The People´s Bank of China Announcement [2006] No. 5
In order to deepen
the reform of foreign exchange management system, support trade and investment
facilitation, further cultivate the foreign exchange market and promote a basic
equilibrium in balance of payments, the People´s Bank of China (PBC), with the
approval of the State Council, hereby makes the following announcement
regarding the partial adjustment of foreign exchange management policies:
1. In
the case that enterprises open, change or close foreign exchange accounts used
for current account transactions, the administration mode is changed from being
based on prior approval to direct processing of the applications by banks in
accordance with foreign exchange management requirements and business practices
while at the same time filing with the State Administration of Foreign Exchange
(SAFE). In addition, the foreign exchange account limits for current account
transactions are increased, and enterprises are allowed to purchase foreign
exchange in advance to support authentic trade payments.
2. Documents
required for sale and purchase of foreign exchange in service trade are
simplified with the examination and approval procedures relaxed.
3. Procedures
related to sales of foreign exchange to resident individuals are further
trimmed and the indicative limits on purchase of foreign exchange are increased
up to a yearly quota. Within such a quota, individuals can purchase foreign
exchange from banks by presenting their identity documents and declaring the
usage of foreign exchange; banks can sell foreign exchange exceeding the quota
to individuals after verifying relevant documents to satisfy their real needs.
4. Expanding
domestic banks´ overseas foreign exchange investment services on behalf of their
clients. Qualified banks are allowed to collect RMB funds of domestic
institutions and individuals and convert into foreign exchange under a
specified limit to invest in overseas fixed income products.
5. Qualified
securities brokers such as fund management companies are allowed to collect
self-owned foreign exchange of domestic institutions and individuals and use
the funds for overseas portfolio investment including buying stocks.
6. Further
expanding overseas securities investment by the insurance institutions.
Qualified insurance institutions are allowed to purchase foreign exchange for
the purpose of investing in overseas fixed-income products and money market
instruments. The amount of foreign exchange purchases is subject to a limit
proportional to the total asset of an insurance institution.
The PBC will,
together with relevant authorities, organize and implement the above policy
measures respectively. In the mean time, the PBC will closely track and analyze
the development of the balance of payments, timely adjust related polices,
avoid risks so as to safeguard national economic and financial stability.
The People´s Bank of China
2006-4-13
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