Foreign Trade and Foreign Investment Facilitation Article 12

Foreign Trade and Foreign Investment Meet “12 Facilitation Rules”.

Benefit more than 95% of cross-border e-commerce enterprise customers of payment institutions, save more than 50% of the preparation and review time of enterprise documents, and facilitate the use of capital by non-investment foreign-invested enterprises. Recently, the State Administration of Foreign Exchange issued a notice on further promoting the facilitation of cross-border trade and investment. The new changes brought about by the 12 measures have aroused widespread concern. Experts pointed out that the 12 measures to facilitate cross-border trade and investment introduced this time will further facilitate market participants to handle foreign exchange business and provide strong support for stabilizing foreign trade and foreign investment.
Banks and enterprises have more autonomy “On the basis of full investigation and preliminary experiments, SAFE has studied and launched 12 policies and measures to facilitate cross-border trade and investment. It has made great efforts to improve the level of foreign exchange management services for the real economy and promote trade and investment facilitation and high-quality economic development.” Talking about the “Circular” released this time, Wang Chunying, spokesman and chief economist of the State Administration of Foreign Exchange, said.

Specifically, six of the 12 measures directly involve cross-border trade. According to the Circular, eligible banks will be allowed to independently optimize the business process when handling foreign exchange receipts and payments for goods trade and services trade for enterprises with good credit.

Wang Chunying introduced that SAFE has launched a pilot project in early 2019 to facilitate foreign exchange receipts and payments for goods trade in Guangdong, Hong Kong, Macao and the Gulf region, Shanghai and Zhejiang. According to the report of the pilot bank, it can save more than 50% of the preparation and examination time of enterprise documents. This reform will expand the pilot areas to other areas with mature conditions, and expand the scope of the pilot business from foreign exchange receipts and payments in goods trade to foreign exchange receipts and payments in services trade.

The circular also pointed out that small and micro cross-border e-commerce enterprises with an annual trade volume of less than 200,000 U.S. dollars may not go through the registration formalities for the “list of foreign exchange trading enterprises”. Cancellation of the requirement for enterprises to report the correspondence between import and export and foreign exchange receipts and payments at the initial stage of business to the foreign exchange bureau; Relaxation of account opening for export income to be verified; To facilitate the registration of the directory of enterprise branches; Project contracting enterprises can centrally manage, allocate and use funds for different overseas projects, facilitate enterprises to revitalize overseas deposited funds, and support enterprises to develop diversified markets …

“The adjustment of foreign exchange management policies for cross-border trade is mainly aimed at giving banks and enterprises more autonomy so as to make honest enterprises more convenient, small and micro enterprises more convenient, business reports more convenient, account use more autonomous, registration procedures clearer and capital use more efficient.” Wang Chunying said.

It is more convenient to carry out domestic equity investment.

In terms of cross-border investment and financing, the six measures involve domestic equity investment, payment of capital account income, settlement and use of foreign exchange funds, registration and management of foreign debts, opening of foreign exchange accounts, and cross-border transfer of credit assets. What changes will take place in the above areas after the new measures are introduced?

Take domestic equity investment as an example. Before the reform, foreign-invested enterprises with investments could carry out domestic equity investment with capital according to laws and regulations. Starting from 2015, non-investment foreign-invested enterprises will have the word “investment” in their business scope. They can also transfer or settle their capital in the original currency to carry out domestic equity investment. However, if the word “investment” is not included in the business scope, domestic equity investment is not allowed.

After the reform, non-investment foreign-invested enterprises are allowed to carry out domestic equity investment in the original capital currency or foreign exchange settlement according to law, regardless of whether the business scope contains the word “investment” or not, provided that they do not violate the current special administrative measures for foreign investment access and the projects invested in China are true and compliant. According to foreign exchange bureau data, there are currently more than 370,000 registered foreign-invested enterprises in the country, of which less than 3,000 are investment-oriented foreign-invested enterprises and the proportion of non-investment-oriented foreign-invested enterprises exceeds 99%.

“Lifting the restriction on domestic equity investment in the capital of non-investment foreign-invested enterprises will help facilitate the use of capital by a large number of non-investment foreign-invested enterprises and promote more foreign-invested enterprises to carry out domestic equity investment. It will also help attract foreign investment, promote the stable development of foreign enterprises in China and serve the development of the real economy.” Gao Jie, associate professor of the School of Finance of the University of Foreign Economic Relations and Trade, said in an interview with this reporter.

Provide a better business environment for enterprises While facilitating investment, there will be new changes in financing. The “Circular” proposes to decentralize the registration of foreign debts of enterprises to banks and to cancel the registration of foreign debts of enterprises on a trial basis.

According to previous regulations, enterprises should cancel their foreign debts at the local foreign exchange bureau within one month after each foreign debt is paid off. When an enterprise actually borrows foreign debts, it needs to register each foreign debt with the local foreign exchange bureau.

After the introduction of the new measures, the foreign exchange bureau will handle the cancellation of foreign debt registration of enterprises instead of directly going to the bank, eliminating the time requirement for enterprises to handle the cancellation of foreign debt registration within one month. In Guangdong, Hong Kong, Macao and Taiwan’s Dawan District and Hainan, the registration requirement for non-financial enterprises to borrow foreign debts one by one will be abolished on a pilot basis. Enterprises in the pilot areas can go through a one-time foreign debt registration at the local foreign exchange bureau and borrow, use and repay foreign debt funds on their own within 2 times their net assets.

Wang Chunying introduced that the foreign debt cancellation registration reform was piloted in Guangdong, Fujian and Beijing Zhongguancun at the end of 2018, greatly facilitating enterprises. Take Guangdong as an example. Since this year, banks have cancelled more than 500 foreign debts, with a corresponding foreign debt signing amount of more than 10 billion US dollars, saving nearly 50,000 kilometers of business mileage between enterprises and foreign exchange bureaus. “Overall, foreign debt registration management reform measures will further reduce the cross-border financing costs of enterprises.”

In Gao Jie’s view, the 12 measures introduced this time are specific arrangements for China to optimize its business environment and promote the opening of capital projects. They will provide more convenient foreign exchange management policies for cross-border trade and foreign investment, create a better business environment, and provide support for stabilizing foreign trade and foreign investment.

Notice of the State Administration of Foreign Exchange on Further Promoting the Facilitation of Cross-border Trade and Investment The branches and foreign exchange management departments of the State Administration of Foreign Exchange in all provinces, autonomous regions and municipalities directly under the Central Government, and the branches of Shenzhen, Dalian, Qingdao, Xiamen and Ningbo; All national Chinese banks:

In order to further promote the reform of “deregulation services”, improve the real economic capacity and level of foreign exchange management services, and promote the facilitation of cross-border trade and investment, the State Administration of Foreign Exchange has decided to further optimize foreign exchange management policies and measures to facilitate market participants to handle foreign exchange business in compliance. The relevant matters are hereby notified as follows:

First, expand the trade and foreign exchange revenue and expenditure facilitation pilot On the basis of the pilot projects in Guangdong, Hong Kong, Macao and Taiwan, Shanghai and Zhejiang, the regions that have expanded the pilot projects for the facilitation of foreign exchange receipts and payments in goods trade will support other regions in carrying out pilot projects such as optimizing the verification of foreign exchange receipts and payments in goods trade, canceling the registration of special foreign exchange refunds, and simplifying the verification of import payments.

The implementation of the service trade foreign exchange revenue and expenditure facilitation pilot. Banks that meet the conditions of prudence and compliance can handle foreign exchange receipts and payments in service trade for domestic institutions with good credit according to the principle of “know customers, know business and perform due diligence”. We will push forward the electronic filing of foreign exchange payments for service trade and realize electronic bank audit through information sharing.

Two, the abolition of non investment foreign investment enterprises capital domestic equity investment restrictions On the basis that investment-oriented foreign-invested enterprises (including foreign-invested companies, foreign-invested start-up investment enterprises and foreign-invested equity investment enterprises) can carry out domestic equity investment with capital according to regulations, non-investment-oriented foreign-invested enterprises are allowed to carry out domestic equity investment with capital according to law on the premise that they do not violate the current special management measures for foreign investment access (negative list) and the projects invested in China are true and compliant.

If a non-investment foreign-invested enterprise transfers its capital in the original currency to carry out domestic equity investment, the investee shall register the receipt of domestic reinvestment and open a capital account to receive the capital in accordance with the relevant provisions, and there is no need to register the capital contribution in cash. If a non-investment foreign-invested enterprise carries out domestic equity investment through capital settlement, the investee shall register for receiving domestic reinvestment and open a “capital account-settlement to be paid account” to receive the corresponding funds according to regulations.

Three, expand the capital project income payment facilitation pilot Allowing eligible enterprises in the pilot areas to use capital, foreign debt, overseas listing and other capital income for domestic payment does not require the bank to provide proof of authenticity one by one in advance, and the use of funds should be true and in compliance with the current regulations on the use of capital income. Pilot banks should follow the principle of exhibition to control the risks of pilot businesses. The local foreign exchange bureau should strengthen monitoring analysis and supervision after the incident.

Four, relax restrictions on the use of foreign exchange funds in capital projects The restrictions on the use of foreign exchange settlement in domestic asset realization accounts will be lifted. Under the foreign direct investment, when the domestic equity transferor receives the transfer price of the foreign investor’s equity, it can directly handle the account opening, fund import and settlement procedures in the bank with the relevant business registration certificate.

We will relax restrictions on the use and settlement of foreign investors’ deposits. After the transaction is concluded, the deposit remitted or transferred from abroad by foreign investors can be directly used for their legal capital contribution within the territory and the payment of consideration inside and outside the territory. Remove the restriction that funds in the margin account cannot be settled, and allow the margin to be settled and paid directly when the transaction is concluded or default deduction is made.

Five, simplify the small cross-border e-commerce enterprises goods trade revenue and expenditure procedures When a payment institution or bank handles the collection and payment of foreign exchange for goods according to the notice of the state administration of foreign exchange on printing and distributing the measures for the administration of foreign exchange for payment institutions (no 13 [2019]), small and micro cross-border e-commerce enterprises (excluding) with an annual cumulative amount of foreign exchange collection and payment for goods less than us $200,000 may be exempted from the registration of “list of enterprises receiving and paying foreign exchange for trade” (hereinafter referred to as list registration). The foreign exchange bureau shall supervise and inspect the small and micro cross-border e-commerce enterprises exempted from the list registration according to law.

Six, the reform of enterprise foreign debt registration management To cancel the management requirement that non-bank debtors must go to the local foreign exchange bureau for cancellation of foreign debt registration, non-bank debtors can directly go through qualified cancellation of foreign debt registration with banks under the jurisdiction of their foreign exchange branch (foreign exchange management department). Cancel the time limit for non-bank debtors to cancel their foreign debt registration.

The foreign debt registration of non-financial enterprises will be cancelled on a trial basis. Non-financial enterprises in the pilot areas can register their foreign debts at the local foreign exchange bureau according to 2 times their net assets. Non-financial enterprises can borrow their foreign debts within the registered amount, and directly go through the procedures of outward remittance and purchase of foreign exchange in the bank, and go through the declaration of balance of payments according to regulations.

Seven, cancel the capital account foreign exchange account number limit The restrictions such as “each foreign debt can open up to 3 foreign debt special accounts”, “each account holder can only open one foreign deposit special account in principle” and “the equity transferor of each equity transfer transaction can only open one domestic asset realization account” will be removed. Relevant market holders can open multiple foreign exchange accounts for capital projects according to actual business needs, but the number of accounts opened in relevant accounts should meet the requirements of prudent supervision.

Eight, optimize the goods trade foreign exchange business reporting methods Cancel the requirement for enterprises to report their business during the counseling period to the local foreign exchange bureau. Foreign exchange bureaus shall carry out key monitoring and verification on enterprises with abnormal and suspicious foreign exchange receipts and payments in goods trade during the counseling period, and standardize classified management.

Business reports such as enterprise trade credit and trade financing can be processed online through the foreign exchange monitoring system for goods trade (enterprise side), without going to the local foreign exchange bureau for on-site reports (except for special businesses with inconsistent trade subjects).

Nine, relax the export income to be checked account opening Enterprises can independently decide whether to open an account to be checked for export income (hereinafter referred to as the account to be checked) when handling goods trade income. If the enterprise does not open an account to be checked, the bank can directly enter the foreign exchange account of the current account or settle the foreign exchange according to the current regulations. According to the current regulations, enterprises are exempted from submitting the income declaration form of the account to be checked to the foreign exchange bureau.

Ten, facilitate enterprise branch directory registration The branch of an enterprise shall apply for registration, alteration and cancellation of the list in accordance with the requirements of the current enterprise legal person, and provide the original or copy of its own “business license”, but it is not necessary to provide the “business license” of the enterprise legal person.

Eleven, promote the domestic credit assets transfer pilot According to the principle of controllable risks and prudent management, the pilot areas are allowed to expand the scope of subjects and channels involved in the foreign transfer of domestic credit assets, and expand the scope of credit assets that can be transferred abroad, including bank non-performing assets and trade financing.

Twelve, allowing the centralized management of overseas funds of engineering contracting enterprises Project contracting enterprises may open overseas centralized fund management accounts after registration by the foreign exchange bureau, and the centralized fund management accounts shall conform to the laws and regulations of the country (or region) where the overseas accounts are located. The income scope of the centralized management account for overseas funds is to transfer the relevant project funds from overseas owners or within China, and transfer the funds from other overseas contracted projects accounts in the same country (or region) opened by the same subject. The scope of expenditure is to transfer funds to projects transferred back to China, overseas projects, and other contracted projects in the same country (or region) abroad opened by the same subject.

This notice shall be implemented as of the date of promulgation (among them, the second paragraph of Article 8 shall be implemented as of January 1, 2020 due to the need to upgrade the foreign exchange monitoring system for goods trade). In case the previous regulations are inconsistent with this notice, this notice shall prevail. After receiving this notice, the branches and foreign exchange management departments of the State Administration of Foreign Exchange shall promptly forward it to their central branches, sub-branches, urban commercial banks, rural commercial banks, foreign banks and rural cooperative banks. After receiving this notice, all national Chinese banks shall forward it to their branches in a timely manner. In case of any problems during the implementation, please give feedback to the State Administration of Foreign Exchange in a timely manner.