The People's Bank of China--News

Administrative Rules on Pilot Program of Renminbi Settlement of Cross-border Trade Transactions

Article 1 These Rules are formulated in accordance with laws and regulations including the Law of People´s Republic of China on the People´s Bank of China to facilitate trade, to make sure the pilot renminbi settlement of cross-border trade transactions is smoothly executed, to regulate the behaviors of pilot enterprises and commercial banks, and to prevent risks arising from the above business.

Article 2 The designated and eligible enterprises are allowed to settle their cross-border trade transactions in renminbi on a voluntary basis, and commercial banks shall receive support in providing renminbi settlement service for these cross-border trade transactions.

Article 3 These Rules shall apply to renminbi settlement of cross-border trade transactions in the pilot areas as approved by the State Council.

Article 4 Provincial-level governments in the pilot areas are responsible for coordinating relevant agencies in their localities to recommend pilot enterprise candidates for renminbi settlement of cross-border trade transactions. Agencies including the People´s Bank of China (the PBC), the Ministry of Commerce, the General Administration of Customs, the State Administration of Taxation, and the China Banking Regulatory Commission shall examine the candidates and finalize the list of pilot enterprises. When recommending a pilot enterprise candidate, it is necessary to verify the identity of the enterprise and its legal representative(s), verify if the enterprise is registered in its real name and whether it complies with the various provisions governing renminbi settlement of cross-border transactions. In the case that a pilot enterprise violates relevant rules and regulations, it will be penalized in accordance with laws and removed from the list of pilot enterprises.

Article 5 The PBC may exercise control over the aggregate of renminbi settlement of cross-border trade transactions in line with the macro-economic management stance and to prevent systemic risks.

Article 6 The cross-border clearing and settlement in reminbi of import and export trade between a pilot enterprise and an overseas enterprise can be done either through the clearing banks for renminbi business in Hong Kong and Macau or through a domestic commercial bank that acts as an agent for an overseas commercial bank.

Article 7 The commercial banks that are approved by the PBC and Hong Kong Monetary Authority or by the PBC and the Macau Monetary Authority, that are members of the PBC´s Large Value Payment System and are providing renminbi clearing service in Hong Kong or Macau may serve as clearing banks for renminbi business in Hong Kong or Macau to provide cross-border renminbi clearing and settlement service.

Article 8 A commercial bank that is capable of conducting international settlement business and operates in the pilot areas (hereinafter referred to as "a domestic settlement bank") may provide cross-border renminbi settlement service for pilot enterprises.

Article 9 A commercial bank that is capable of conducting international settlement business and operates in the pilot areas (hereinafter referred to as "a domestic agent bank") may sign an agreement for agent renminbi settlement with an overseas bank (hereinafter referred to as "an overseas participating bank") that participates in the program of renminbi settlement of cross-border trade transactions, open an inter-bank fund transfer account denominated in renminbi for the overseas participating bank and settle cross-border trade transactions in renminbi as an agent of the overseas participating bank. The domestic agent bank shall report the agent agreement for renminbi settlement and the inter-bank renminbi fund transfer account information to local PBC offices for disclosure purpose.

Article 10 A domestic agent bank may require a minimum deposit from an overseas participating bank in opening an inter-bank renminbi fund transfer account, and may provide money exchange service for the required deposit.

Article 11 A domestic agent bank may purchase and sell renminbi per requests of an overseas participating bank within the limit set by the PBC.

Article 12 A domestic agent bank may provide financing for the inter-bank renminbi fund transfer account opened by an overseas participating bank in order to meet the latter´s temporary liquidity demand. The cap and the maturity for such financing activities are determined by the PBC.

Article 13 Clearing banks for renminbi business in Hong Kong and Macau may, in accordance with relevant rules issued by the PBC, convert foreign exchange into renminbi and borrow funds from the inter-bank foreign exchange market and the inter-bank borrowing market in the Mainland. The limits on renminbi exchange as well as cap and maturity of inter-bank borrowing are determined by the PBC.

Article 14 A domestic settlement bank may provide renminbi trade financing services pursuant to relevant regulations in an incremental manner.

Article 15 The cross-border receipt and payment of renminbi should be based on actual and legal transactions. A domestic settlement bank shall verify the authenticity of transaction-related documents and the consistency of the documents with the receipt and payment of renminbi in accordance with relevant regulations of the PBC.

Article 16 In accordance with regulations on anti-money laundering and counter-terrorist financing, a domestic settlement bank and a domestic agent bank shall perform due diligence to get to know their clients, understand the purpose and nature of clients´ transactions, find out the natural persons actually in control of their clients and the beneficiaries of the relevant transactions, keep on file their clients´ identity information and transaction records to make sure that the details of each transaction can be re-established.

Article 17 Export tax rebate (exemption) policies shall apply to export transactions settled in renminbi in accordance with relevant rules and regulations. The taxation authorities under the State Council are responsible for making detailed administrative rules on tax rebate (exemption) for these transactions.

Article 18 Cross-border trade transactions settled in renminbi by pilot enterprises are not included in the administration of foreign exchange verification, and an foreign exchange verification form is not required for customs declaration and claiming export tax rebate (exemption). A domestic settlement bank and an agent bank shall, as required by taxation authorities, provide relevant data and documents on the renminbi settlement service of cross-border trade transactions for a pilot enterprise in accordance with laws and regulations.

Article 19 A pilot enterprise shall guarantee the authenticity of cross-border trade transactions settled in renminbi, and shall establish a ledger for renminbi settlement of cross-border trade transactions to keep an accurate record of customs declaration of import and export transactions and of renminbi receipt and payment.

Article 20 A pilot enterprise and its domestic settlement bank shall report balance of payments (BOP) transactions under the pilot program of renminbi settlement for BOP statistics purpose. When conducting renminbi purchase and sales transactions, a domestic agent bank shall compile statistics thereof according to relevant regulations.

Article 21 Renminbi liabilities of a resident to a non-resident under cross-border trade shall be registered according to the regulations on the compiling and monitoring statistics of external debt.

Article 22 The PBC establishes and maintains a Cross-border Renminbi Receipt and Payment Information Management System to record various categories of information on each cross-border trade transaction settled in renminbi of a pilot enterprise, to reconcile the daily total of customs declaration with the daily total of cross-border renminbi receipt and payment, to compile, analyze and monitor statistics of cross-border renminbi receipt and payment. A domestic settlement bank and an agent bank shall link its system with the Cross-border Renminbi Receipt and Payment Information Management System and report statistics of cross-border renminbi payment and receipt to the System.

Article 23 A pilot enterprise that has not recovered the related renminbi proceeds 210 days after exporting the related goods shall, via its domestic settlement bank, report within 5 working days the outstanding amount and the serial number of the corresponding export declaration form to the Cross-border Renminbi Receipt and Payment Information Management System, and shall provide relevant documents to its domestic settlement bank.

A pilot enterprise that intends to deposit its renminbi export proceeds in an overseas bank shall, via its domestic settlement bank, report to the local PBC office for disclosure purpose, and report the amount of the renminbi funds to be deposited overseas, the opening bank, account information, use of the funds and the serial number of the corresponding export declaration form to the Cross-border Renminbi Receipt and Payment Information Management System.

A pilot enterprise shall choose one domestic settlement bank as the main reporting bank for renminbi settlement of cross-border trade transactions. The main reporting bank shall be responsible for bringing to the enterprise´s attention its obligation of information reporting and disclosure.

Article 24 The PBC shall inspect and monitor the conduct of renminbi settlement of cross-border trade transactions by domestic settlement banks, domestic agent banks and pilot enterprises, and shall impose penalty for any violation of relevant regulations.

Violations of laws and regulations by a pilot enterprise in renminbi settlement of cross-border trade transactions shall be accurately, thoroughly and promptly recorded in the PBC´s basic enterprise credit information database, and shall be shared with the customs and taxation authorities.

Article 25 The PBC shall, after consultation with the renminbi clearing banks in Hong Kong and Macau, revise the Agreement on the Clearing of Renminbi Businesses so as to specify the contents of renminbi settlement and clearing services for cross-border trade transactions provided by these clearing banks in Hong Kong and Macau.

The PBC may sign a Memorandum of Cooperation with the Hong Kong Monetary Authority and the Macau Monetary Authority on regulating and supervising within their respective mandate renminbi settlement and clearing services for cross-border trade transactions provided by the renminbi clearing banks in Hong Kong and Macau.

Article 26 The PBC is to establish an information sharing and management mechanism together with the Ministry of Finance, the Ministry of Commerce, the General Administration of Customs, the State Administration of Taxation, the China Banking Regulatory Commission and the State Administration of Foreign Exchange to strengthen ex post inspection for the purpose of effective supervision of the pilot program of renminbi settlement of cross-border trade transactions.

Article 27 The Rules shall come into force on the day of its release.