Foreign Exchange Bureau: To Prevent Cross-Border Capital Coming In And Out

Establishing and improving the supervision and control of cross border funds of foreign currencies and safeguarding the national economy

1. China has made positive progress in strengthening and improving the supervision of cross-border capital flows.

In recent years, the foreign exchange management departments have been sticking to the bottom line of risk, constantly strengthening and improving the supervision of cross-border capital flows. While adhering to balanced management, they have focused on preventing "hot money" inflow, slowing down the surplus in foreign exchange sales and foreign exchange reserves and the excessive growth of foreign exchange reserves as a major task of foreign exchange management.

Mainly include:

First, research and formulate a timely policy plan to deal with large-scale cross-border capital inflows.

In 2008, the revision and implementation of the regulations on foreign exchange management provided a legal basis for the supervision of cross-border capital flows.

In 2009 and 2010, policy plans for dealing with abnormal cross-border capital outflows and inflows were formulated respectively.

In November 2010 and March 2011, we launched the two plan to cope with the abnormal cross-border capital inflow, strengthened the management of foreign exchange business such as foreign exchange settlement and sale positions, export settlement and short-term foreign debts, and further reduced the total scale of short-term foreign debt indexes of domestic financial institutions in 2011.

Two, we must give full play to foreign exchange inspection methods to crack down on arbitrage funds such as "hot money".

In recent years,

Three, we must adhere to both sides to guide orderly cross-border capital flows.

While preventing the influx of "hot money", we must simplify and abolish the mandatory foreign exchange settlement system, and encourage the purchase and payment of foreign exchange with real trade investment demand.

In 2010, the reform of import and export verification was carried out, so that most of the normal import and export businesses of the compliance enterprises did not need to go through the on-site cancellation procedures, and the operating costs of banks and enterprises dropped significantly.

In 2011, the export income policy was put to the whole country, and the reform of import and export verification was carried out.

Support the strategy of "going out", cancel the quota of foreign investment and purchase foreign exchange, and allow the initial cost of overseas investment to be remitted.

The four is to enhance the ability to analyze and monitor cross-border capital flows.

We should strengthen the statistical monitoring and early warning of the balance of payments, conduct statistics and monitoring of cross-border movements of foreign currencies, establish a comprehensive statistical system for bank trade financing, and establish and improve the monitoring and early warning system for international payments.

We should enhance pparency, conduct a comprehensive interpretation of cross-border capital flows, and inform some banks, enterprises and individuals about the penalties for illegal foreign exchange operations, further deterring illegal activities and correctly guiding expectations.

We should exert the efforts of cross sectoral supervision, strengthen information sharing and policy coordination, and form a regulatory force to curb the inflow of "hot money".

Overall, the adjustment of foreign exchange management policy guided by the reduction of surplus has played a positive role in preventing the impact of cross-border capital flows and safeguarding national economic and financial security.

Since the second half of 2011, especially since the 4 quarter, China's foreign exchange situation has changed significantly, and the RMB exchange rate has been at an equilibrium level.

The early request for banks to increase their foreign exchange positions has not only alleviated the pressure on the central bank to purchase foreign exchange in the current period, but also reduced the risk of bank currency mismatch, effectively smoothing the bank's initiative to increase its position since the 4 quarter of 2011, and stabilizing the possible fluctuations in the market.

Two. The new situation and new stage put forward higher requirements for the supervision of the cross-border capital flow of foreign currency in China

As the degree of opening up has increased, trade and investment facilitation has been steadily advancing, and cross-border RMB trade settlement experiments have been expanding. China is a highly open economy.

Influenced by the changes in the economic situation at home and abroad, the pformation of China's economic development mode, and the gradual arrival of macro-control policies, the cross-border capital flows of domestic and foreign currencies show new characteristics, and put forward higher requirements for the next stage of cross-border capital management.

(1) the balance of the balance of payments means that we need to strengthen the balanced management of cross-border capital flows.

The ratio of current account surplus to GDP in the same period is an important index to measure the imbalance of foreign countries.

Since the international financial crisis, China's current account surplus has tended to improve.

It is initially estimated that the current account surplus in 2011 will be further reduced to about 3% of GDP in the same period, which is about 7 percentage points lower than the historical high in 2007.

The momentum of China's rapid growth in foreign exchange reserves has slowed down.

At the end of 2011, China's foreign exchange reserves stood at about US $3 trillion and 200 billion, an increase of about US $330 billion compared with the end of last year, with a slight increase of about US $110 billion over the same period last year.

On the whole, the balance of the trend of international payments is a positive change that is in line with the direction of macro-control.

However, in the face of the complex economic and financial environment at home and abroad, cross-border capital flows are still uncertain.

This requires foreign exchange management departments to speed up the pformation of cross border capital flow supervision concepts and methods. In accordance with the requirements of balanced management, we must properly control and control two cross border funds, and make comprehensive use of economic, legal and necessary administrative means to constantly improve the supervision of cross-border capital flows, prevent cross-border capital from coming in and out, and safeguard national economic and financial security.

(two) the improvement of China's financial openness means that we need to accelerate the pformation of cross-border capital flows.

At present, China is a highly open and powerful country.

In 2009, affected by the spread of the international financial crisis, the total scale of the balance of payments fell to $4 trillion, and the main trading items such as trade in goods and direct investment declined.

In 2010, China's foreign-related economic activities quickly revert to the level before the financial crisis, when the total scale of international payments reached US $5 trillion and 600 billion, a record high.

With the expansion of China's foreign economic contacts, foreign trade and investment have become increasingly active. Various economic entities have put forward higher requirements for relaxing the restrictions on cross-border capital flows and making full use of two domestic and international markets and two kinds of resources.

In order to adapt to the new situation, foreign exchange management departments should accelerate the pformation of foreign exchange management mode while promoting trade and investment facilitation and steadily promoting convertibility of capital account. By integrating data and system resources, we should strengthen cross-border capital flow monitoring with economic entities as the units, and make policy plans for dealing with cross border funds' two-way flow risks. We should use pre adjusted fine-tuning tools to smooth cross-border capital flows into and out of large areas without leaving regulatory blind spots.

(three) the increasing scale of RMB cross-border capital flows means the need to further enhance the ability to monitor and analyze cross-border capital flows of all foreign currencies.

In recent years, the confidence and demand of RMB in the international market have been continuously improved, and the scale of cross-border RMB capital flows has expanded rapidly.

In 2011, the amount of RMB cross-border settlement exceeded 2 trillion yuan, an increase of 4 times compared with the same period last year. The proportion of cross-border RMB pactions in cross-border capital flows has increased significantly.

In view of this new situation, we need to focus on the long term, improve the institutional mechanism for the supervision of cross-border capital flows of foreign currencies, strengthen the monitoring, analysis and early warning of cross-border RMB capital flows, and strengthen the information communication and regulatory cooperation of the regulatory authorities, so as to form a joint force of supervision.

It is a long-term work to establish and improve the supervision framework for cross-border capital flows of foreign currencies.

In the coming period, foreign exchange management departments should focus on the following key links:

First, we should strengthen the analysis of the situation and improve the ability of scientific prediction.

We should carefully observe and closely follow the changes in the cross border capital flows of foreign currencies, attach great importance to some signs and tendentious issues, study in-depth the channels and pmission mechanisms of cross-border revenue and expenditure, and dig out core indicators that are highly correlated with the trend of cross-border capital flows, and improve the scientificity and accuracy of cross-border capital flows.

Two, we should strengthen policy reserves and make policy plans to deal with the risk of cross border capital flows.

Insisting on the balanced management of cross-border capital flows should not only improve and enrich the policy plan to prevent the massive net inflow of cross border capital, but also make policy reserves to prevent cross-border capital outflows and improve the pertinence and foresight of regulatory policies.

Three, we must adhere to balanced management and focus on preventing cross border abnormal capital flows.

To implement the concept of balanced management and promote trade and investment facilitation, we should actively explore new ideas, new tools and mechanisms for cross-border capital flow supervision, and comprehensively use economic, legal and necessary administrative means to reduce speculative arbitrage space.

At the same time, we should speed up the cultivation and development of the foreign exchange market, improve the market maker's market making mechanism, enhance the ability of self adjustment and self balancing in the foreign exchange market, and make good use of the market mechanism in the rational allocation of foreign exchange resources.

Four, we should optimize the system and mechanism and improve the ability to deal with the impact of cross-border capital flows.

It is important to strengthen the supervision system and mechanism construction of cross border capital flows of foreign currencies, and strengthen supervision cooperation.

We should establish a policy pmission mechanism of regulatory authorities for economic entities such as enterprises, banks and individuals, so as to improve the effectiveness of policies.

We should strengthen the guidance of financial institutions, pay attention to giving full play to the role of designated foreign exchange banks in policy pmission, and improve the ability of regulating and controlling the foreign exchange revenue and expenditure of the economic entities.

We should make good use of inspection methods to maintain a high pressure strike against illegal funds such as hot money, crack down on illegal and criminal activities in the regulatory areas such as underground banks, intensify disclosure of illegal information, and enhance the deterrent force against illegal cross-border capital flows.