SAFE, the Chinese State Administration of Foreign Exchange, has announced plans to push forward with reforms of FX administration. The plans will affect several different aspects of foreign exchange and the aim is to promote trade and investment, support the economy and guard against the risks arising from cross-border capital flows.

The measures affect the following areas:

1. The lower limits of comprehensive positions of banks in the settlement and sales of foreign exchange will be extended.
2. The approach to the delivery of forward transactions for foreign exchange settlement will be diversified.
3. The administration of foreign exchange receipts from trade in goods will be simplified for Class-A enterprises.
4. Policies for the administration of foreign exchange settlement for the external debt of Chinese and foreign-funded enterprises will be unified.
5. The administration of foreign exchange receipts and payments will be standardized for offshore entrepot transactions for trade in goods.
6. The outward remittance administration will be standardized for foreign exchange profits from direct investments.
7. The measures for the administration of risk reminder notifications will be standardized for trade in goods.
8. Any companies violating this Circular will be punished by foreign exchange authorities in accordance with the Regulations on Foreign Exchange Administration.

The circular also said that the measures would take effect on the date of announcement. The date given on the circular was 26 April 2016. The English language version was published yesterday.

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CTMfile take: This could be useful information for corporates investing in or doing business with China but it's always best to check with your bank to see what measures are being implemented.