Chapter I General Provisions

Article 1 These Regulations are formulated for the purposes of strengthening foreign exchange administration, maintaining the balance of international payments and promoting the sound development of the national economy.

Article 2 The foreign exchange administrative department of the State Council and the branches thereof (hereinafter referred to as foreign exchange administrative departments) shall perform the duty of foreign exchange administration in accordance with law and take charge of the implementation of these Regulations.

Article 3 The term "foreign exchange" as mentioned in these Regulations refers to the following instruments of payment and assets denominated in foreign currencies that can be used for international liquidation:

(1) Foreign currencies in cash, including paper money and coins;

(2) Foreign currency payment instruments, including bills, bank deposit certificates and bank cards, etc.;

(3) Securities denominated in foreign currency, including bonds and stocks, etc.;

(4) Special drawing rights; and

(5) Other assets denominated in foreign currencies.

Article 4 These regulations are applicable to all activities related to foreign exchange income and expenditure and foreign exchange business operations of Chinese institutions and individuals, and foreign exchange income and expenditure and foreign exchange business operations conducted within the territory of the People's Republic of China by overseas institutions and individuals.

Article 5 International payments and transfers under the current account are not restricted by the state.

Article 6 The state adopts the declaration statistics and reporting system for international payments.

The foreign exchange administrative department of the State Council shall conduct the statistics and monitoring of international payments and publish the status of balance of international payments on a regular basis.

Article 7 Financial institutions engaged in foreign exchange business shall open a foreign exchange account for a client and handle foreign exchange businesses through the foreign exchange account according to provisions of the foreign exchange administrative department of the State Council.

Financial institutions engaged in foreign exchange business shall report to the foreign exchange administrative departments about the foreign exchange income and expenditure of their clients as well as changes of their accounts according to law.

Article 8 The circulation of foreign currencies is prohibited and foreign currencies shall not be quoted for pricing or settlement within the territory of the People's Republic of China, except as otherwise provided by the state.

Article 9 The foreign exchange incomes of domestic institutions and individuals may be transferred to China or deposited in overseas countries. The conditions and terms for transferring to China or depositing in overseas countries shall be provided by the administration department of foreign exchange of the State Council according to the status of international payments and the needs for foreign exchange administration.

Article 10 The administrative department of foreign exchange of the State Council shall hold, manage and operate the foreign exchange reserves of the state according to law, and follow the principles of safety, fluidity and increment.

Article 11 Where the balance of international payments has or may have a serious disequilibrium, or the national economy faces or may face a serious risk, the state may take necessary measures to maintain and control the balance of international payments.

Chapter II Foreign Exchange Administration

Under the Current Account

Article 12 The foreign exchange income and expenditure under the current account shall be based on accurate and legitimate transactions. Financial institutions engaged in the settlement and sale of foreign exchange shall conduct proper inspection of the accuracy of transaction documents and the consistency with the foreign exchange income and expenditure according to the provisions of the administrative department of foreign exchange of the State Council.

Foreign exchange administrative departments have the power to supervise and inspect the aforesaid issues.

Article 13 The foreign exchange incomes under the current account may be retained or sold to financial institutions engaged in the settlement and sale of foreign exchange in accordance with relevant provisions.

Article 14 The foreign exchange expenditure under the current account shall be, against valid documents, paid with self-owned foreign exchange or foreign exchange bought from financial institutions engaged in the settlement and sale of foreign exchange in accordance with provisions on the administration of the payment and purchase of foreign exchange by the administrative department of foreign exchange of the State Council.

Article 15 The limits for the amounts of foreign currencies in cash which are carried or declared when entering or exiting the territory of the People's Republic of China shall be determined by the foreign exchange administrative department of the State Council.

Chapter III Foreign Exchange Administration

Under Capital Account

Article 16 Overseas institutions and individuals that directly invest in China shall go through registration formalities at foreign exchange administrative departments upon the approval by competent departments.

Overseas institutions and individuals that conduct the issuance and transaction of securities or derivatives shall abide by provisions of the state concerning market access, and go through registration formalities according to provisions of the administrative department of foreign exchange of the State Council.

Article 17 Domestic institutions and individuals that engaged in overseas direct investment or the issuance and transaction of securities and derivatives abroad shall go through registration formalities in accordance with provisions of the administrative department of foreign exchange of the State Council. If the relevant state provisions require them to get the approval of the competent department or archive the issue with the competent department, they shall do so before handling the registration formalities.

Article 18 The state carries out the scale administration of foreign debts. Institutions or individuals that borrow foreign loans shall abide by relevant provisions of the state and go through registration formalities at foreign exchange administrative departments.

The administrative department of foreign exchange of the State Council shall be responsible for the statistics and monitoring of foreign debts across the country and publish the status of foreign debts on a regular basis.

Article 19 Institutions or individuals that offer foreign guarantees shall apply to the foreign exchange administrative departments and the latter shall make decisions on whether to approve according to the assets and liabilities of the applicants. Where the business scope is required to be approved by relevant competent departments by the state, applicants shall go through approval formalities before applying to the foreign exchange administrative departments. The institutions shall, after concluding a foreign guarantee contract, handle the foreign guarantee registration formalities at the foreign exchange administrative departments.

The provisions of the preceding paragraph shall not apply where institutions, upon the approval of the State Council, provide foreign guarantee for a loan with the money borrowed from a foreign government or an international financial organization.

Article 20 Banking financial institutions may directly offer commercial loans to foreign parties within the approved business scopes. Other domestic institutions that offer commercial loans to foreign parties shall apply to foreign exchange administrative departments, which shall make decisions on whether to approve according to the assets and liabilities of the applicants. Where the business scope is required by the state to be approved by relevant competent departments, applicants shall go through approval formalities before their applications to foreign exchange administrative departments.

Those that offer commercial loans to foreign parties shall go through registration formalities according to provisions of the administrative department of foreign exchange of the State Council.

Article 21 Where the foreign exchange incomes under the capital account are to be retained or sold to financial institutions engaged in the settlement and sale of foreign exchange, approvals of foreign exchange administrative departments are required, except as otherwise provided by the state.

Article 22 The foreign exchange expenditure under the capital account shall be, against valid documents, paid with self-owned foreign exchange or foreign exchange bought from financial institutions engaged in the settlement and sale of foreign exchange in accordance with provisions on the administration of the payment and purchase of foreign exchange by the administrative department of foreign exchange of the State Council. If the state provisions require the approval of foreign exchange administrative departments, the approval must be obtained before making foreign exchange payments.

The currency denominated in renminbi that belongs to foreign investors in foreign-invested enterprises that terminated according to law may, after the liquidation and taxation formalities in accordance with relevant provisions of the state, be used to buy foreign exchange from financial institutions engaged in the settlement and sale of foreign exchange and remitted abroad.