The branches and foreign exchange administrative departments of the State Administration of Foreign Exchange (SAFE) in all provinces, autonomous regions, and municipalities directly under the central government, the SAFE branches in Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo, and all designated Chinese-funded foreign exchange banks:

To efficiently implement the Opinions of the General Office of the State Council on Promoting Economic Development by Following Current Economic Trends (Guobanfa No.126 [2008]), and to facilitate the process of trade, the State Administration of Foreign Exchange (or SAFE) decided to launch a pilot program on the reform of the import payments verification system (hereinafter referred to as import verification reform), thus gradually completing transformation of import payments administration from case-by-case verification to batch-based verification, from on-site verification to off-site verification, and from behavioral supervision to subject supervision. The SAFE collects electronic information about cargo flows and capital flows of import companies through the Inspection System for the Collection and Settlement of Foreign Exchange under Trade (hereinafter referred to as inspection system), subjects import companies to off-site batch-based inspections as well as monitoring and early warning to identify abnormal capital flows and trading transactions, and subjects import companies to administration through examinations and evaluations that are conducted based on the outcome of on-site inspections. The circular on the relevant issues is given as follows:

1. Starting May 1, 2010, the pilot program for the reform of import verifications will be launched in the SAFE branches in Tianjin, Jiangsu, Shandong, Hubei, Inner Mongolia, and Fujian (including the autonomous regions and municipalities directly under the Central Government), and in the region under the jurisdiction of the SAFE's Qingdao branch.

2. The import companies in the pilot regions shall undergo import payments procedures subject to the Measures for the Pilot Program on Reform of the Administration of Foreign Exchange Payments for the Import of Goods and its implementing rules (hereinafter referred to as Measures, see Appendices 1 and 2); the banks in the pilot regions shall handle the import payments for import companies in accordance with the Measures. The import payments for the non-pilot regions shall be dealt with pursuant to the functional provisions for verification of import payments.

3. During implementation of the pilot program, inter-provincial (inter-autonomous region and inter-municipality directly under the Central Government) business related to non-local foreign exchange payments shall be dealt with subject to the functional provisions for verification of import payments. Where import companies in the pilot regions deal with non-local import payments in non-pilot regions, they shall register such payments with the local foreign exchange authorities where they are registered; where import companies in the non-pilot regions deal with non-local import payments in the pilot regions, the banks shall examine the Import Payments Registration Form and other relevant instruments in accordance with the pre-reform provisions.

4. To ensure the smooth transformation of import payments administration before and after the said reform, for import payments accrued prior to January 1, 2010, the import companies in both the pilot regions and non-pilot regions shall undergo the related verification formalities with their local foreign exchange authorities before July 31, 2010. Where the import companies fail to go through the verification formalities for any overdue business within the prescribed limit and without any justification, the foreign exchange authority in question shall mete out penalties accordingly or shall put it on file for a future inspection of the import payment.

5. Considering that the import verification reform is a great initiative for facilitating the process of trade, all foreign exchange branches in the pilot regions shall attach great importance to the reform and arrange the following issues in a centralized manner:

(1) The said branches shall step up publicity and training efforts. Following the SAFEs centralized deployment, they shall provide effective publicity and sound explanations about the pilot program through different channels, direct the concerned banks and import companies and urge them to become familiarized with the outlines of the reform as well as other policies and measures as soon as possible; the said branches shall institute training activities among the foreign exchange authorities, banks, and import companies within their jurisdictions so as to pave the way for such banks and import companies to conduct related businesses in future.

(2) The said branches shall urge import companies listed on the Name List of Import Companies for Import Payments to sign the confirmation letter for the import payment business before July 31, 2010.  The text of the confirmation letter will be issued separately.

(3) The said branches shall, in accordance with the Measures, complete the administrative work for the pilot program, such as the name registration, off-site inspection and monitoring and early warning, on-site supervision and inspection, and classified management, and shall optimize the functions of the inspection systemfor administration.

(4) The said branches shall report to the SAFE the progress of the pilot program without delay, and provide feedback if any problem arises from implementation of the pilot program and propose corresponding solutions or suggestions.

6. During implementation of the pilot program, the foreign exchange authorities from the non-pilot regions shall clear up the left over that occurred before January 1, 2010 by taking different approaches to either informing the concerned import companies or urging them to go through the verification formalities. Meanwhile, the said authorities shall proactively study the policies on the import verification reform and track the progress of the pilot program so as to be well prepared for the official implementation of import verification reform.

As of the date of issuance this circular, all branches and administrative departments of the SAFE shall start the preparatory work accordingly, and shall promptly forward it to the central sub-branches, sub-branches, local commercial banks, foreign banks, and relevant entities within their respective jurisdiction. If any problems arise from implementation thereof, the import companies and banks shall promptly report them to the foreign exchange authorities where they are located; and the branches and administrative departments shall report them to the SAFE in a timely manner.

                                                                                                    April 2, 2010