March 30, 2007 - The SAFE recently held the 2007 National Work Conference on Foreign Exchange Inspection and the Work Conference on the Inspection of Foreign Exchange Capital Inflows and Sales in Dongguan , Guangdong . The conference summarized the inspection of foreign exchange in 2006 and made arrangements for 2007. Deputy Administrator Mr. Deng Xianhong attended the meeting and delivered a speech.

The SAFE focused on inspection to combat abnormal capital and short-term venture capital against the background of the continuous balance of payments surplus and the rapid increase in foreign exchange reserves. By carrying out special inspections and surveys of the external debts and the foreign exchange assets and liabilities of banks, deferred payments, cross-border related transactions, services trade, external debts of foreign-funded enterprises, temporary payable received accounts of Chinese- and foreign-funded enterprises, collections and sales in some regions, pending surrender accounts, and nominal rate and foreign capital inflows to the real estate market, the SAFE cracked down on over 70 underground money shops and dens of illegal foreign exchange transactions and solved some large cases, for instance online speculation in foreign currency, illegal transaction of verification documents, and underground KRW circulation and illegal inflows of large amounts of abnormal funds through exchanges outside of China. During the entire year of 2006, 1,914 cases were investigated and punished through the national foreign exchange inspection system and 1,915 cases were solved, with the amounts of the fines totaling RMB 139 million and the confiscations totaling RMB 138 million in the one year. The work in 2006 played a positive role in grasping the overall trend in foreign exchange capital inflows, curtailing the inflow of illegal capital, and promoting an equilibrium in the balance of payments.

The conference also made overall arrangements for foreign exchange inspection work in 2007. In light of the financial situation of the macro-economy, the inspection of foreign exchange will center on the goal of achieving a basic equilibrium in the balance of payments and stepping up the monitoring and inspection of the inflow of short-term abnormal capital. Inspection of the main factors that influence an equilibrium in the balance of payments will be intensified, while taking into consideration the new problems emerging in the equilibrium in the balance of payments. The SAFE will keep up with an adjustment of the policies for foreign exchange administration, carry out special inspections and check the effects of the new policies, severely crack down on illegal foreign exchange behavior and enhance the inspection and punishment of severe and important cases, reinforce the study of means for off-site inspections and establish an off-site inspection system, further rectify and standardize the foreign exchange market order, deepen the construction of a foreign exchange credit system, and strengthen the construction of internal control. Management and inspection teams will be strengthened and the risks of law enforcement will be prevented.

The conference made detailed arrangements for the coming all-round inspection of foreign exchange capital inflows and the collection and sales of banks in some regions. Inspections of foreign exchange capital inflows and sales will be divided into two phases off-site and on-site. The SAFE will carry out off-site inspections covering foreign exchange collection and sales and the use of RMB capital from foreign exchange by banks, enterprises, and institutions, foreign institutions in China , and individuals in ten regions where the exchange business is brisk. Four designated foreign exchange banks in Shanghai, Tianjin, Beijing, and Shenzhen will undergo special inspections of their foreign exchange collection and sales, through which the SAFE will grasp whether the business was conducted according to the regulations and whether the business had an impact on an increase in a favorable balance between the settlement and sale, and will deal with their illegal practices.