Page 20 - Doing Business in China

FOREIGN EXCHANGE CONTROLS

OVERVIEW OF FOREIGN EXCHANGE CONTROLS

RMB EXCHANGE RATE REFORM
The Renminbi (“RMB”) is the official currency in mainland China, and is issued in the Yuan (元), Jiao (角), and Fen (分)
denominations (1 Yuan = 10 Jiao = 100 Fen)�

The People’s Bank of China is the country’s central bank (“Central Bank”), responsible for formulating the exchange
rates between the RMB and major foreign currencies (i�e� USD, EUR, HKD, JPY and GBP)�

As part of efforts to reform the RMB exchange rate system since 2005, the Central Bank took a major step on
11 August 2015 when it introduced the middle rate, which is mainly determined by the market� However, the
Central Bank continues to strive for a balance between ensuring the stability of its monetary policy and exchange
rate reforms�

The State Administration of Foreign Exchange (SAFE) is the authority responsible for foreign currency exchange
control in China�

SIMPLIFIED DOMESTIC AND OVERSEAS DIRECT INVESTMENT REGISTRATION PROCEDURE
As of 1 June 2015, SAFE has eliminated the administrative examination and approval procedures related to foreign
exchange registration approvals for domestic and overseas direct investments� Instead, SAFE authorises banks
to review and handle direct investment-related foreign exchange registrations and other related activities� This
includes tasks such as examination, reporting statistics, and monitoring and registering domestic and overseas
direct investments within the scope of SAFE’s authorisation and under the guidance of SAFE�

After completing the registration of domestic direct investment, the foreign-invested company can open a capital
account in RMB or foreign currency and deposit its registered capital into this capital account�

ENFORCING DISCRETIONAL FOREIGN EXCHANGE SETTLEMENT
A foreign invested company can settle foreign exchange capital into its capital account at its own discretion since
1 June 2015� The proportion of discretionary settlement of foreign exchange capital of foreign-invested companies
is temporarily set at 100%� SAFE may adjust the aforementioned proportion in due course based on the international
balance of payments situation�

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