Announcement of the State Administration of Foreign Exchange on Reforming the Foreign Exchange Administration Approach for Foreign Direct Investment — Full English Translation (2015)

Table of Contents

I. Simplification of Foreign Exchange Registration for Foreign Direct Investment

Article 1 — For the purposes of further deepening the reform of the foreign exchange administration system, better satisfying the needs of foreign-invested enterprises for operational convenience, and promoting trade and investment facilitation, the State Administration of Foreign Exchange (SAFE) hereby decides to reform the foreign exchange registration approach for foreign direct investment (FDI).

Article 2 — Foreign-invested enterprises shall complete their foreign exchange registration for FDI in accordance with the relevant provisions. The SAFE and its local branches shall treat domestic and foreign-funded enterprises equally in foreign exchange administration and shall implement the negative list management approach for foreign investment access.

Article 3 — Foreign-invested enterprises may, upon completion of foreign exchange registration, open foreign exchange capital accounts at banks. Banks shall handle capital account transactions such as inward remittance, foreign exchange settlement, and payment of foreign exchange capital for foreign-invested enterprises based on foreign exchange registration vouchers and transaction documents.

II. Reform of Capital Account Settlement

Article 4 — Foreign-invested enterprises may, at their discretion, settle their foreign exchange capital according to their actual business needs. The proportion of foreign exchange capital that may be settled on a discretionary basis shall be 100 percent. Foreign-invested enterprises may continue to settle foreign exchange capital on a payment-by-payment basis.

Article 5 — Renminbi funds obtained by foreign-invested enterprises through the settlement of foreign exchange capital shall be deposited in the corresponding settlement pending-payment accounts and shall be used for operational purposes within the enterprises’ scope of business. Such funds shall not be used for purposes beyond the scope of business of the enterprises.

Article 6 — Banks shall, in accordance with the principle of “know your customer,” “know your business” and “due diligence,” conduct authenticity and compliance reviews of the use of funds settled by foreign-invested enterprises, and shall retain relevant business materials for future reference.

III. Simplification of Capital Verification Procedures

Article 7 — The procedures for the verification of capital contributions by foreign investors to foreign-invested enterprises shall be further simplified. Foreign-invested enterprises shall complete capital contribution information reporting through the enterprise information reporting system, and the SAFE shall verify the relevant information through data exchange with other departments. No separate foreign exchange capital verification procedures shall apply.

IV. Transitional Arrangements

Article 8 — This Announcement shall take effect on June 1, 2015. The SAFE shall separately formulate detailed rules for the implementation of this Announcement. The relevant previous provisions that are inconsistent with this Announcement shall cease to be effective. The SAFE and its local branches shall strengthen business guidance and follow-up monitoring to ensure the smooth implementation of the reform measures.