Foreign exchange management refers to the control measures on foreign exchange receipts and payments, trading, borrowing, transfer, international settlement, foreign exchange rate and foreign exchange market authorized by a government.

Before the reform and opening up, China implemented a highly centralized planned economy system. Due to the shortage of foreign exchange resources, China has been implementing strict foreign exchange control. Since the implementation of the reform and opening-up strategy in 1978, the reform of China's foreign exchange management system has changed from a highly centralized foreign exchange management system to a foreign exchange management system adapted to the socialist market economy in an orderly manner along the direction of gradually narrowing the mandatory plan and cultivating the market mechanism. In December 1996, China realized the convertibility of RMB under current account, strictly managed foreign exchange under capital account, and initially established a foreign exchange management system adapted to the socialist market economy. Since the founding of the People's Republic of China, China's foreign exchange management system has generally experienced three stages: planned economy period, economic transition period and the establishment of socialist market economy in 1994. Carry out the foreign exchange retention system

In order to reform the foreign exchange distribution system of unified revenue and unified expenditure, mobilize the enthusiasm of foreign exchange earning units, expand foreign exchange income and improve the allocation of foreign exchange resources, the foreign exchange retention method has been implemented since 1979. While foreign exchange is managed by the state in a centralized way, with a unified balance and key points guaranteed, foreign exchange for trade and non-trade shall be retained, and a certain proportion of foreign exchange shall be reserved for foreign exchange earning places and enterprises according to different situations, so as to solve the import of materials needed for developing production and expanding business. The object and proportion of foreign exchange retention shall be stipulated by the state. The use of retained foreign exchange must comply with the provisions of the state. Units that have retained foreign exchange can sell them to units that need foreign exchange through the foreign exchange swap market if they do not need foreign exchange themselves. The scope and proportion of retained foreign exchange have gradually expanded, and the foreign exchange allocated in mandatory plans has gradually decreased accordingly.

Foreign exchange swap market

On the basis of implementing the foreign exchange retention system, there is a need to swap foreign exchange. Therefore, since October 198, the Bank of China has started foreign exchange adjustment business, allowing units holding retained foreign exchange to transfer the surplus foreign exchange quota to units lacking foreign exchange. In the future, the object and scope of foreign exchange adjustment will be gradually expanded, initially limited to the foreign exchange retained by state-owned enterprises and collective enterprises, and later expanded to the foreign exchange of foreign-invested enterprises, foreign donations and domestic residents. The exchange rate for adjusting foreign exchange was originally stipulated by the state to add a certain range on the basis of the official exchange rate. In March 1988, the exchange rate was liberalized, and the buyers and sellers agreed according to the supply and demand of foreign exchange. The People's Bank of China intervened in the market moderately, and guided the use of adjusting foreign exchange (or foreign exchange market access) by formulating the "guiding sequence for foreign exchange adjustment", and the role of market regulation was increasingly enhanced.

Reform the RMB exchange rate system

1. Implement the dual exchange rate system of internal settlement price of trade and announced exchange rate

The exchange rate is overvalued, which is not conducive to the development of foreign trade. Therefore, in 1981, China formulated an internal settlement price of foreign exchange for trade, which was set at US$ 1 plus 1% profit at that time, which was suitable for the settlement of import and export trade, while continuing to announce the official exchange rate. The two exchange rates have played a certain role in encouraging exports and taking care of non-trade interests, but there has been confusion in the scope of use, which has brought many complicated problems to foreign exchange accounting and foreign exchange management. With the rise of the US dollar exchange rate in the international market, China gradually lowered the official exchange rate, and by the end of 1984, the official exchange rate was close to the internal settlement price of trade foreign exchange. On January 1, 1985, the internal settlement price was cancelled and a single exchange rate was re-implemented. The exchange rate was US$ 1 to 2.8 yuan RMB.

2. Adjust the official exchange rate according to the price changes at home and abroad

After the reform and opening up, China's prices have been reformed and gradually liberalized, and prices have risen. In order to adapt the RMB exchange rate to the price changes and play a role in regulating the international balance of payments, the exchange rate was greatly adjusted several times in 1985-9 according to the changes in domestic prices. From January 1, 1985, US$ 1 to 2.8 yuan RMB, it was gradually adjusted to US$ 1 to 5.22 RMB on November 17, 199. In recent years, the downward adjustment of RMB exchange rate is mainly based on the change of the average exchange cost of national exports, and the downward adjustment of exchange rate lags behind the increase of domestic prices.

3. Implement an exchange rate system in which the official exchange rate and the exchange rate in the swap market coexist

In order to cooperate with foreign trade, carry out the contract system and cancel financial subsidies, foreign exchange swap centers have been set up in various places since March 1988, and the amount of foreign exchange swap has gradually increased, forming an exchange rate system in which the official exchange rate and the swap market exchange rate coexist. From April 9, 1991, the adjustment of the official exchange rate changed from the previous large-scale and one-time adjustment to a gradual and slow adjustment, that is, managed floating, and by the end of 1993, it was adjusted to 1 US dollar to 5.72 yuan, down 9% from November 17, 199. At the same time, the exchange rate of the foreign exchange swap market is liberalized, allowing it to fluctuate with the market supply and demand, and the exchange rate fluctuates greatly. With the state's macro-control and the intervention of the People's Bank of China, it rose to US$ 1 (8.72 RMB) at the end of 1993.

allow a variety of foreign exchange businesses

before p>1979, foreign exchange businesses were managed by the Bank of China. In order to adapt to the new situation after the reform and opening up, competition mechanism was introduced in the field of foreign exchange business, the operating mechanism of foreign exchange business was reformed, the national specialized banking business was allowed to cross, and a number of commercial banks and a number of non-bank financial institutions were approved to operate foreign exchange business; Foreign-funded financial institutions are allowed to set up business institutions and engage in foreign exchange business, forming a pattern in which various financial institutions participate in foreign exchange business.

capital import and export management system

(6) relax the foreign exchange management for domestic residents

individuals are allowed to hold and deposit foreign exchange in the country, but they are not allowed to buy or sell it without permission or take it out of the country without permission. For foreign exchange of personal income, according to different circumstances, it is allowed to retain foreign exchange in a certain proportion or in full. Since 1985, all remittances remitted to domestic residents from abroad or foreign exchange brought in from abroad have been allowed to be kept and deposit accounts opened in banks. Since November, 1991, foreign exchange owned by individuals has been allowed to participate in foreign exchange adjustment. Individuals who need foreign exchange for going abroad to visit relatives, emigrate, study abroad and support their relatives abroad can apply to the State Administration of Foreign Exchange with exit certificates and relevant certificates, and sell a certain amount of foreign exchange after approval, but the standard for approving foreign exchange is low.

About foreign exchange certificate

In order to facilitate passengers and prevent foreign currency from circulating in China and arbitrage of foreign exchange and materials, the Bank of China issued foreign exchange certificate on April 1, 198, and foreign exchange certificates were denominated in RMB. Foreigners, overseas Chinese, compatriots from Hong Kong, Macao and Taiwan, foreign embassies and consulates, and personnel of delegations can exchange foreign exchange into foreign exchange certificates according to the bank's foreign exchange rate, and must use foreign exchange certificates to buy goods and pay labor and service fees in hotels, restaurants, designated shops and airports. The unused foreign exchange certificates can be taken out of the country or exchanged back into foreign exchange within 5% of the original exchange amount. Units that collect foreign exchange certificates must be approved by the foreign exchange bureau, and the foreign exchange certificates they receive must be deposited in the bank and managed according to the two lines of revenue and expenditure. If a voucher-receiving unit exchanges foreign exchange certificates to a bank, it may retain foreign exchange in accordance with regulations. On November 14th, 1993, the Decision of the Central Committee on Several Issues Concerning the Establishment of a Socialist Market Economic System adopted by the Third Plenary Session of the 14th CPC Central Committee clearly demanded that "the foreign exchange management system should be reformed, a managed floating exchange rate system based on market supply and demand and a unified and standardized foreign exchange market should be established, so as to gradually make RMB a convertible currency". This has made clear the direction for further reform of the foreign exchange management system. Since 1994, around the goal of foreign exchange system reform, according to the scheduled reform steps, China's foreign exchange management system has mainly carried out the following reforms:

major reforms

(1) major reforms were carried out in the foreign exchange system in 1994, and conditional convertibility of RMB under current account was implemented

1. The system of bank settlement and sale of foreign exchange was implemented, and the foreign exchange payment and retention were cancelled, and the mandatory plan and approval for the use of foreign exchange were cancelled. From January 1, 1994, all kinds of foreign exchange retention, surrender and quota management systems were abolished, and the system of bank settlement and sale of foreign exchange under the current account of domestic institutions was implemented. Except for goods subject to import quota management and import management of specific products and goods subject to automatic registration system, foreign exchange must be purchased at designated foreign exchange banks with licenses, import certificates or import registration forms, corresponding import contracts and valid commercial bills (invoices, waybills, collection certificates, etc.) corresponding to payment methods, and foreign exchange for other goods that meet the national import management regulations, foreign exchange for trade incidental expenses and non-trade business external payment shall be received with contracts, agreements, invoices and payment notices from overseas institutions. In order to concentrate foreign exchange to ensure the supply of foreign exchange, the foreign exchange income of domestic institutions in the current account, except the foreign exchange allowed by the state to be retained, can be transferred back to China in time and sold to the designated foreign exchange banks at the market exchange rate.

2. Exchange rates should be merged, and a single and managed floating exchange rate system based on market supply and demand should be implemented. On January 1, 1994, the official exchange rate of RMB was merged with the market exchange rate, and a single and managed floating exchange rate system based on market supply and demand was implemented. At the time of merger, the RMB exchange rate was 1 US dollar to 8.7 yuan. The exchange rate of RMB is formed by market supply and demand. The People's Bank of China announces the daily exchange rate, and foreign exchange trading is allowed to fluctuate within a certain range. Over the past five years, the RMB exchange rate has been basically stable and slightly increased.

3. Establish a unified, standardized and efficient foreign exchange market. From January 1, 1994, Chinese-funded enterprises withdrew from the foreign exchange swap center, and designated foreign exchange banks became the main body of foreign exchange transactions. On April 1st, 1994, China Foreign Exchange Trading Center, an inter-bank foreign exchange market, was established in Shanghai, connecting all sub-centers in China. Since April 4th, China Foreign Exchange Trading Center system has been officially put into operation, adopting membership system, implementing centralized settlement system for matching transactions, and embodying the principle of giving priority to price and time. According to the macroeconomic policy objectives, the People's Bank of China intervened in the foreign exchange market to regulate market supply and demand and maintain the stability of RMB exchange rate.

4. The foreign exchange management policy for foreign-invested enterprises will remain unchanged. In order to reflect the continuity of national policies, when the system of bank settlement and sale of foreign exchange was implemented for domestic institutions in 1994, the original method was still maintained for foreign exchange receipts and payments of foreign-invested enterprises, allowing them to retain foreign exchange, and foreign exchange transactions of foreign-invested enterprises still had to be entrusted to designated foreign exchange banks to handle through local foreign exchange swap centers, and settled uniformly at the exchange rate in the inter-bank foreign exchange market.

5. It is forbidden to price, settle and circulate foreign currency in China. On January 1, 1994, China reiterated the cancellation of domestic foreign currency pricing and settlement, prohibited domestic circulation of foreign currency and private trading of foreign currency, and stopped issuing foreign exchange certificate. Foreign exchange certificate, which is in circulation in the market, is allowed to continue to be used until December 31, 1994, and can be exchanged for US dollars or settled into RMB at the Bank of China before June 3, 1995.

Through the above reforms, China successfully realized the conditional convertibility of RMB in current account in 1994.

Cancel the current account

(II) In 1996, other exchange restrictions remaining under the current account were cancelled, and the convertibility of RMB under the current account was announced on December 1

1. Incorporate foreign exchange trading of foreign-invested enterprises into the bank settlement and sale system. Since July 1, 1996, foreign exchange trading of foreign-invested enterprises has been incorporated into the system of bank settlement and sale of foreign exchange. At the same time, foreign exchange accounts of foreign-invested enterprises are divided into foreign exchange settlement accounts for current projects and special foreign exchange accounts for capital projects. The foreign exchange bureau approves the maximum amount of foreign exchange settlement accounts, and foreign-invested enterprises retain foreign exchange income under the current account within the approved limit, and the excess must be settled. Foreign payments under the current account of foreign-invested enterprises can be handled directly at designated foreign exchange banks with valid vouchers, and at the same time, foreign exchange adjustment centers will continue to be retained to serve foreign exchange trading of foreign-invested enterprises. After the closure of the foreign exchange swap center on December 1, 1998, all foreign exchange transactions of foreign-invested enterprises were conducted in the bank settlement and sale system.

2. Improve the residents' foreign exchange standard and expand the scope of foreign exchange supply. On July 1, 1996, the standard for residents to exchange foreign exchange for private purposes was greatly raised, and the scope of foreign exchange supply was expanded.

3. Cancel the existing restrictions on the regular use of foreign exchange. In 1996, China also lifted restrictions on the use of foreign exchange for non-trade and non-business purposes, such as entry-exit exhibitions and investment promotion, and allowed Chinese institutions and personnel in China to purchase articles, equipment and utensils for their own use in China, and the RMB proceeds from the sale can be exchanged for foreign exchange and remitted.

After the above reforms, China has lifted all restrictions on current international payments and transfers, which meets the requirements of Article 8 of the International Monetary Fund Agreement. On December 1, 1996, China officially announced its acceptance of Article 8 to realize full convertibility of RMB under current account. So far, China has implemented the convertibility of RMB under current account, strictly managed foreign exchange under capital account, initially established a foreign exchange management system adapted to the socialist market economy, and has been continuously improved and consolidated. For example, in 1997, the standard of foreign exchange supply for personal use was greatly raised again, some Chinese-funded enterprises were allowed to retain a certain amount of foreign exchange income under current account, and a pilot project of foreign exchange settlement and sale by forward banks was launched, and so on. Since 1998, under the background of the spreading and deepening influence of the Asian financial crisis, in view of the prominent situation of evasion, arbitrage, fraudulent foreign exchange and illegal foreign exchange transactions, under the premise of persisting in reform and opening up and convertibility of RMB current account, we have improved foreign exchange management laws and regulations, strengthened foreign exchange law enforcement, ensured law-abiding operation, cracked down on illegal capital flows, maintained the stability of RMB exchange rate and the normal order of foreign exchange receipts and payments, and protected enterprises and individuals in order to create a fair, clean and healthy business environment.

Deepening the structural reform

(3) Since joining the World Trade Organization in 21, the reform of the foreign exchange management system has been deepened

Since joining the World Trade Organization in 21, China's foreign economy has developed rapidly, and its international balance of payments has continued to show a large surplus, and its reform and opening up has entered a new stage. Foreign exchange management actively conforms to the challenges of joining the WTO and integrating into economic globalization, further deepens reforms, continues to improve current account convertibility, steadily promotes capital account convertibility, and promotes trade facilitation. The main measures are:

improving the efficiency of administrative licensing

1. Significantly reducing administrative examination and approval to improve the efficiency of administrative licensing. According to the requirements of administrative examination and approval reform in the State Council, since 21, the foreign exchange administration has cancelled 34 administrative licensing items in three batches, accounting for 46.5% of the original administrative examination and approval items. In accordance with the requirements of the Administrative Licensing Law, 39 reserved administrative licensing items were thoroughly cleaned up, and the procedures for handling and operating these items were clearly defined and standardized to improve the efficiency of administrative licensing.

promote trade and investment facilitation

2. further improve the foreign exchange management of current account and promote trade and investment facilitation. All Chinese-funded enterprises, like foreign-invested enterprises, are allowed to open current account foreign exchange accounts, which will increase the proportion of cash retained by enterprises several times and extend the time for settlement of foreign exchange exceeding the limit. We have repeatedly raised the guiding limit for individual domestic residents to purchase foreign exchange and simplified relevant procedures. Simplify import and export write-off procedures, and establish three supervision modes: write-off, batch write-off and total write-off