Laws of the People's Republic of China

The State Administration of Foreign Exchange

Circular of the State Administration of Foreign Exchange (SAFE) on the Administration of Foreign Exchange Account of NVOCC

HuiFa [2002] No.75

July 25, 2002

SAFE branches in all provinces, autonomous regions and municipalities directly under the Central Government, exchange administration offices, and SAFE branches in the cities of Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo; headquarters of all designated Chinese-funded foreign exchange banks:

In order to normalize the foreign exchange administration related to ocean shipping, and ensure the normal foreign exchange income and outlay of NVOCCs (non-vessel operating common carriers), a circular on issues related to the administration of foreign exchange accounts of NVOCCs is given hereunder according to Regulations of the People's Republic of China on International Ocean Shipping (Decree [2001] No.335 of the State Council), Rules on the Administration of Domestic Foreign Exchange Account (promulgated by the People's Bank of China on October 7, 1997), and Circular on Issues Related to the Administration of Foreign Exchange Income and Outlay Related to International Ocean Shipping (HuiFa [2001] No.058):

1.

An authorized NVOCC may apply to a local branch or sub-branch of the State Administration of Foreign Exchange (hereafter referred to as the SAFE office) for opening a foreign exchange account under current account (hereinafter referred to as "foreign exchange account") upon the Certificate of Qualification of NVOCC issued by the Ministry of Transportation.

2.

Income items of the foreign exchange account are limited to freight and related fees for international ocean shipping paid by domestic shipper, forwarder, shipping agency, and NVOCC, or remitted in from abroad; while its outlay items are confined to freight and related fees remitted abroad for international ocean shipping, or paid to domestic forwarder, shipping agency, shipping company, NVOCC, and wholly foreign-funded shipping company.

3.

When approving an NVOCC to open a foreign exchange account, the SAFE office shall set a balance ceiling for the account equal to 10 percent of the NVOCC's foreign exchange income from current account transactions in the previous year. For a newly established NVOCC, the initial balance ceiling may be set in principle at an equivalent of USD100,000. The SAFE office may adjust the initial balance ceiling according to the grand total of the balance ceilings in the locality and adjust annually the balance ceiling of the account. If the actual balance exceeds the ceiling, the surplus shall be sold to the bank in 5 working days.

4.

If the regulations on the administration of foreign exchange account is amended in the future, the amended will prevail.

On receiving this Circular, SAFE branches shall promptly transmit it to the sub-branches and foreign-funded banks and entities concerned under their respective jurisdiction. The designated Chinese-funded foreign exchange banks shall transmit it to their branch offices as soon as possible. Any problem encountered during the implementation shall be reported in time to the Current Account Department of the State Administration of Foreign Exchange.