Feng Juping: Boost Construction of Foreign Exchange Regulation Computerization and Promote Trade & Investment Facilitation

Feng Juping
Yantai, Shangdong, China
June 15, 2004

Good morning! Honorable Guests, Ladies and Gentlemen:

It's my great pleasure being invited to participate in the First APEC E-commerce Industrial & Commercial Federation Forum and exchange the experience in boosting trade and investment facilitation by e-commerce with you. Arranged by the initiator, I would like to make a brief introduction of the construction of foreign exchange regulation computerization and the trade and investment facilitation boosted by the computerization.

I Review of Construction Process of Foreign Exchange Regulation Computerization

In the last few years, China energetically pushed forward with the reform of foreign exchange regulations which includes continuously simplifying the procedures of administrative examination and approval, attaining RMB convertibility for current account, improving RMB exchange rate forming mechanism, refining macro regulation system of international balance of payments, enhancing supervision and regulation on foreign exchange business in financial institutions, and gradually boosting the convertibility for capital account in order to build the foreign exchange regulation system that is compatible with the socialism market economy.

Based on the demand of foreign exchange regulation reform, the State Administration of Foreign Exchange has established the computerization regulatory framework of unified planning and unified platform and electronic system of foreign exchange statistics and regulation information covering main foreign exchange regulation and with comparatively complete contents. By building up the general administration bureau and 43 data centers as four-level network structure for date concentration, we set up the application systems of foreign loans statistics and monitoring, international balance of payments statistics and monitoring, import and export verification and cancellation, batch data exchange with the customs, individual foreign exchange purchase, bank foreign exchange settlement and sales, name list of import and export enterprises, and foreign exchange balance of payments account and realized the computerization administration on the basis of network in foreign exchange administration branches of all levels including general bureau, provincial, municipal, and county.

To meet the new situation and requirement after China's entry into the WTO, we will be committed to further improving foreign exchange regulatory instruments in current account, refining foreign exchange administrative measures in capital account, strengthening the supervision on bank foreign exchange balance of payments on the basis of maintaining the balance of international balance of payments and stable RMB exchange rate, cracking down on illegal foreign exchange transactions, rectifying and standardizing foreign exchange market order, raising foreign exchange regulation and service level, and making efforts to create a pleasant environment to support foreign trade and encourage foreign enterprises to invest in China. For this reason, according to the requirement of the general policy of state computerization construction and general planning of electronic government affairs construction made by the State Council, the State Administration of Foreign Exchange constituted the Development Plan on Computerization in the State Administration of Foreign Exchange in order to realize the electronic administration and service of foreign exchange, the computerization of supervision on foreign exchange, scientific foreign exchange decision making, office automatization, and modernization of reserves operation and administration.

The electronic administration and service of foreign exchange is the platform to establish electronic service, unify the standards, collect data from banks, enterprises, superior government departments and release the information, and realize the information links; The computerization of supervision on foreign exchange is the platform to establish supervision on the capital transaction of foreign exchange and flexible non-site supervision; The scientific foreign exchange decision making is the platform for policy to make a scientific analysis on the model of decision making and provide reliable proof for decision making; The office automatization is the platform to establish the automatization of office and provide with effective and facile office methods; The modernization of reserves operation and administration is the platform to establish reserves operation and administration and provide with scientific operation and administration services for foreign exchange reserves. The framework of the five application platforms is set in the Development Plan on Computerization in the State Administration of Foreign Exchange on the basis of current application systems to integrate the business data and procedure and establish a unitary application system for foreign exchange administration in order to wholly improve and advance the capabilities of public services, administration, decision making, and emergency handling in foreign exchange administrative departments, positive maintain the balance of international balance of payments, prevent from short-term capital flow striking, promote the national economy to develop continuously, rapidly, and soundly, and provide good service for the facilitation of trade and investment.

II Measures to Promote Facilitation of Trade & Investment by Construction of Foreign Exchange Administration Computerization

The construction of foreign exchange administration computerization established the electronic service system of foreign exchange administration with transforming functions, simplifying procedures, standardizing administration, and improving services as the core to provide good services and support for the facilitation of China's trade and investment.

(i)Encourage and support export expanding and facilitate import and export trade

With the establishment and refine of the verification and cancellation system of foreign exchange from export, China has attained the transform from supervision beforehand to afterwards on foreign exchange from export. The State Administration of Foreign Exchange successively developed the system of verification and cancellation of foreign exchange from export, internet-based examination and verification systems of import customs declaration and export verification and cancellation declaration developed in cooperation with the Customs, attained the data share and comprehensive utilization among the foreign exchange administration bureau, customs, and banks, refined the collection and analysis on data and information, improved the utilization of data from difference aspects from dynamic to static state, variable to accumulative amount, and structures and regions, realized the monitoring on two-way capital flowing, changed the administration concept, attained the transit from the current supervision model of verification one by one and correspondingly to batch and general supervision, enhanced the supervision on capital flow-in and flow-out, simplified the complicated registry procedures for enterprises, cut down the operation cost for enterprises, raised the efficiency of the verification and cancellation of import and export for enterprises, and facilitate the import and export for enterprises.

Currently, we are studying a model to further optimize the one-by-one, batch, and general verification and cancellation. We will establish the risk evaluation index and system against abnormal change of import and export foreign exchange verification and cancellation to standardize the system of abnormal circumstances forecasting and enhance the tracking monitoring and dynamic analysis on the date of abnormal circumstances. We will also integrate with the data linked with the examination and verification systems of import and export customs declaration and international balance of payments declaration of the customs to realize the regulation on general amount and categories of import and export foreign exchange verification and cancellation, refine the system of import and export foreign exchange verification and cancellation, and establish a new regulations on import and export foreign exchange verification and cancellation. For the convenience of verification and cancellation for enterprises, we have set pilot verification and cancellation through telenet in some regions.

(ii) Improve import and export environment for enterprises and enhance enterprises' competitiveness

We will further push ahead with reforms on foreign exchange account in current account, raise the limitation of foreign exchange that the inbound organizations are permitted to maintain in their current account, and gradually attain the transit from compulsory settlement system to willing settlement system of foreign exchange. In order to improve the environment for foreign capital using in China, support the implementation of going global strategy, and promote the development of our foreign trade, we insist on the basis principles of two-line regulation on foreign exchange income and expenses and examination and verification of authenticity. By the means of pilot first and then generalization, we will provide the transnational corporations with flexible administrative policies for their foreign exchange income and expenses in current account in order to facilitate the production and operation of the corporations. We will refine the administrative and law system of non-trade foreign exchange to supplement the laws and regulations on service trade such as contracting engineering, e-commerce, and Sino-foreign cooperative management of schools. We will refine the current regulations on foreign exchange in processing trade. We will standardize the regulations on border trade, smooth the bilateral bank settlement, improve bilateral settlement of standard currencies, guide related local bureaus to formulate implementation detailed rules of foreign exchange regulations in border trade to meet the local actual situation.
At the same time, we will further refine the information system of regulations on foreign exchange accounts by bringing the complete information of enterprises' foreign exchange income and expenses into the foreign exchange account system to realize the overall supervision and control on the capital flow in foreign exchange account.

(iii) Improve Policies on Individual Foreign Exchange and Facilitate Nongovernmental International Exchange

To meet the increasing demand of individual foreign exchange of Chinese residents after China's entry into the WTO, the State Administration of Foreign Exchange continues adjusting the regulations on individual foreign exchange purchase by increasing quota and extending the foreign exchange sales from one bank to all the nominated banks to basically meet the demand of individual foreign exchange using. We developed the computer application system to conduct the transactions of individual foreign exchange purchase at real time, enhance the supervision on the rationality of banks' approval of private foreign exchange sales by the foreign exchange administration bureau and facilitate individual foreign exchange using.

By the end of 2003, seventeen Chinese and foreign banks including Banks of China, Industrial and Commercial Bank of China, Agricultural Bank of China, CITIC Industrial Bank, and China Merchants Bank had used this system and conducted over 650 thousand business of individual foreign exchange purchase in their 3,056 offices.

At present, in view of the policy adjustment and problems in the regulations on individual foreign exchange in recent years, we are further supplementing and smoothing the regulations and policy linking in individual foreign exchange account, foreign exchange settlement and sales, and cash deposits and withdrawal, readjusting and modifying the Implementation Detailed Rules of Regulations on Individual Foreign Exchange Purchase of Inbound Residents and constituting the Regulations on Individual Foreign Exchange of Inbound Residents, and upgrading the current system of individual foreign exchange purchase.

(iv) Steadily press ahead with the convertibility for capital account and improve the facilitation of investment

In recent years, the foreign exchange administrative authorities has continued innovating regulations on capital account and adopted the measures including simplifying the procedures of examination and verification on the resources of outbound investment capital, abolishing the examination and verification on foreign exchange risks, canceling the requirement for profits deposit paid by outbound investors, returning the profits deposit already paid, increasing pilots of outbound investment foreign exchange administration reform, and promoting the Qualified Foreign Institution Investors (QFII) by cooperation with the Securities Supervision Committee in order to press ahead with the convertibility for capital account and improve the facilitation of investment.

In 2004, the State Administration of Foreign Exchange will further expand the pilot regions of foreign investment foreign exchange administration reform, properly adjust the policies of immigrants' assets and non-resident heritage transfer, and selectively introduce international financial institutions to issue RMB bonds inbound. At the same time, we will integrate current account administrative information system, statistics and monitoring system of foreign loans, bank foreign exchange settlement and sales system to realize the monitoring on flow amount, accumulative amount, and flowing directions of foreign exchange capital and supervision on transaction parties and types according to the classification.

III Prospect on Computerization to Improve the Facilitation of Trade Investment

The core of computerization is e-commerce. In the developing phase for e-commerce in China, we shall face and solve challenges and obstruction together. We believe we must work hard in the three aspects as follows to develop e-commerce:

(i) All the departments should cooperate with each other to create a coordinated space for the development of China' s e-commerce.

Since the 1990s, the Chinese government has successively established a series of business systems and gained remarkable achievements. However, there are still some problems such as network redundant construction, irrational structure, inadequate development and exploitation information resources, low degree of share, standards disunity, hidden safety problems, and weak construction of legal system.

As one of government offices, in two or three years, we will first of all solve the problems existing in the construction of computerization and propose to realize the shares and comprehensive utilization of information resources among all the ministries and departments to create a coordinated space for the development of China's e-commerce and make an example for the construction of computerization in enterprises.

(ii) Energetically guide enterprises to take an active part in and promote the development of e-commerce

Numerical enterprises set up a footstone for the development of e-commerce. APEC E-commerce Industrial and Commercial Federation should lead excellent enterprises to actively participate in the activities of e-commerce, bring its role as a bridge between government and industrial and commercial sector into a full play, and assist to solve key problems in the process of computerization in industrial and commercial fields, especially the talent problems. By convening workshops, trainings, and enterprises union meetings, it will enhance senior leaders understanding and investment on computerization strategic planning, improve the operation concept and administrative level of the managers, boost the innovation of enterprises' procedures, establish the platform for enterprises cooperation and development, and forge ahead the whole process of China's e-commerce.

(iii) Unified planning, step-by-step implementation, and steadily push ahead with the construction of e-commerce

The practice of China's computerization construction proved that both the e-commerce established by enterprises and electronic government affairs made by government must be in accordance with the rules of computerization construction. Based on the policies of unified planning and step-by-step implementation, overall plans must by made including goals, hardware planning, software planning, overall costs planning, analysis on input and output, and risk evaluation in order for the enterprises to evade risks as much as possible and steadily boost the construction of e-commerce.

Ladies and gentlemen:

In the future twenty years, our country will face the key strategic opportunity to build a well-off society in an all-around way and refine the socialism market economy system. The steady development of e-commerce will contribute to the development of China. Let's cooperate with each other and press ahead with the development of e-commerce in APEC member nations and attain the common prosperity.

Thank you!