In recent years, the State Administration of Foreign Exchange (SAFE) has been committed to implementing the decisions and arrangements of the Central Committee of the Communist Party of China and the State Council on deepening financial system reform. Prioritizing a balanced approach to openness and security, and aiming for high-quality development, SAFE has actively advanced initiatives to facilitate cross-border trade and investment. These efforts have yielded positive outcomes.

 

Continuously Optimize the Administration of Foreign Exchange from Trade to Support the Standardized and Healthy Development of New Forms and Models of Trade

A service system conducive to the development of new forms and models of trade is being explored and improved. First, efforts have been directed toward enhancing foreign exchange administration systems tailored to these emerging trade format. Since 2020, SAFE has issued several policy documents, such as the Circular on Supporting the Development of New Forms of Foreign Trade (Huifa[2020] No. 11) and the Notice on Issues Concerning Supporting New Forms of Offshore International Trade (Yinfa[2021] No. 329), to encourage the standardized and innovative development of new forms and models of trade. Second, continuously optimize the methods of foreign exchange administration for cross-border trade. In 2024, the Circular on Further Optimizing the Administration of the Business of Foreign Exchange from Trade (Huifa[2024] No. 11) was issued. It eliminated administrative licensing for the registration of enterprises with foreign exchange receipts and payments under trade and simplified procedures for enterprises in special customs supervision zones. Third, implement risk management aligned with facilitation initiatives. Adhering to the principles of "serving the real economy, facilitating openness, maintaining transaction records, and ensuring risk control", differentiated management measures have been applied to various types of new forms and models of trade.

 

An enabling environment for cross-border capital settlements has been cultivated to support the development of new forms and models of trade. First, settlement services for cross-border e-commerce have been optimized. SAFE has guided banks and payment institutions to leverage their strengths and, subject to controllable risks, use electronic transaction data to provide foreign exchange settlement and sale, as well as related fund receipt and payment services, to entities engaged in new forms of trade such as cross-border e-commerce. From January to August 2024, banks and payment institutions processed over 700 million cross-border e-commerce settlement transactions using electronic data, benefiting 1.2 million small and micro enterprises. Second, foreign exchange administration for market procurement has been improved. SAFE has optimized the market procurement trade settlement mechanism, guided key regions to enhance data collection channels and promote platform development to attract more market procurement merchants to use online information platforms for collection of foreign exchange. Currently, 80% of collection and settlement of foreign exchange for market procurement nationwide is conducted through online self-service platforms, benefiting approximately 190,000 small and micro enterprises. Third, settlement channels for new forms of trade have been expanded. Banks have enhanced foreign exchange services for integrated foreign trade service providers, facilitating the integration of offline and online trade for small and micro enterprises. From January to August 2024, banks collaborated with integrated foreign trade service providers capable of providing electronic transaction data to provide cross-border e-commerce settlement services to 90,000 small and micro enterprises.

 

Deepen Cross-Border Investment and Financing Foreign Exchange Administration Reform to Advance High-Standard Opening Up and High-Quality Development

Foreign exchange administration for foreign investment has beenstreamlined to attract increased foreign capital for business expansion in China. First,policy support for the headquarters economy has been enhanced. Pilot programs for multinational corporations' cash pooling services have been expanded and upgraded, with improved management policies to facilitate the efficient use of cross-border funds. By the end of August 2024, over 1,000 multinational corporations had participated in cash pooling services, benefiting 18,000 member enterprises. Second, innovation in cross-border investment has been actively supported. Foreign exchange administration pilot programs for Qualified Foreign Limited Partners (QFLP) and Qualified Domestic Limited Partners (QDLP) have been further advanced, enabling cross-border investment through equity investment funds and promoting industrial optimization and upgrading. According to the Ministry of Commerce, in 2023, foreign direct investment (FDI) in China's high-tech industries reached 423.3 billion yuan, accounting for 37.3% of total utilized FDI, with FDI in high-tech manufacturing growing by 6.5% year on year. Third, foreign exchange administration for cross-border financing has been optimized. Support has been extended to foreign-invested enterprises whose overseas parent companies issue RMB bonds in China. The funds raised are directed toward expanding domestic investment and production operations.

 

The foreign exchange administration service system for outbound investment has been upgraded to support enterprises' global expansion and address their international currency needs. First, streamline foreign exchange registration and optimize fund exchange processes. Enterprises can nowprocess foreign exchange registration and related procedures for outbound direct investment through a "one-stop" service at banks, simplifying the process of managing the remittance of funds for outbound investment. Second, standardize and enhance financial support for outbound investment. A macro-prudential policy framework integrating domestic and foreign currencies has been established for overseas bank loans, aligning rules for banks' offshore RMB and foreign currency loans. The reform of the centralized management of cross-border funds has been deepened. Multinational corporations are allowed to consolidate the foreign debt quotas and overseas lending limits of their domestic member enterprises for unified use. This has effectively supported domestic enterprises in optimizing resource allocation for outbound investment. According to the 2023 Statistical Bulletin of FDI in China jointly released by the Ministry of Commerce, the National Bureau of Statistics, and the State Administration of Foreign Exchange in September 2024, China's outbound direct investment stock totaled US$2.96 trillion by the end of 2023, ranking among the top three globally for seven consecutive years.

 

Roll Out Comprehensive Facilitation Policies and Expand Pilot Areas

In December 2023, SAFE introduced additional facilitation policies. The Circular on Further Deepening Reform to Promote Cross-border Trade and Investment Facilitation (Huifa [2023] No. 28) was issued, rolling out nine foreign exchange facilitation policies nationwide. At the same time, the Circular on Expanding the Pilot Program for High-Standard Opening-up of Cross-Border Trade and Investment (Huifa [2023] No. 30) was issued, replicating and promoting eight effective facilitation policy measures from earlier pilot programs. The implementation of these policies has significantly supported cross-border trade and investment activities for domestic and foreign enterprises, greatly improving the flexibility and convenience of fund utilization.

 

Moving forward, efforts will focus on advancing cross-border trade and investment facilitation reforms. Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and the principles set forth at the Third Plenary Session of the 20th Central Committee of the Communist Party of China, emphasis will be placed on conducting in-depth field research to better understand the policy needs of market participants. Targeted foreign exchange facilitation measures will be introduced, and systems and mechanisms for high-standard opening-up will be further improved. These efforts aim to better support the high-quality development of cross-border trade and investment.