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Trade Administration Policy

Circular of the SAFE on Relevant Issues Concerning the Implementation of Online Inspection when there are Inconsistencies between the Export Entity and the Foreign Exchange Collection Entity

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

For the purpose of solving the problem that banks cannot conduct online inspections of the collection and settlement of foreign exchange from exports due to inconsistencies between the foreign exchange collection entity and the export entity caused by changes relating to the exclusive distributor or the authorized parent company and its branches (subsidiaries), in line with the relevant provisions of the Circular of the SAFE on Relevant Issues Concerning the Implementation of the Measures for Online Inspections of the Foreign Exchange Collection and Settlement of Export Proceeds (Huifa No. 31 [2008], hereinafter referred to as No.31 Document), we provide notification on the relevant issues as follows:

1. The inconsistencies between the foreign exchange collection entity and the export entity due to changes relating to the exclusive distributor or the authorized parent company and its branches (subsidiaries) prior to December 31, 2008: the foreign exchange collection entity shall file a written application with the local SAFE branches (hereinafter referred to as the foreign exchange departments), and submit the export contract or agreement and other relevant evidential materials together with duplicate copies. The foreign exchange collection entity shall, upon the approval of the foreign exchange departments, handle the foreign exchange sales or outward transfers in the to-be-checked account by holding the Note for Foreign Exchange Collection of Export Proceeds, the operator IC card of the export entity, and the approval document of the foreign exchange departments. The bank shall, in accordance with the provisions in the Measures for Online Inspections of the Foreign Exchange Collection and Settlement of Export Proceeds, handle the relevant procedures for the online inspection of the foreign exchange collection and settlement of export proceeds and other formalities for the foreign exchange collection entity within the amount of foreign exchange receivable corresponding to the export entity.

The foreign exchange departments shall retain the written application of the foreign exchange collection entity and the duplicate copies of the relevant evidential materials for further reference after handling the aforesaid approval procedures.

2. Beginning on January 1, 2009, the export business of exclusive distributors or  authorized parent companies and their branches (subsidiaries) shall be handled in line with the relevant provisions in the Measures for Online Inspections of the Foreign Exchange Collection and Settlement of Export Proceeds and No. 31 Document, that is, the export entity, the foreign exchange collection entity, and the entity on the online inspection must be consistent.

For inconsistencies in export contracts that are signed or before the date of issuance of the Circular and prescribed to collect foreign exchange after January 1, 2009, the inconsistencies should be handled by referring to the first provision in this Circular.

For inconsistencies in export contracts that are signed after the date of issuance of this Circular, the inconsistencies shall be handled in accordance with these Measures.

3. This Circular shall apply to enterprises that are approved by the foreign exchange departments to carry out centralized collection and settlement of foreign exchange.

4. Any inconsistencies between the foreign exchange collection entity and the export entity due to the mergers or separations of the foreign exchange collection entity shall be handled by referring to the first provision in this Circular.

All branches and foreign exchange administration departments of the State Administration of Foreign Exchange shall, upon receipt of this Circular, immediately forward it to all central sub-branches, sub-branches, foreign-funded banks, local commercial banks, and relevant units; All designated Chinese-funded foreign exchange banks shall, upon receipt of this Circular, immediately forward it to their subordinate branches. When an entity encounters any problems in the implementation of this Circular, feedback should be sent to the Current Account Management Department of the SAFE in a timely manner.

July 28, 2008