In an effort to gain a better understanding of China's foreign exchange regulations as well as the current state of the renminbi market and the economy,China Forex spoke to Mu Zhiqian,a consultant to SAFE's Balance of Payments Department. The following is an interview with Mr. Mu conducted by Debra Lodge,managing director Global Markets and head of RMB Business Development,North America,at HSBC.

Q: We often find that the implementation of a policy can be different from province to province. Why is this? Could you explain how policy is communicated between the PBOC at the central level and the local branches?

A: For starters,we need to state clearly that when it comes to government policy,we have uniform standards throughout the country. In China,there is no provision for extending better than national treatment - or worse than national treatment. This is a fair market-oriented approach. In practice,however,people often conclude that policy implementation varies from region to region. There are two main reasons for this. On one hand,people have different understandings and interpretations of government regulations. China's legal system is based on regulatory provisions while the British and American legal systems follow legal precedence. In China,people may have different interpretations of a government ruling based on linguistic or other factors and these result in differences in practice. At the same time,there are different levels of development in different regions,and there are differences in trading practices as well types of products and the frequency of use of these products. These all contribute to differences in the application of certain regulations. And yet the standard has already been set in a uniform manner; regardless of whether it is a question of market participants or the regulators themselves,there is no flexibility in these regulations. The process of implementing regulations is also transparent.

Q: We have seen that both the PBOC and SAFE have taken measures to simplify the regulatory approval process in a number of areas. Are any more improvements expected in the near future?