PRC Foreign Exchange Administration Regulations Revised
October 15, 2008 | BY
clpstaff &clp articlesChina's currency has undergone fundamental changes along with the rapid economic development both domestically and in global markets. In order to adapt to today's financial and currency markets, the State Council has adopted a revision of Foreign Exchange Regulations of the People's Republic of China on August 5 2008. Foreign companies need to be familiar with the newly revised foreign exchange regulations.
By Amy Chen and Jonathan Selvadoray, CMS Legal, Shanghai office*.
According to the Foreign Exchange Regulations of the People's Republic of China 《中华人民共和国外汇管理条例》(Regulations) before the recently introduced revision, the foreign exchange administration focused on its outflow in order for China to obtain more foreign exchange reserves. However, due to the pressure arising from the large size of China's foreign exchange reserves, the revised Regulations adopt a way of balancing the administration on foreign exchanges. They therefore tighten restrictions on foreign exchange inflow and relax the approach to foreign exchange outflow.
The revised Regulations provide that China may take necessary protective and restrictive measures relating to their foreign exchange balance in case there is any imbalance or a national economic crisis.
Foreign exchange incomes under revenue account items
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