The State Administration of Foreign Exchange (SAFE) released a new regulation on Thursday to clarify key forex procedures for the nation's growing ranks of individual international traders.
Qualified individual traders will be subject to forex payment reporting requirements similar to those for corporate traders. The rule is key to the nation's forex management.
The new regulation is part of a legal framework for authorities to enforce the new Foreign Trade Law. The law, which came into effect in July, allows individuals to conduct foreign trade.
China still maintains capital control as the local currency, the Renminbi, is only partly convertible under the capital account.
Individual traders will be allowed to open special bank accounts for their trade-related settlement needs, SAFE said. Transfers of funds can be made freely between such accounts and the traders' personal non-cash forex savings accounts, but transfers from cash foreign currency savings to settlement accounts are forbidden.
Individual traders can make forex payments either through their special settlement accounts or with foreign currency purchased with Renminbi from designated banks. They can sell their forex earnings either directly or through the settlement or non-cash savings accounts.
Giving foreign trade rights to individuals marked the final move in converting the foreign trade sector from a planned-economy into a market-oriented one, analysts said. In the first 10 days after the new Foreign Trade Law took effect on July 1, 66 individuals completed registration procedures in Beijing alone, which analysts say reflected the huge demand from individual Chinese for foreign trade rights.
But the Foreign Trade Law only legalizes entry of individuals, while related regulations in such areas as customs, forex controls, product quality inspection and taxation need to be updated to facilitate transactions, analysts said.
SAFE's regulation also includes measures to ensure the authenticity of foreign trade deals by individual traders, requiring them to present necessary documents when they sell foreign currency to the banks.
(China Daily August 20, 2004)
