The branches and foreign exchange administrative departments of the State Administration of Foreign Exchange ("SAFE") in all provinces, autonomous regions, and municipalities directly under the Central Government; branches of the SAFE in Shenzhen, Dalian, Qingdao, Xiamen and Ningbo; and all national Chinese-funded banks:

For the purposes of further promoting the reform of "simplification of administrative procedures and decentralization of powers, combination of decentralization and appropriate control, and optimization of services," enhancing the capability and level of foreign exchange administration to serve real economy, and facilitating cross-border trade and investment, the SAFE has decided to further optimize foreign exchange administration policies and measures, and facilitate market entities' compliant handling of the foreign exchange business. You are hereby notified of the relevant matters as follows:

I . Expanding the pilot program of facilitating foreign exchange receipts and payments in trade

The regions implementing the pilot program of facilitating foreign exchange receipts and payments under trade in goods shall be expanded, and on the basis of the pilot program in the Guangdong-Hong Kong-Macao Greater Bay Area, Shanghai and Zhejiang, other regions are supported in conducting such pilot programs as optimizing the examination of foreign exchange receipts and payments under trade in goods, deregistering special reexchange, and simplifying the inspection of foreign exchange payments for imports according to relevant provisions.

The pilot program of facilitating foreign exchange receipts and payments under trade in services shall be conducted. Eligible, prudential and compliant banks may handle foreign exchange receipts and payments under trade in services for domestic institutions with good credit status according to the business principles of "knowing clients, knowing businesses, and due diligence." The electronic recordation of taxation for foreign exchange payments under trade in services shall be promoted, so as to realize electronic examination by banks in the form of information sharing.

II . Canceling restrictions on domestic equity investments made with capital funds by non-investing foreign-funded enterprises

On the basis that investing foreign-funded enterprises (including foreign-funded companies, foreign-funded venture capital enterprises and foreign-funded equity investment enterprises) may make domestic equity investments with their capital funds in accordance with laws and regulations, non-investing foreign-funded enterprises are permitted to legally make domestic equity investments with their capital funds under the premise that the existing special administrative measures (negative list) for foreign investment access are not violated and domestic investment projects are true and compliant.

Where a non-investing foreign-funded enterprise makes domestic equity investment with capital funds in the original currency, the investee shall accept domestic reinvestment registration and open a capital fund account to receive funds according to relevant provisions, and is not required to handle the entry registration of cash contribution. If a non-investing foreign-funded enterprise makes domestic equity investment with capital funds obtained from foreign exchange settlement, the investee shall undergo registration formalities for accepting domestic reinvestment and open the "capital account – account for settled foreign exchange to be paid" to receive the corresponding funds according to relevant provisions.

III . Expanding the pilot program of facilitating revenue payment under capital accounts

Qualified enterprises in pilot regions are allowed to use revenue under such capital accounts as capital funds, external debts, and overseas listing for domestic payment without providing banks with authenticity certification materials in advance, and the use of funds shall be authentic and compliant, and comply with the existing administrative provisions on the use of revenue under capital accounts. Pilot banks shall manage and control the risks of pilot business under business principles. The local foreign exchange authority shall strengthen monitoring and analysis and interim and ex post supervision.

IV . Relaxing restrictions on the use of foreign exchange funds under capital accounts for foreign exchange settlement

The restrictions on the use of funds in domestic asset realization accounts for foreign exchange settlement shall be canceled. When the transferor of domestic equity under the account of direct foreign investment receives the consideration for equity transfer from a foreign investor, it may directly undergo account opening, inward remittance of funds and foreign exchange settlement and use formalities at a bank based on the relevant business registration certificate.

The restrictions on margin use and foreign exchange settlement by foreign investors shall be relaxed. The margin remitted from abroad or transferred from the domestic market by a foreign investor may be directly used as its domestic lawful capital contribution or the consideration paid both at home and abroad after the transaction is concluded. The restriction that funds in the margin account shall not be used for foreign exchange settlement shall be canceled, and the margin may be directly used for foreign exchange settlement and payment when a transaction is concluded or deposits are deducted for the breach of contract.

V . Simplifying the formalities for trade in goods of micro and small cross-border e-commerce enterprises

When a payment institution or a bank handles foreign currency receipts and payments under trade in goods in accordance with the Notice by the State Administration of Foreign Exchange of Issuing the Measures for the Administration of the Foreign Exchange Business of Payment Institutions (No. 13 [2019], SAFE), micro and small cross-border e-commerce enterprises of which annual cumulative amount of foreign currency receipts or payments under trade in goods is less than 200,000 US dollars (exclusive) may be exempt from undergoing the formalities for registration in the directory of enterprises with foreign exchange receipts and payments in trade (hereinafter referred to as "registration in the directory"). The foreign exchange authority shall, in accordance with the law, conduct the supervision and inspection of micro and small cross-border e-commerce enterprises exempt from undergoing registration in the directory.

VI . Reforming the administration of registration of external debts of enterprises

The administrative requirement that non-bank debtors shall undergo external debt deregistration formalities at the local foreign exchange authority shall be canceled. A non-bank debtor may directly undergo external debt deregistration formalities which meet relevant conditions at the bank under the jurisdiction of the foreign exchange authority (foreign exchange administrative department) to which it is affiliated. The time limit for non-bank debtors to handle external debt deregistration shall be canceled.

The pilot program of deregistering each external debt by non-financial enterprises shall be carried out. Non-financial enterprises in pilot regions may complete external debt registration at the foreign exchange authority where it is located based on two times the amount of net assets. Non-financial enterprises may borrow external debts within the registered amount on their own, and directly undergo such formalities as inward and outward remittance of funds and foreign exchange purchase and sale at banks, and handle international balance of payments in accordance with relevant provisions.

VII . Canceling restrictions on the number of opened foreign exchange accounts under capital accounts

The restrictions such as "a maximum of three special accounts for external debt may be opened for each external debt," "each account-opening entity may in principle open one special account for the remittance of margin from abroad," "an equity transferor in an equity transfer may only open one domestic asset realization account" shall be canceled. The relevant market entities may open several foreign exchange accounts under capital accounts according to actual business needs, but the number of accounts opened shall comply with prudential regulatory requirements.

VIII . Optimizing the methods for reporting the foreign exchange business for trade in goods

The requirement that enterprises shall report the business during the counseling period to the local foreign exchange authority shall be canceled. The foreign exchange authority shall conduct focused monitoring and inspection of enterprises in the counseling period with abnormal and suspicious foreign currency receipts and payments under trade in goods, and regulate categorized administration.

Enterprises may undergo online formalities for enterprises' trade credit, trade financing and other business reports through the foreign exchange monitoring system for trade in goods (enterprise terminal), and are not required to report at the local foreign exchange authority (except for special businesses with different trade entities).

IX . Relaxing restrictions on the opening of a to-be-inspected account for export revenue

For the revenue obtained by an enterprise from trade in goods, the enterprise may, on its own, decide whether to open a to-be-inspected account for export revenue (hereinafter referred to as the "to-be-inspected account"). If an enterprise has not opened a to-be-inspected account, the examined revenue from trade in goods by the bank in accordance with the existing provisions may be directly deposited into the foreign exchange account under current accounts or used for foreign exchange settlement. If the form for the declaration of revenue in the to-be-inspected account needs to be submitted to the foreign exchange authority according to the existing provisions, the enterprise may be exempted from submission.

X . Facilitating the registration of inventory of branches of enterprises

Where an enterprise's branch applies for undergoing the formalities for registration, modification or deregistration in the inventory, it shall provide the original or duplicate of its Business License according to the existing requirements for enterprise legal persons, but it is not to required to provide the Business License for the enterprise legal person.

XI . Promoting the pilot program on the external transfer of domestic credit assets

Under the principles of controllable risks and prudential management, pilot regions are permitted to expand the scope of subjects participating in the external transfer of domestic credit assets and transfer channels and expand the scope of transferable credit assets, including non-performing assets of banks and trade financing, among others.

XII . Permitting the centralized management of overseas funds of enterprises undertaking contracted projects

An enterprise undertaking a contracted project may, upon registration at the foreign exchange authority, open an account for the centralized management of funds abroad, which shall comply with the laws and regulations of the country (or region) where the overseas account is opened. The scope of receipts of an account for the centralized management of overseas funds shall be project funds transferred from the overseas owner or domestic market, and funds transferred from other overseas contracted project accounts of the same country (or region) opened by the same entity. The scope of expenditures shall be project funds transferred back to China, the relevant overseas project funds expenditure, and funds transferred to other contracted project accounts of the same overseas country (or region) opened by the same entity.

This Notice shall come into force on the date of issuance (paragraph 2 of Article 8 shall come into force on January 1, 2020 since the foreign exchange monitoring system for trade in goods shall be updated). In the case of any discrepancy between this Notice and the existing relevant provisions, this Notice shall prevail. Upon receipt of this Notice, all branches and foreign exchange administrative departments of the SAFE shall, in a timely manner, forward it to central sub-branches, sub-branches, urban commercial banks, rural commercial banks, foreign-funded banks, and rural cooperative banks within their respective jurisdictions. All national Chinese-funded banks shall, upon receipt of this Notice, forward it to their branch offices within their respective jurisdictions in a timely manner. If you encounter any problem in implementation, please report it to the SAFE in a timely manner.

Tel.: 86-010-68402450, 86-010-68402163, 86-010-68402250

State Administration of Foreign Exchange

October 23, 2019