Laws of the People's Republic of China

The State Administration of Foreign Exchange

Circular of the State Administration of Foreign Exchange on Interim Measures for Supervision and Control of Verification and Cancellation of Trade Import Exchange Payments

HuiGuoFaZi [1997] No.1

January 17, 1997

Article 1

These Measures are formulated in accordance with the provisions of the Regulations of the People's Republic of China on Foreign Exchange Control for the purposes of improving the supervision and administration of the verification and cancellation of trade import exchange payments.

Article 2

When making overseas payments for goods, advance payments or back payments related to the import of goods (hereinafter referred to as import exchange payments) by means of purchasing foreign exchange through a bank or making payments form a spot exchange account, enterprises(including foreign investment enterprises) and institutions which operate import business with the approval of the Ministry of Foreign Trade and Economic Cooperation or a unit authorized by it (hereinafter referred to as the importing units) shall undertake the procedures for verification and cancellation in accordance with these Measures.

Article 3

A "Voucher for Verification and Cancellation of Trade Import Exchange Payments"(in place of a declaration voucher) (hereinafter referred to as a verification and cancellation voucher) refers to a voucher formulated by the State Administration of Foreign Exchange, filled out by the importing unit, examined and verified by a designated foreign exchange bank and on the strength of which such bank makes import exchange payments.

On the strength of one verification and cancellation voucher the import exchange payments may be made just for one time.

Article 4

The State Administration of Foreign Exchange and its branch bureaus (hereinafter referred to as foreign exchange bureaus) shall be responsible for the verification, cancellation, examination and administration of all import exchange payments, and shall conduct supervision and inspection of importing units and designated foreign exchange banks. A designated foreign exchange bank shall submit the verification and cancellation vouchers and relevant statements to the foreign exchange bureau at the place where it is located, an importing unit making overseas foreign exchange payments shall undertake the procedures for the approval of import foreign exchange payments verification and cancellation with the foreign exchange bureau at the place where it is located.

Article 5

For import exchange payments where payment of foreign exchange is required on delivery of goods, when the designated foreign exchange bank makes import foreign exchange payments on the strength of original import goods declaration voucher(copy exclusively for foreign exchange payment verification and cancellation, the same hereinafter), the procedures for verification and cancellation shall be regarded as being gone through at the same time; for import foreign exchange payments under other methods of settlement, the importing unit shall, on the strength of the verification and cancellation voucher, record form, original import goods declaration voucher(for import foreign exchange payments under entrepot trade arrangements, the foreign exchange conversion memo for the entrepot income shall be presented), directly undertake the procedures for the approval of import foreign exchange payments verification and cancellation with the foreign exchange bureau.

Article 6

An importing unit shall, on the strength of the approval document of the Ministry (commission or office) of Foreign Trade and Economic Cooperation, the business license issued by the department for industry and commerce and the enterprise coda certificate issued by the technological supervision department, have itself entered onto the Register of Importing Units Making Overseas Foreign Exchange Payments with the foreign exchange bureau at the place where it is located. Importing units which are not on the Register may not directly make import foreign exchange payments with the designated foreign exchange bank.

Article 7

The foreign exchange bureau is to promptly publish, update and adjust the register for the designated foreign exchange bank. The foreign exchange bureaus of the provinces, autonomous regions, municipalities directly under the Central Government, municipalities separately listed on the State plan and special economic zones may, depending on the actual local situations, centrally publish the Register of Importing Units Making Overseas Foreign Exchange Payments or have it published by their subordinate branch bureaus for their respective regions.

Article 8

The foreign exchange bureau has the right to issue at any time to the designated foreign exchange bank a Name List of Importing Units Examined and Verified for Authenticity by the Foreign Exchange Bureau based on the cancellation and verification circumstances of an importing unit. The minimum period during which an importing unit shall be subject to examination and verification of authenticity will be six months.

Article 9

For the following import exchange payments, before exchange payment or before an import letter of credit is issued, an application shall be made by the importing unit in respect of each sum to the foreign exchange bureau at the place where it is located and procedures for Import Exchange Payment Record Form (hereinafter referred to as the record form) shall be gone through; the designated foreign exchange bank shall undergo the import exchange payment procedures for it in accordance with provisions on the basis of the record form:

(1)

where the importing unit is not on the Register of Importing Units Making Overseas Foreign Exchange Payments;

(2)

where the importing unit is listed onto the Name List of Importing Units Examined and Verified for Authenticity by the Foreign Exchange Bureau;

(3)

where it is impossible to declare delivery of goods to Customs within 90 days (excluding the 90 days) after exchange payment;

(4)

where the importing unit handles an exchange payment within a designated foreign exchange bank other than one in the city or county under the jurisdiction of the foreign exchange bureau at the place where it is located.

Article 10

When handling an exchange payment, an importing unit shall truthfully fill in the verification and cancellation voucher (three copies for each voucher) in accordance with provisions; in case of payment of foreign exchange on delivery, the serial number of the relevant Customs Declaration For Import Goods and the amount of the currency type declared shall also be filled in. The verification and cancellation voucher, together with other exchange payment documents, shall be submitted to the designated foreign exchange bank for examination and verification.

Article 11

After undergoing foreign exchange payment procedures, the designated foreign exchange bank shall classify the first copy of the verification and cancellation voucher in term of payment of foreign exchange on delivery and other methods of settlement, bind them together respectively and submit them on a weekly basis to the foreign exchange bureau at the place where the importing unit is located; the second copy shall be returned to the importing unit, and the third copy, together with other exchange payment documents, shall be kept for five years for reference.

Article 12

For exchange payment on the strength of the record from, the designated foreign exchange bank shall keep the first copy of the record form and the third copy of the verification and cancellation voucher together for reference, return the second copy of the record form and the second copy of the certification and cancellation voucher to the importing unit for safekeeping, and submit the third copy of the record form and the first copy of the verification and cancellation voucher to the foreign exchange bureau at the place where the bank is located.

Article 13

An importing unit shall, on a monthly basis, submit the verification and cancellation form as well as the attached verification and cancellation documents to the foreign exchange bureau for examination, and undergo the procedures for examination of verification and cancellation with the foreign exchange bureau within one month after declaration of the relevant goods imported.

When undergoing the procedures for examination of verification and cancellation, for the goods which have been delivered, the importing unit shall attach the original import goods Customs declaration form and other verification and cancellation documents to the back of the appropriate verification and cancellation vouchers (in case of an exchange payment on the strength of the record form, the record from shall also be attached to the back of the relevant verification and cancellation vouchers), and shall truthfully complete the Trade Import Exchange Payment Delivered Goods Verification and Cancellation Form; for goods which have not been delivered, the Trade Import Exchange Payment Non-delivered Goods Verification and Cancellation Form shall be completed.

Article 14

After examining the verification and cancellation form and documents attached thereto submitted by the importing unit, the foreign exchange bureau shall affix a "declared and examined" stamp onto the verification and cancellation form and each page of the declaration forms attached thereto, keep the first copy of the verification and cancellation form, and return the second Copy and the documents attached thereto to the importing unit.

The importing unit shall have the verification and cancellation form and the documents attached thereto kept for reference for 5 years.

Article 15

The designated foreign exchange bank shall submit the Trade Import Exchange Payment Monthly Statistical Report to the foreign exchange bureau prior to the fifth of every month.

Article 16

The foreign exchange bureau shall, in a way of total sum or individual sum, cross-verify and check the verification and cancellation vouchers submitted by the designated foreign exchange bank and the importing unit, verify and check the verification and cancellation form and the documents attached thereto submitted by the importing unit in light of the verification and cancellation voucher submitted by the designated foreign exchange bank, and verify and check the importing unit's and bank's situations of exchange payments and of verification and cancellation in light of the record form.

Article 17

The foreign exchange bureau shall undertake random checks of an importing unit and a designated foreign exchange bank according to the situations of verification and checks; for any doubtful documents, importing units or designated foreign exchange banks, key verification and checks shall be undertaken, and "second verification" shall be conducted, in accordance with relevant provisions and at any time, with the Customs at the place where the declaration form is issued. Under payment of foreign exchange on delivery, for an exchange payment on the strength of import goods Customs declaration form, the "second verification" of the import goods Customs declaration form shall be still conducted by the designated foreign exchange bank.

Article 18

An importing unit which commits the following acts shall make an explanation to the foreign exchange bureau within five working days after receiving a notice. Where no explanation has been made by the expiration of the time limit or where there are no justified reasons, the foreign exchange bureau shall, in accordance with the provisions of Article 8 of these Measures, enter the importing unit onto the Name List of Importing Units Examined and Verified for Authenticity by Foreign Exchange Bureau:

(1)

to submit for examination a false, forged, altered or reused customs declaration form for import goods (verification and cancellation copy) or other documents to a foreign exchange bureau or a designated foreign exchange bank;

(2)

to fail to provide a valid customs declaration form for import goods or other evidence of delivery of goods on time after exchange payment;

(3)

without a record form in the situation where a record form shall be presented;

(4)

to fail to submit, to falsely submit or in another manner not in accordance with provisions, to submit a verification and cancellation form and documents attached thereto to the foreign exchange bureau or to lose relevant documents;

(5)

to violate other provisions of these Measures.

Article 19

For a designated foreign exchange bank or an importing unit which is in violation of these Measures, the foreign exchange bureau shall impose penalties upon it in accordance with the provisions of the Regulations of the People's Republic of China on Foreign Exchange Control.

Article 20

The branches of the foreign exchange bureaus shall submit the Trade Import Exchange Payment Verification and Examination Form to the State Administration of Foreign Exchange prior to 10th of every month.

Article 21

The State Administration of Foreign Exchange shall be responsible for the interpretation of these Measures.

Article 22

These Measures shall enter into force as of March 1, 1997. The Interim Measures for Administration of Verification and Cancellation of Import Foreign Exchange Payment promulgated on July 31, 1996 shall be nullified at the same time.

Attachment omited