China Simplifies Forex Settlement to Boost Cross-Border Trade

On 20 May, the State Administration of Foreign Exchange (SAFE) issued a circular on supporting the development of new forms of trade (Hui Fa No. 11 [2020]). It is aimed at helping enterprises to handle foreign exchange business. The new measures, which took effect on the date of promulgation, include the following:

• Support is given to banks that meet certain conditions to conduct foreign exchange business based on electronic transaction information

• Cross-border e-commerce operators will now be able to net their export sales with expenses incurred outside of China, including storage, logistics and tax costs for foreign exchange settlement

• Enterprises are allowed to advance credit to clients for storage, logistics and tariff charges incurred outside of China

• Individuals are allowed to settle payments via personal foreign exchange accounts under ‘cross-border e-commerce’ and ‘market-based purchases’ (simplified customs channel)

• Banks are allowed to provide foreign exchange settlement, payment and collection services to certain entities that use market-based purchase trading platforms

Source: State Administration of Foreign Exchange