It injects capital into entities like CIC International，CNIC Corporation Limited，China Development Bank，Export-Import Bank of China，and supports the China-Africa Development Fund and other multilateral funds in various forms to provide long-term and stable financial support for Belt and Road cooperation.
It is necessary to strengthen the research on foreign exchange management policies of countries that jointly build the Belt and Road，and provide policy reference for enterprises and other subjects. The State Administration of Foreign Exchange proactively assumes its functional role，and constantly strengthens the follow-up research on the new trends in the foreign exchange management policies of the countries that jointly build the Belt and Road. In 2017，a research group on the foreign exchange management policies of BRI countries was set up to compile the Overview of Foreign Exchange Management Policies of Belt and Road Countries. In 2023，within the original framework，the Policy Research Group expanded its research coverage to encompass 145 countries that signed co-construction agreements with China，further fostering economic and trade investment exchanges with co-construction countries.
We are committed to deepening the reform of foreign exchange management and establishing a favorable policy environment to support Belt and Road cooperation. A key initiative is the adoption of a foreign exchange management system for goods trade featuring "total quantity verification，dynamic monitoring，and classified management". This system will replace the current practice of individual write-offs for imports and exports. To enhance foreign exchange facilitation for high-quality enterprises，the authority for examining foreign exchange management in trade services will shift to banks. Phasing out pre-certification and simplifying document examinations will be prioritized. Additionally，efforts will focus on elevating the electronic aspect of trade receipts and payments，promoting online verification of tax records for trade payments，and standardizing new trade formats. These measures will continually improve the level of trade facilitation of foreign exchange receipts and payments for the Belt and Road cooperation.
Our commitment to facilitating cross-border investment and financing remains unwavering. We will assist domestic institutions in effectively utilizing both domestic and international resources and markets. Reform achievements in simplifying administration and delegation of authority in foreign exchange management of direct investment will be further consolidated. The willingness settlement of foreign exchange funds for capital projects will be implemented，providing support for qualified enterprises to actively participate in Belt and Road cooperation. The efficiency of cross-border investment and financing funds will be strengthened，and the macro-prudential management policy of full-scale cross-border financing will be actively improved. Furthermore，the financing channels for enterprises participating in the joint construction of BRI will be expanded.
Looking ahead，China's foreign exchange regulator will thoroughly study and understand the spirit of General Secretary XI Jinping’s important speech at the Third Belt and Road Forum for International Cooperation，conscientiously implement the decisions and deployment for high-quality Belt and Road cooperation. We must continue to make significant strides in strengthening and amplifying the reform and opening up within the foreign exchange sector，providing sound financial and foreign exchange services，and thereby bringing high-quality Belt and Road cooperation to a whole new level.