China’s current FOREX control system was first introduced in 1996. According to this system, all FOREX transactions are classified into two categories: capital account items and current account items.
Capital account items are capital inflow or outflow transactions which serve either to increase or decrease a company’s debt or equity, including foreign direct investment, all types of loans, loan-related security transactions and securities investments. All capital account transactions are subject to approval by the State Administration for Foreign Exchange (SAFE).
Current account items are transactions of an ordinary recurrent nature, including payments for foreign trades and services and interest payments for FOREX debts.