Have there been any recent developments in foreign exchange regulations?
Since 1999 there has been a devolution of approval authority
to relevant local State Administration of Foreign Exchange (SAFE)
branches. The restructuring parallels with the restructuring of the
People's Bank of China and is a way of making the foreign exchange
administration more effective and less bureaucratic in order to attract
investors. It also aims at strengthening national level SAFE control
at the local level. SAFE now has nine regional instead of provincial
branches, which cut across provincial boundaries, that is they are
less limited in their jurisdiction. It is hard to tell whether this
new system will yield good results since it seems that SAFE wants
to both keep the control and at the same time improve efficiency.
Concerning foreign exchange purchases regarding FIE equity transfers,
there seem to be two views. One the one hand, SAFE officials assert
that devolution of authority should be pursued also in that area.
On the other hand, there also seem to be concerns about the remittance
of foreign exchange proceeds to Chinese parties.
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