March 16, 2007 - The SAFE recently held its 2007 work conference on foreign exchange management under the capital account in Nanjing , summarizing its work in 2006 and making arrangements for foreign exchange management under the capital account for 2007. Deputy Administrator Li Dongrong attended the meeting and delivered a speech.

Centering on the promotion of an equilibrium in the balance of payments and based on the principle of balanced management of capital inflows and outflows, the SAFE, in keeping with national macro-control, carried out institutional innovations and policy adjustments, working out and releasing a sequence of policies and measures in 2006. Management of foreign exchange under the capital account has made new progress. The SAFE improved management of external financial investment and guided the orderly bi-directional flow of capital under the securities account. The qualified domestic institutional investors (QDII) system was introduced and totals of USD 13.4 billion, USD 3.488 billion, and USD 0.5 billion respectively were approved for the external financial investment of banks in China, insurance institutions, and securities institutions, and a total of USD 3.4 billion was approved for qualified foreign institutional investors (QFII). Meanwhile, the SAFE strengthened and improved the statistical monitoring of cross-border capital flows, strictly controlled short-term external debts, and further standardized foreign exchange management of foreign capital mergers and acquisitions and round-tripping investment. To coordinate macro-control of the real estate market, the SAFE further standardized foreign exchange management of capital inflows into the real estate market and the practice of foreign exchange sales of property by overseas institutions and individuals and effectively controlled the borrowing of external debt by foreign-funded enterprises. The SAFE further deepened the reform of foreign exchange administration of overseas investments and offered vigorous support for competent enterprises to "go global." By lifting the limitations on foreign exchange purchases for overseas investment, enterprises were allowed to remit related early-phase investment-related expenses in advance to fully satisfy corporate demands for overseas foreign exchange.
The conference also made arrangements for foreign exchange administration under the capital account in 2007. First, the reform of foreign exchange administration of direct investment will be further deepened, competent enterprises will be given vigorous support to "go global," and channels for overseas investment will be broadened. The SAFE will cooperate with the relevant departments to improve the statistical monitoring of foreign direct investment and administration of capital sales, and will perfect the centralized management of the foreign exchange capital of multinational corporations. Second, external debt management will be strengthened. The SAFE will improve statistical monitoring, restrain the overheated growth of short-term debts, control the sales of external debts, and improve the management of external guarantees. Third, the opening up of the capital market will be steadily driven to promote the orderly bi-directional flow of capital. The SAFE will improve the implementation of qualified institutional systems such as QFII and QDII, standardize individual foreign exchange administration under the capital account, and gradually loosen the restrictions on individual external financial investments.

Li emphasized that foreign exchange administration under the capital account faces new challenges due to the serious disequilibrium in the balance of payments. He put forward six requirements in order to effectively do the work of foreign exchange administration under the capital account in 2007. First, the spirit of the Central Economic Work Conference and the National Financial Work Conference should be studied to align with the thinking of the Central Governments analysis and judgment on the current balance of payments, to recognize the complexity of achieving an equilibrium in the balance of payments, and to guide the administration of foreign exchange under the capital account. Second, vigorous measures should be taken to cultivate a working style and accomplish every task in a down-to-earth manner. Third, a sense of serving society and facilitating trade and investment should be encouraged. Fourth, science should be respected to improve the monitoring, servicing, and administrative efficiency via hi-tech methods. Fifth, a sense of financial security should be strengthened, correctly balancing reform and risk prevention while further promoting RMB convertibility under the capital account. Sixth, the fight against corruption should be reinforced, improving internal management and building a team that is proficient and ideologically advanced