China Forex: A number of reform measures were launched in capital account foreign exchange management in 2017 in an effort to help expand the opening up of the financial market. Could you share with us the progress made in these areas over the past year?

Guo Song: In 2017，under the correct leadership of the Communist Party Central Committee，the State Council，the Party Committee of the People’s Bank of China and the Party organization within the foreign exchange administration，administrative departments that deal with capital account issues continued to adhere to the policy of expanding capital inflows while managing capital outflows. They did this by pushing reforms and stabilizing market expectations. The main objectives were to promote foreign exchange management reform and guard against risks from cross-border capital flows. In this effort they sought to overcome existing difficulties and introduce a number of major foreign exchange control measures concerning the capital account and in turn support the real economy. Specific measures were as follows:

First，we improved foreign exchange management of foreign-invested enterprises by keeping pace with the times. Regulators were faced with a new situation for foreign direct investment. We described it as national treatment prior to market entry plus a "negative list" approach，whereby business activities are permitted unless specifically proscribed. We improved the management of high-profit equity sales and divestments by foreign-invested enterprises in general. We also strengthened our reviews of transactions to determine whether they were authentic and in compliance with laws and regulations. We also tightened our supervision of the remittance of profits of foreign-invested enterprises while ensuring that investors from overseas maintained their right to remit profits.

Second，we actively constructed an integrated overseas loan policy system for both domestic and foreign currencies. In order to check cross-border capital flow risks from overseas loans and prevent the illegal use of foreign currency policies for regulatory arbitrage，we stated that the total balance of overseas and domestic loans should not exceed 30% of a firm's net assets. Additionally，we clarified the requirements for registering overseas loans.