Title: Improving the Effectiveness of Foreign Exchange Administration in Serving China's Real Economy

China Forex: The central government emphasizes the need to focus on institutional opening-up, aligning with strict standards for international economic trade, and constructing a new system for a higher-level open economy. In 2023, what initiatives did the General Affairs Department (Policy and Regulation Department) undertake to promote institutionalization and high-level opening-up in the foreign exchange field? What are the next steps?

 

YANG Jun: In 2023, the General Affairs Department (Policy and Regulation Department) remained committed to promoting high-level institutional opening-up, strengthening the rule of law in foreign exchange and continually improving the foreign exchange institutional environment in favor of high-quality financial development and economic and financial security. Efforts were focused primarily on enhancing the quality of legislation. We have actively promoted revisions to the Regulations on Foreign Exchange Administration established a robust cross-border fund management system and enriched and enhanced statistical monitoring as well as mid-event and post-event regulatory measures. We helped improve technical guidance for legislation, facilitate the formulation of regulations or pilot policies concerning banks' foreign exchange operations, cross-border financing, foreign direct investment and domestic reinvestment, and bank settlement accounts integrating RMB and foreign currency, among others. This is helping to shape an institutional regime adapted to the new trends of economic globalization.

 

Second, we have deepened reform and opening-up in the field of foreign exchange. Efforts were made to support Belt and Road cooperation, as well as the construction of the Hainan Free Trade Port and the Guangdong-Hong Kong-Macao Greater Bay Area. We have been actively involved in negotiations and rule-making of multilateral and bilateral trade and investment agreements, which play a leading role in high-standard opening-up. Our third focus has been to continuously improve administrative efficiency in the foreign exchange field to optimize the business environment. We have implemented a concrete, long-term clean-up of laws and regulations that will soon abolish normative documents that do not conform to superior laws and regulations. In 2023, we repealed or revised 27 regulations, including cleaning up penalty-related articles in normative documents based on the Administrative Penalty Law. In drafting regulations, public opinions were also taken into account through dialogue, symposiums and surveys. Nine of the new draft regulations were open for public comment in 2023. Finally, we have rigorously standardized administrative enforcement in the foreign exchange field to improve the quality of foreign exchange administrative enforcement. In this sector, we are fully implementing the administrative approval list regime in order to enhance restrictions on discretionary power through standardized procedures. We have also improved training for administrative officials to enhance their legal understanding and capacity to enforce the rule of law. We have also developed the supervisory function of administrative appeals and complaints, aimed at expeditiously resolving disputes and rectifying illegal or improper enforcement practices.

 

In 2024, the General Affairs Department (Policy and Regulation Department) will continue to advance the rule of law in the foreign exchange field to support the deepening of reform and opening-up in foreign exchange administration, and effectively maintain the stability of China's foreign exchange market. Firstly, we will

 

establish and improve the foreign exchange administrative regulation system through continuing efforts to revise the Regulations on Foreign Exchange Administration, coordinate with the People's Bank of China (PBOC) to perfect other financial laws and regulations and further clean up outdated regulations, and continuously improve the formulation of normative documents. Our second aim is to constantly refine foreign exchange administration policies and improve business environments. Centering on what we call the "five major areas", namely, technology finance, green finance, inclusive finance, pension finance, and digital finance, we will continue to improve the facilitation of cross-border trade, investment and financing, strive to improve the quality of capital account opening-up, so as to better serve high-quality economic and financial development. Thirdly, we will continuously intensify internal control over legislation and law enforcement, giving priority to the quality of administrative enforcement. In the area of foreign exchange, significant decisions will be subject to more stringent validity reviews, broader public participation and higher-level risk assessment to elevate decision quality, public credibility and enforceability. We will continue to streamline administrative approval matters, perfect law enforcement procedures (including administrative approval), revise administrative appeal procedures, rectify prominent weaknesses in administrative enforcement, and strengthen supervision over administrative powers.

 

China Forex: The Central Economic Work Conference highlighted that there are still multiple challenges involved in further promoting the recovery and improvement of China's economy, including increased complexity, severity, and uncertainty in the external environment, as well as relatively low social expectations and a number of potential risks. What measures has the General Affairs Department (Policy and Regulation Department) taken in market communication and expectation guidance? What are the considerations for 2024?

 

YANG Jun: In 2023, the General Affairs Department (Policy and Regulation Department) delved into studying, promoting and implementing the spirit of the 20th National Congress of the Communist Party of China (CPC), actively voicing its initiatives, strengthening market communication and reasonably guiding market expectations. First, we focused on thoroughly studying, promoting and implementing the deployment of theCPC Central Committee. Special columns such as "Theme Education on Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era" and "Studying, Promoting and Implementing the Spirit of the Central Financial Work Conference" were established on the SAFE official Weibo account, functioning as a timely channel for authoritative news releases, as well as a platform to showcase thematic education practices and outcomes in the foreign exchange administration system and elucidate the measures and effects of providing foreign exchange services for the high-quality development of the real economy. Second, authoritative voices were amplified as they interpreted trends and policies. We supported SAFE administrators' attendance to numerous press conferences hosted by the State Council Information Office and public events, including the Lujiazui Forum, Financial Street Forum, and Boao Forum, where they delivered authoritative interpretations of foreign exchange trends and policies. We swiftly released and interpreted important data such as the balance of payments, foreign exchange settlements and sales, external debt, and foreign exchange reserves. We have participated in events such as interviews, media briefings and media fact-finding trips to provide in-depth insights into vital foreign exchange policies, such as facilitating cross-border trade and investment, expanding high-level opening-up pilot schemes and reforming bank foreign exchange operations. In 2023, a total of 390 proactive communications were conducted jointly with various SAFE departments.

 

In 2024, the General Affairs Department (Policy and Regulation Department) will fully adhere to the principles outlined in the Central Economic Work Conference and the Central Financial Work Conference. We will continue to effectively communicate and interpret foreign exchange trends and policies, enhance dialogue with the market, and significantly improve market perception. First, we will capitalize on SAFE’s authoritative leadership voice. Through various channels such as press conferences, media briefings, and journalist interviews, we will intensify efforts to interpret foreign exchange trends and policies, promptly addressing key societal concerns. Secondly, we will actively promote the dissemination and interpretation of foreign exchange data and policies. Greater efforts will be made to disseminate foreign exchange knowledge in popular forms. We will create more new media products such as diagrams, charts, and short videos to enhance readability and reach. This will help more business entities understand and benefit from policy initiatives.

 

China Forex: Wider investigation and research are crucial components of theme education. How has the General Affairs Department (Policy and Regulation Department) strengthened its investigation and research in 2023?

 

YANG Jun: In 2023, the General Affairs Department (Policy and Regulation Department) took the opportunity of deepening themed education to conduct prospective and fundamental investigations and research on major issues in foreign exchange administration, in order to continuously enhance the quality and level of advisory support. Firstly, we investigated and researched around key tasks in foreign exchange management reform. We have diligently responded to the requirements of themed education for comprehensive investigation and research, fully leveraging our "assisting" role to support SAFE Party Group's investigation and research work. At present, we have conducted basic-level investigation and research centering on topics such as the revision of the Regulations on Foreign Exchange Administration, technological innovation in foreign exchange management services, optimization of foreign exchange services for small and micro enterprises, and reforms in foreign exchange account management to solicit suggestions from banks, enterprises, and sub-bureaus and lay the groundwork for institutional improvement. Secondly, we pragmatically conducted fundamental research projects. Grounded in forward thinking and practicality, we conducted research on topics such as the establishment of a modern financial system, RMB internationalization, and the high-quality opening-up of capital account, laying the groundwork that supports leadership decision-making. Thirdly, we have strengthened internal information research within the system. We have made improvements to research and analytical judgment on changes in foreign exchange trends, foreign trades and foreign fund updates, and the implementation of foreign exchange policies, as well as issues discovered during routine supervision, which must be reported with first-hand information as soon as possible. Useful references were also provided for trend analysis by the Central Party Committee and the State Council. Fourthly, we have closely monitored international trends and strengthened research on foreign affairs. We closely followed international economic and financial trends, conducted in-depth analysis and proposed countermeasures, and made recommendations around trends in cross-border trade and investment, economic and financial developments in Europe and the United States, and currency policy trends.

 

In 2024, the General Affairs Department (Policy and Regulation Department) will continue to fully implement the requirements of comprehensive investigation and research and further strengthen topic planning and in-depth investigation and research on topics such as building a modern industrial system, reform, opening up, foreign exchange risk prevention and control, and international economic and financial trends and policies, all providing fundamental support for scientific decision-making.

 

YANG Jun Director-General of SAFE's General Affairs Department (Policy and Regulation Department)