Laws of the People's Republic of China

The State Administration of Foreign Exchange

Circular of the State Administration of Foreign Exchange on Relevant Issues on the Foreign Exchange Control in Bonded Warehouses

HuiFa [1998] No.97

November 30,1998

Branches the State Administration of Foreign Exchange in all provinces, autonomous regions, and municipalities directly under the central government, Branch of Shenzhen;the Assigned banks of foreign exchange:

Since the promulgation and implementation of the Circular on the Improvement of the Supervision over the Sale and Payment of Foreign Exchange, we have received many issues on the foreign exchange control in bonded warehouses reported by some local branches of the State Administration of Foreign Exchange (SAFE), the designated foreign exchange banks and enterprises, this Circular on issues on the foreign exchange control in bonded warehouse is hereby issued after review and consideration as follows in order to ensure the lawful operation of enterprises:

1.

Where the enterprises engaged in the operation of bonded warehouses (hereinafter referred to as "bonded warehouse enterprises") import goods from outside China and supply them to other domestic entities' on consignment and commission manner, it is the responsibility of the domestic entities taking delivery of goods from the bonded warehouses to purchase foreign exchange from the designated foreign exchange banks or use their own foreign exchange accounts to make payment to outside of China with the following valid documents and commercial invoices, while the bonded warehouse enterprises shall not make purchase and payment of foreign exchange:

a.

import contract;

b.

verification form of import payment of foreign exchange;

c.

special payment certificate for the customs duty levied by Customs or Customs' duty - exemption certificate;

d.

original declaration form of import goods attached with anti- falsification tag and stamped with Customs' "proof seal" with the country (or region) of dispatch as "People's Republic of China (142)", the domestic place of destination as "some place in China", the means of transportation as "bonded";

e.

other valid documents and commercial invoices required by corresponding means of settlement and modes of trade administration. The applicants for the purchase and payment of foreign exchange shall be in conformity with the operating entities indicated on the declaration form.

2.

Where the bonded warehouse enterprises import goods from outside China in an outright purchase manner and sub-sequently sell them to other domestic entities through the bonded warehouses, it is the responsibility of the bonded warehouse enterprises to purchase foreign exchange from the designated foreign exchange banks or use its own foreign exchange accounts to make the payment to outside of China with the following valid documents and commercial invoices while the domestic entities taking delivery of goods from bonded warehouse shall not make the purchase and payment of foreign exchange and shall make payments only in RMB to the bonded warehouse enterprises:

a.

import contract;

b.

verification form of import payment of foreign exchange;

c.

special payment certificate for the customs duty levied by Customs or Customs' duty-exemption certificate;

d.

original declaration form of import goods attached with anti- falsification tag and stamped with Customs' "proof seal" with the country (or region) of dispatch as "People's Republic of China (142)", the domestic place of destination as "some place in China", the means of transportation as "bonded"; (declaration form for exit outside of bonded warehouse)

e.

original declaration form of import goods stamped with Customs' "proof seal" with the country (or region) of dispatch as "Outside of China", the mode of trade as "Goods from Bonded Warehouse(1233)"; (declaration form for entry into bonded warehouse)

f.

other valid documents and commercial invoices required by corresponding means of settlement and modes of trade administration.

The total amount on the declaration form for exit outside of bonded warehouse shall not be higher than that for entry into the bonded warehouse.

The applicants for the purchase and payment of foreign exchange shall be in conformity with the operating entities indicated on the declaration forms for the exit outside of and entry into the bonded warehouse and the buyers in the import contract.

3.

Where the domestic entities import goods from outside China into China through the bonded warehouse, such cases shall be handled according to the provisions of the Article 2 of this Circular. Where the raw materials under the commission processing are imported from outside China into China through bonded warehouse, purchase and payment of foreign exchange shall not be made.

4.

Only declaration form for entry into bonded warehouse itself shall not be used by the bonded warehouse enterprises and other domestic entities as documents evidencing payment of foreign exchange.

5.

Designated foreign exchange banks shall strictly examine and verify required valid documents and commercial invoices and go through the procedures of the check of declaration forms and verification of import payment of foreign exchange according to provisions.

6.

This Circular is not applicable to the enterprises operating bonded warehouse business in the bonded areas and the act of importing goods from the bonded market in the bonded areas.

7.

Upon its receipt of this Circular, every branches of SAFE shall transit it to the sub-branches and financial institutions (inclusive of foreign financial institutions) under its jurisdiction and entities concerned. Any problems or questions arising in its implementation shall be reported promptly to SAFE.

8.

This Circular shall enter into force as of the date of promulgation.