Laws of the People's Republic of China

The State Administration of Foreign Exchange

Circular of the State Administration of Foreign Exchange Concerning Canceling Partial Categories for Recording Import Payments in Foreign Exchange

HuiFa [2003] No.34

March 5, 2003

Branches and foreign exchange administration departments under the State Administration of Foreign Exchange in provinces, autonomous regions and municipalities directly under the Central Government, and branch administrations of Shenzhen, Dalian, Qingdao, Xiamen, Ningbo; and designated banks of foreign exchange:

In order to adapt to the new trend after China's entry of WTO, further perfect the administration on the foreign exchange of current account transactions and accelerate the development of foreign trades, the State Administration of Foreign Exchange has decided to cancel partial categories for recording the import payments in foreign exchange to simply the procedures of verification of import payments in foreign exchange for the importers. Some relevant issues are circularized hereby:

I.

Recording and registration requirements for three categories, including "transshipment trades of paying-first-and-then-collecting", "material used by overseas projects", "prepayment over stipulated proportion and amount", which are stipulated in the HuiGuoHanZi [98] No.199, the Circular of Distributing the Provisions of Verification of Trade Facticities of Cancellation of Import Payments in Foreign Exchange shall be canceled. As of the enforcement of this Circular, importers may directly go to banks to purchase/pay foreign exchange under above three categories of transactions, by presenting the required payment warrants and commercial bills, without needs to apply to the State Administration of Foreign Exchange or its branches (hereinafter referred to as AEF) for Record Form for Import Payment in foreign exchange.

II.

When an importer purchases/pays foreign exchange under the "transshipment trade of paying-first-and-then-collecting", it shall present relevant commercial documents including import/export contract, verification form of import payments in foreign exchange (that may be regarded as a declaration form), credit letter issued by buyer or payment guarantee that is issued by a foreign bank and has been authenticated by a domestic bank for its testkey as well as all commercial documents in any settlement methods. When purchasing/paying foreign exchange under the trade of "material used by overseas projects", the importer shall present import/export contract, verification form of import payments in foreign exchange (that may be regarded as a declaration form), commercial invoice or proforma invoice, project contracting agreement or subcontracting agreement and all commercial documents in any settlement methods. In a case of or purchasing/paying foreign exchange under the trade of "prepayment over stipulated proportion and amount", the importer shall present import/export contract, verification form of import payments in foreign exchange (that may be regarded as a declaration form), commercial invoice or proforma invoice, commercial invoice or proforma invoice, and prepayment guarantee letter issued by a foreign bank and has been authenticated by a domestic bank with its testkey or standby letter of credit.

III.

When the importer is filling in the Verification Form of Import Payments in Foreign Exchange (that may be regarded as a declaration form), the item "Payment Nature" shall be filled with "Normal Payment in Foreign Exchange" for any of the above-mentioned three categories of payments.

IV.

After the procedures for selling/paying foreign exchange are completed, the designated foreign exchange banks shall transmit the paper-based verification documents and relevant electronic documents to AFE.

V.

After the importers have paid the foreign exchange for the items of the above-mentioned three categories, it shall go through the verification procedures according to relevant government regulations governing the verification procedures for export proceeds and import payments. The AFE shall, when dealing with the verifications of above categories, input "999999" for all the serial numbers of the data record forms for the import payments in foreign exchange.

VI.

This Circular shall enter into force as of April 1, 2003. If any previous provisions are inconsistent with this Circular, this Circular shall prevail.

All branches shall transmit this Circular to their central sub-branches, foreign-funded banks and relative units upon receiving this Circular. As soon as the Chinese-capital designated banks of foreign exchange receive this Circular, they shall immediately transmit it to their branches. They shall feedback any problem occurring in the course of implementation of this Circular to the Department of Current Account Transactions Administration of the State Administration of Foreign Exchange.