The People's Bank of China--News

People´s Bank of China Adjusted Foreign Exchange Administration Policy towards Individuals

In order to keep up with the pace of reform, open-up and economic development, to facilitate individuals´ foreign exchange payment activities and to streamline related procedures, the People´s Bank of China adjusted and improved foreign exchange administration policy towards individuals in its freshly released Administrative Rules on Individual´s Foreign Exchange (hereinafter as the Rules).

According to the Rules, individuals´ foreign exchange payment activities will be regulated based on trading party´s identity, i.e. domestic and non-domestic individuals, and on nature of a transaction, i.e. current account and capital account. The principle of full convertibility applies to individuals´ transactions under current account while necessary administration is maintained for those under capital account.

Key policy adjustments include the following. First, annual aggregate amount control is imposed on foreign exchange sale by individuals and foreign exchange purchase by domestic individuals. Within the prescribed aggregate limit, an individual can directly sell to and purchase from a bank after presenting valid IDs. Beyond the limit and when the transaction is under the current account, an individual can do the business with a bank after valid IDs are presented and necessary documents are verified by the bank. For a capital account transaction, due verification are required. Second, adequate facilities are provided to individuals who receive and make payment with foreign exchange for trade purposes. Individuals are allowed to open foreign exchange settlement accounts for foreign exchange receipt and payment in goods import and export. Those individuals who have registered and filed for their right of conducting foreign trade can be treated as institutions in foreign exchange receipt and payment; after making industrial and commercial registration or obtaining other types of business license, individuals can entrust enterprises which have obtained the right of conducting foreign trade to handle part of their foreign exchange receipt and payment, transfer and sale for foreign trade purposes. Third, capital account transactions that are open to individuals are further clarified, and the related foreign exchange receipt and payment activities are regulated. Fourth, cash-deposit and non-cash foreign exchange accounts are merged as foreign exchange savings account. Individuals´ non-business foreign exchange receipt and payment will be managed through these accounts. Management over deposit, withdrawal and carrying of foreign currency cash is regulated.

Meanwhile, the Rules take stock of the existing regulations over individuals´ foreign exchange payment activities and abolish 16 previous regulatory documents. This will further enhance transparency and efficiency of the individuals´ foreign exchange policies, and facilitate banks and individuals to conduct foreign exchange business.

The Rules will take effect as of February 1, 2007.