Circular of the State Administration of Foreign Exchange on Printing and Distributing the Measures for the Administration of Foreign Exchange in Bonded Areas under the Customs\' Supervision

The foreign exchange bureaus and foreign exchange administrative departments of all provinces, autonomous regions and municipalities directly under the Central Government, and the foreign exchange bureaus of Shenzhen, Dalian, Qingdao, Xiamen and Ningbo:

For the purpose of meeting the demands of further expanding and transforming the functions of bonded areas under the customs\' supervision and facilitating the trade and investment made by enterprises within such areas, after consulting with the State Administration of Taxation and the General Administration of Customs, the State Administration of Foreign Exchange has formulated the Measures for the Administration of Foreign Exchange in Bonded Areas under the Customs\' Supervision (Please see Annex, hereinafter referred to as these measures). These measures integrate various foreign exchange administration policies applicable to different bonded areas under the customs\' supervision, adjust the inconsistent policies governing foreign exchange purchase and settlement inside and outside such areas based on maintaining some preferential policies, and further simplify the examination and approval procedures for foreign payments. We hereby print and distribute these measures to you for your earnest implementation, and specify the issues concerning the foreign exchange accounts of enterprises in export processing zones as follows:

1. An enterprise in any export processing zone which has opened foreign exchange accounts shall, before these measures come into force, adjust the nature and number of such accounts pursuant to these measures upon the approval of the local bureau or sub-bureau of the State Administration of Foreign Exchange (hereinafter referred to as foreign exchange bureau). Funds in the original foreign exchange accounts shall, upon the examination and approval by the foreign exchange bureau, be transferred to corresponding newly opened foreign exchange accounts based on the nature of such funds as declared by the enterprise.

The foreign exchange bureau shall, when examining the nature of funds as declared by the enterprise, comprehensively take into consideration the enterprise\'s capital, foreign debts, domestic and overseas foreign exchange loans and other foreign exchange settlement information so as to accurately determine the nature of funds and avoid confusion.

2. All the local bureaus and foreign exchange administration bureaus shall, after receiving these measures, transmit it to the bureaus under its administration and various administration institutions with bonded areas under the customer\'s supervision as well as banks and enterprises in time. In case any problem arises in the process of its implementation, please inform it to the Comprehensive Department of the State Administration of Foreign Exchange.

Contact persons: Jing Qin, Xu Weigang

Tel: 68402429, 68402238 Fax: 68402430

Annex:

1. Measures for the Administration of Foreign Exchange in Bonded Areas under the Customs\' Supervision 2. Name List of the annulled documents after the Effectiveness of the Measures for the Administration of Foreign Exchange in Bonded Areas under the Customs\' Supervision State Administration of Foreign Exchange August 15, 2007 Annex 1: Measures for the Administration of Foreign Exchange in Bonded Areas under the Customs\' Supervision Article 1 These measures are hereby formulated in accordance with the Regulations on the Foreign Exchange System of the People\'s Republic of China as well as other relevant laws and rules, with a view to perfecting the administration of foreign exchange outside the bonded areas under the customers\' supervision and promoting the sound development of bonded areas under the customers\' supervision. Article 2 The \"bonded areas under the customers\' supervision\" as mentioned in these measures (hereinafter referred to as \"within the area\") include such specific areas undertaking closed supervision and administration as bonded areas, export processing areas, bonded logistic zones, bonded port areas, comprehensive bonded areas, cross-border industrial areas, etc. Article 3 The State Administration of Foreign Exchange and its branches (hereinafter referred to as \"foreign exchange bureaus\") shall undertake supervision and administration upon foreign exchange accounts, foreign exchange revenue and spending, purchase of foreign exchange, settlement of foreign exchange within the area in accordance with the relevant laws.

The organizations within the area shall include administrative management institutions, enterprises, public institutions and other economic organizations.

Article 4 After the enterprises within the area have withdrawn their respective industrial and commercial license, they shall go through the procedures for foreign exchange registration uniformly at the local foreign exchange bureau in accordance with the relevant rules.

Where the enterprises within the area undertake foreign exchange revenue and spending operation, they shall present the certificate of foreign exchange registration and handle it with effective proof and commercial document.

Article 5 The business between the area herein and foreign countries shall be priced and settled by foreign exchange, except otherwise stipulated.

The business subject to cargo trade between the area herein and non-bonded areas under the customers\' supervision within the territory of the People\'s Republic of China (hereinafter referred to as \"within the territory and outside the area) may be priced and settled either via Renminbi or foreign currency; affiliated expenditure subject to cargo trade shall be priced and settled in accordance with commercial practice; dealing subject to trade in services shall be priced and settled via Renminbi.

Dealing among the area organizations may be priced and settled via Renminbi or foreign currency; all the expenditures of the administrative management organizations within the area shall be priced and settled via Renminbi.

Article 6 With regard to the cash collection and payment between the area herein and foreign countries, the organizations within the area shall undertake statistic application of international payment and collection in accordance with local regulations; as for the cash collection and payment between the area herein and the area within the territory and outside the area needn\'t undertake statistic application of international payment and collection. Article 7 The domestic enterprises shall open, use and close foreign exchange accounts in accordance with foreign exchange regulations within the territory and outside the area.

The foreign exchange accounts of the enterprises within the area shall be taken into foreign exchange account information system for management.

Article 8 Different foreign exchange administration policies shall be adopted upon cargo trade of foreign exchange collection and payment of the enterprises in the area in light of customs supervision methods corresponding to the status of cargo bond.

Such enterprises within the area as undertake cargo trade after having registered with the competent commercial authority shall go through the registration procedures of \"Name List of Import Entities that Makes Foreign Exchange Payment Outwards\" and collection verification and writing-off of export proceeds in foreign exchange with the local foreign exchange bureau in accordance with the relevant regulations within the territory and outside the area. 炙

Article 9 Where such enterprises in the area pay loan to foreign countries or in-the-territory-and-out-of-the area has one of the following occasions, they shall handle it in the bank by presenting legal, authentic and effective credence and commercial documents. (1) Such enterprises as import goods directly from abroad or from the enterprises in the territory and outside the area may pay from foreign exchange account or foreign exchange purchase. (2) After the conclusion of export contract with foreign counterpart, cargos shall be exported after the enterprises in the territory and outside the area have declared it, payment abroad may be transferred by the enterprises in the area to the enterprises in the territory and outside the area. (3) Such enterprises as purchase goods from the enterprises outside the area may pay directly hereto, and banks herein shall handle such procedures as settlement of foreign exchange or entry of item into account. (4) Payment to the enterprises abroad or within the territory and outside the area.

Such enterprises in \"Name List of Import Entities that Makes Foreign Exchange Payment Outwards\" within the area as pay in other area shall handle such record procedures as import proceeds in foreign exchange in accordance with the relevant regulation.

Article 10 Such enterprises in the area pay cargos abroad needn\'t handle the verification and cancellation of import proceeds in foreign exchange, except otherwise prescribed.

Where enterprises in the area pay abroad on the strength of customs declaration form or customs recording, the foreign exchange payment bank shall handle such procedures as electronic account, case close in accordance with local regulations.

Where the enterprises in the area pay abroad by buying foreign exchange other than by means of payment after arrival of goods, they shall present the originals of customs declaration form or customs recording to the foreign exchange payment bank, and the bank herein shall go through the corresponding procedures in accordance with the precedent regulations. Where the enterprises herein fail to present the aforesaid documents, the foreign exchange payment bank shall submit to the local foreign exchange bureau the name list of enterprises in the area in three working days prior to the completion of every quarter to let the local exchange bureau to examine and verify the authenticity of each foreign exchange revenue or expenditure. 炙

Article 11 Where such enterprises in the area as export goods abroad have handled abroad record of bonded goods at the customs herein, they needn\'t handle verification and cancellation of export proceeds in foreign exchange; where such enterprises herein have handled export declaration of non-bonded cargos in the customs, the enterprises herein shall handle the verification and cancellation of export proceeds in foreign exchange at the prescribed foreign exchange bureau. Article 12 The business between the enterprises in the area shall be paid with Renminbi or from its foreign exchange account on the strength of such effective certificate and business documents as contract, agreement, invoice which proves the legality and authenticity of the business. Article 13 Such enterprises in the territory and yet outside the area as purchase cargos in the area may pay to the enterprises in the area by effective credence and commercial document and pay to foreign countries directly and may also pay to the enterprise with cargo right in the territory and outside the area. After the enterprise with cargo right in the territory and outside the area has received the foreign exchange payment from the aforesaid enterprise in the territory and outside the area, it may handle the procedure of verification and cancelation with the strength of credit advice or the foreign exchange settlement voucher. Article 14 The settlement of foreign exchange revenue under current account of the enterprises in the area and the purchase and payment of foreign exchange under service trade shall be handled in accordance with the relevant regulations within the territory and outside the area. 炙 Article 15 Foreign exchange businesses under capital item of the organizations in the area shall be handled in accordance with the relevant foreign exchange regulations.

The assets gained by foreign investors from the liquidation by the organization in the area may be remitted to foreign countries or reinvested within the territory of the People\'s Republic of China after the foreign exchange bureau has verified it; the assets gained by Chinese investors shall be returned to the zone outside the area within the territory of the People\'s Republic of China in time and handled in accordance with the relevant regulations.

Article 16 After banks have gone through the procedure of purchase of foreign exchange or settlement of foreign exchange for the enterprises in the area, the banks herein shall sign in the corresponding columns of foreign exchange registration certificate and keep the relevant certificate and commercial documents. Article 17 The foreign exchange bureau shall regularly or irregularly undertake supervision and inspection upon foreign exchange business of banks and other organizations in the area, and punish those who violate these measures in accordance with Regulations on the Foreign Exchange System of the People\'s Republic of China and other regulations on foreign exchange management; give the punishment of warning, a criticism by circulating a notice, a fine of less than 30,000 yuan where it is not clearly prescribed in Regulations on the Foreign Exchange System of the People\'s Republic of China and other regulations on foreign exchange management; where the settlement or purchase of foreign exchange is transacted not according to these measures, the right to transact settlement of or purchase of foreign exchange may be suspended or cancelled. Article 18 These measures shall apply to bonded logistic centers (A, B types), diamond dealing. Article 19 These measures shall be implemented as of October 1, 2007, and be interpreted by State Administration of Foreign Exchange. Where there is something not expressly prescribed in these measures, it shall be implemented in accordance with foreign exchange regulations in the territory and outside the area. Where the aforesaid foreign exchange management regulations are inconsistent with these measures, these measures shall prevail. Annex 2: Name List of the annulled documents after the Effectiveness of the Measures for the Administration of Foreign Exchange in Bonded Areas under the Customs\' Supervision

The following documents shall be annulled as of the date when the Measures for the Administration of Foreign Exchange in Bonded Areas under the Customs\' Supervision are implemented:

1. Circular of the State Administration of Foreign Exchange on the Administration of Foreign Exchange in Bonded Logistic Parks (Hui Fa [2005] No.92) 2. Reply of the General Department of State Administration of Foreign Exchange concerning Purchase of Foreign Exchange Subject to Declaration Import by the Enterprises in Haikou Bonded Areas (Hui Zong Fu [2005] No. 16) 3. Reply of the General Department of State Administration of Foreign Exchange concerning Transfer of Foreign Exchange by Enterprises in the Bonded Areas to Foreign Enterprises ( Hui Zong Fu [2004] No. 79) 4. Reply of the General Department of State Administration of Foreign Exchange concerning Purchase of Foreign Exchange of Automobile Allocation Enterprises in the Bonded Areas ( Hui Zong Fu [2003] No. 32) 5. Reply of the General Department of State Administration of Foreign Exchange concerning Purchase of Goods in the Warehouse in the Area by Foreign Companies (Hui Zong Fu [2003] No. 27) 6. Circular of State Administration of Foreign Exchange on Promulgation Measures for the Administration of Foreign Exchange in the Bonded Areas (Hui Fa [2002] No. 74) 7. Circular on Promulgating Interim Measure for the Administration of Foreign Exchange in the Export Processing Areas ( Hui Fa [2000] No. 116)

State Administration of Foreign Exchange 2007-08-15

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