Laws of the People's Republic of China

State Administration of Foreign Exchange

The Notice of State Administration of Foreign Exchange on Relevant Issues concerning Strengthening the Management of Deferred and Forward Payment in Foreign Exchange

Hui Fa [2005] No. 8

February 5, 2005

The branches and foreign exchange administrative department of the State Administration of Foreign Exchange in provinces, autonomous regions and municipality directly under the Central Government, the branches in Shenzhen, Dalian, Qingdao, Xiamen, Ningbo, Chinese-funded banks designated for foreign exchange:

In order to further perfect the management of collections and payment for trade in foreign exchange, and regulate trade financing acts such as the deferred and forward payment for imports in foreign exchange, and so on, the relevant issues are hereby notified as follow:

1.

Foreign exchange control authorities at all levels (hereinafter refer to as "the bureaus of foreign exchange"), banks designated for foreign exchange (hereinafter refer to as "banks") should, in strict accordance with the present Notice and other relevant provisions governing the administration of foreign exchange, strengthen the verification of authenticity of such trade financing as deferred payment for import in foreign exchange and forward payment for import in foreign exchange, during the links of collections, payment and verification and write-off of foreign exchange.

2.

Where the payment in foreign exchange is handled, under the item of payment against arrival, upon the strength of the Certificate Page of Import Payment in Foreign Exchange of Declaration Form for Imported Goods (original) (hereinafter referred to as Declaration Form), the import date of which is ahead of March 1,2005, the amount of non-payment (single) of which exceeds 500 thousand US dollar (included), and whose estimated date of payment in foreign exchange is 90 days (included) later than the import date of Declaration Form, the import entities should, prior to May 1,2005, upon the presentation of such valid commercial documents as Statements for Deferred Payment, Declaration Form and Contract, go through the registration formalities for the deferred payment in foreign exchange with bureaus of foreign exchange, with bureaus of foreign exchange.

3.

Where the payment in foreign exchange is handled, under the item of payment against arrival, upon the strength of the Declaration Form, the import date of which is later than March 1,2005, the import entities should go through the formalities for collections and payment in foreign exchange, upon the date of contract. But where the payment in foreign exchange is handled, the amount of non-payment (single) of which exceeds 500 thousand US dollar (included) and whose estimated date of payment in foreign exchange is 90 days (included) later than the import date of Declaration Form, the import entities should, prior to 60 days after the declaration, upon the presentation of such valid commercial documents as Statements for Deferred Payment, Declaration Form and Contract, go through the registration formalities for the deferred payment in foreign exchange, with bureaus of foreign exchange.

4.

where the deferred payment in foreign exchange is handled, in accordance with the situations in the regulations of above-mentioned article second and third, the banks should, upon the certificate page and commercial documents which regulates the settlement, selling and payment in foreign exchange as Declaration Form, and upon the Registered Sheet on Deferred Payment of Import Payment in Foreign Exchange (hereinafter referred to as "Registered Sheet", the form can be seen from the appendix 1), which should affix the seal of the business of the payment for trade and import, verification and write-off and supervision in foreign exchange by the bureaus of foreign exchange, go through the formalities for collections and payment in foreign exchange, submit to the local bureaus of foreign exchange the third page with the List on Payment for Verification and Write-off of Import Payment in Foreign Exchange. (instead of the Declared List).

5.

Where the payment in foreign exchange is handled, which should be but not to be handled, or the date of which exceeds the day written on the Registered Sheet, under the item of payment against arrival, banks shall not directly go through the import payment in foreign exchange with the import entities. If the payment in foreign exchange can not be paid within the written date on the Registered Sheet because of the special reasons as trade disputes, the import entities should, upon Statements for Deferred Payment, relevant materials and the original Registered Sheet, go through the second registration formalities for the deferred payment in foreign exchange. After the verification of the bureau of foreign exchange, which shall annotate the second deadline of referred payment and affix the seal of verification and write-off and supervision of payment in foreign exchange again. Mostly, the import entities can only go through registration formalities for the deferred payment two times. If the import entities still can not pay the foreign exchange within the deadline on the Registered Sheet after the second postpone, the import entities can not go through the collections and payment of foreign exchange upon the Declaration Form.

6.

Where the letters of credit and the documents under the item of instead received of import is handled, the deadline of which is asked to be deferred by the import entities, the banks should verify and supervise the relevant commercial documents as the valid documents of goods and revised documents of certification.

The banks should make a summary of the forward payment in foreign exchange, whose deadline of the letters of credit and the deferred payment in foreign exchange under the projects of collections exceeded 90 days or above 90 days last month, and submit to the local bureaus of foreign exchange of XX Bank Monthly Statistics Sheet on Deferred and Forward Payment of Trade and Import in Foreign Exchange (the form can see from appendix 2), within 5 work days of every week at the beginning of month.

7.

The bureaus of foreign exchange should do the statistics of situations of the deferred and forward payment in foreign exchange. Each branch bureau should submit to general bureau XX Branch Bureau of State Administration of Foreign Exchange Monthly Statistic Sheet on Deferred and Forward Payment of Import in Foreign Exchange (the form can see from appendix 3) within the 10 days at the beginning of each month.

8.

If the Declaration Form was not used to pay, verify and write-off of the foreign exchange, the date of which is prior to September 1,1998, the import entities should, upon the presentation of Statement for Deferred Payment, Declaration Form and relevant documents, prior to May 1, 2005, go through the record or verification and write-off of the foreign exchange with the bureau of foreign exchange. The banks go through the formalities of collections and payment in foreign exchange for the import entities, upon the Sheet for Records on Import and Payment in Foreign Exchange drown by the bureau of foreign exchange. Since May 1,2005, the import entities can not go through the formalities of payment, verification and write-off in foreign exchange upon the Declaration Form whose date is ahead of September 1,1998.

9.

The banks acting in violation of this Notice shall be penalized in accordance with Article 42 in the Regulation of the Foreign Exchange System. The entities acting in violation of the regulation on feedback situation and sending up the statement in time shall be penalized in accordance with Article 31 and Article 49 in the Regulation of the Foreign Exchange System. The import entities acting in violation of the registered procedure regulated in this Notice shall be penalized in accordance with Article 44 in the Regulation of the Foreign Exchange System.

Banks and import entities acting in violation of other regulations in this Notice shall be penalized in accordance with relevant administrative regulations of the Regulation of the Foreign Exchange System.

10.

This Notice shall come into force as of March 1,2005. If the former regulations contravene the Notice, the Notice should be observed.

After receiving the present Notice, each branch bureau should transmit the Notice to the jurisdictional central sub-offices, foreign-investment banks and relevant entities as soon as possible; after receiving this Notice, each Chinese-funded banks designated for foreign exchange should transmit the Notice to the affiliated organizations as soon as possible. Where any problem is encountered during the period of implementation, please feed it back to the Department of Current Account Administration under the State Administration of Foreign Exchange in time.

Appendix:

(1)

Registered Sheet on Deferred Payment of Import in Foreign Exchange (omitted).

(2)

Bank Monthly Statistics Sheet on Deferred and Forward Payment of Import in Foreign Exchange (omitted).

(3)

Branch Bureau of State Administration of Foreign Exchange Monthly Statistic Sheet on Deferred and Forward Payment of Import in Foreign Exchange (omitted).