On the morning of July 30, the State Administration of Foreign Exchange (SAFE) held a foreign exchange administration work conference for the second half of 2019. The participants earnestly studied and implemented the decisions and plans of the CPC Central Committee and the State Council for the economic and financial undertakings, summarized the work of the first half, analyzed the current situations of the foreign exchange market, and studied and made arrangements for key tasks of foreign exchange administration for the second half. Pan Gongsheng, secretary of the CPC Leadership and administrator of the SAFE, delivered a work report. Members of the CPC Leadership, chief accountants and chief economists of the SAFE attended the conference.

The conference concluded that in the year to date, foreign exchange authorities, under the firm leadership of the CPC Central Committee and the State Council, have remained true to their original aspiration and mission, and based on serving the real economy to solidly further the reform and opening-up in the foreign exchange sector, effectively prevented and controlled external shocks and risks, and protected the foreign exchange market order and the country’s economic and financial safety in accordance with the arrangements of the Central Economic Working Conference and the Report on the Work of the Government. Hard efforts paid off and cultivated a good foreign exchange market environment for the steady operation of the national economy in the first half year of 2019. First, with political development as the top priority, foreign exchange authorities have made an all-out effort to enforce strict Party discipline. They have earnestly launched an educational activity themed with "remaining true to original aspiration and keeping mission firmly in mind". They have ensured strict implementation of the central government's "Eight-point Decision" and its implementing rules, and made unremitting efforts to correct the "four forms of decadence" including formalism, bureaucratism, hedonism and extravagance. Efforts have been made to strengthen the organizational work, and train a contingent of competent and professional officials who are loyal to the Party, have moral integrity, and demonstrate a keen sense of responsibility. Second, the foreign exchange administration reform has been deepened further. Foreign exchange authorities have stably promoted the liberalization of capital account, increased the quota for qualified foreign institutional investors (QFIIs), and supported the launch of the Science and Technology Innovation Board and the "Shanghai-London Stock Connect" programme. They have gone further in the reforms to delegate power, improve regulation, and upgrade services, increased the facilitation of trade and investment, and unveiled a number of facilitation measures for trade in goods, trade in services, insurers and multinational corporations. They have supported the trading and investing activities in countries and regions along the Belt and Road, and published the Overview of Foreign Exchange Administration Policies of the Belt and Road Countries in 2018. Third, the management framework of cross-border capital flows that combines macro-prudential management and micro-regulation has been further improved. Foreign exchange authorities have improved their regulation of banks' compliance in foreign exchange business and strengthened the management of high-risk fields of foreign exchange business. They have advanced the cooperation with regulators of other countries and cracked down upon the illegal behavior in the foreign exchange market. Fourth, the operation and management of foreign exchange reserves have been constantly improved. Foreign exchange authorities have done well in balancing the risk and return of reserve assets and organically combined the commercial use of foreign exchange reserves with the serving of national strategies.

According to the conference, China’s economy remained within a reasonable range and carried forward an overall steady development trend featuring making progress while presenting stable performance in spite of a severe and complicated external environment in the first half year. This underpinned the continued stability of China’s foreign exchange market, basic equilibrium in the cross-border receipts and payments and in the supply and demand on the domestic foreign exchange market, and a stable rise of the foreign exchange reserve. Although the external environment is still complicated in the second half, China’s cross-border capital flows are expected to remain stable on a whole because of the stable expectations for Chinese economy, further widening of opening-up, more mature and rational foreign exchange market and good market order.

The conference stressed that, in the second half, foreign exchange authorities must closely unite around the CPC Central Committee with Comrade Xi Jinping as the core, follow Xi Jinping thought on socialism with Chinese characteristics for a new era, maintain political integrity, think in terms of the big picture, follow the leadership core, and keep in alignment with the central Party leadership and have full confidence in the path, theory, system, and culture of socialism with Chinese characteristics, uphold the core position of General Secretary Xi Jinping in the CPC Central Committee and in the whole Party and uphold the authority of the Central Committee and its centralized, unified leadership, combine the educational activity themed with "remaining true to original aspiration and keeping mission firmly in mind" with the advancement of key work in foreign exchange administration, and carry out the plans of the CPC Central Committee and the State Council satisfactorily without any compromise. Foreign exchange authorities must adhere to the general work guideline of making progress while maintaining stability, make plans for and seek coordinated promotion of the foreign exchange administration work by putting it into the cycling of the entire national economy, further enhance the capability of serving the new pattern of China’s opening-up on all fronts, facilitate the reform and opening-up in key fields of foreign exchange, always think about worst-case scenarios, forestall and mitigate external financial shocks and risks, protect the safety of national economy and finance, and deliver a good result for the upcoming 70th anniversary of the founding of new China.

The conference also set the working priorities for foreign exchange administration in the second half of 2019. The first is to unswervingly deepen comprehensive and strict exercise of Party self-discipline and develop the active and healthy political culture within the Party. Foreign exchange authorities should make the "remaining true to original aspiration and keeping mission firmly in mind" themed education go deeper and firmer with concrete measures, be problem-oriented, review and reflect on the problems and rectify them well to ensure the thematic education yields tangible results. They should strictly practice the standard that officials must have both ability and political integrity, and cultivate professional and high-quality officials teams who are loyal to the Party, have moral integrity, and demonstrate a keen sense of responsibility. The second is to further promote the liberalization and facilitation of trade and investment in a bid to cater to the needs of opening-up at a high level. Efforts should be made to advance capital account convertibility in a stable and orderly way, put into force the management of pre-establishment national treatment plus a negative list in direct investment fields, refine the system in relation to QFIIs and RQFIIs, and deepen the centralized operation and management of multinational corporations’ capital. More places should be included into the pilot of trade receipts and payments facilitation, and support should be given to prudent and compliant banks, which provide creditworthy enterprises with more facilitation services. Foreign exchange authorities should make plans from an overall perspective, strengthen top-level design, and support innovation in regional opening-up and construction of special zones. They should solidly carry out the work in connection with keeping employment, finance, foreign trade, foreign capital, investment and expectation stable. They should continue to deepen the reforms to delegate power, improve regulation, and upgrade services, launch the "Internet plus Regulation" system of the SAFE, and improve the "Online Application System of Government Services" of the SAFE. The third is to improve the management framework of "macro-prudence plus micro-regulation" for cross-border capital flows, and further strengthen the capability of preventing and controlling external shocks and risks. Foreign exchange authorities should step up monitoring and early warning of the foreign exchange market, and study how to diversify the macro-prudential management tools. They should continue to crack down on illegal acts in the foreign exchange market, particularly malignant breaches of laws and regulations such as underground banks and false and fraudulent transactions. The fourth is to consolidate the foundation of foreign exchange administration work. Foreign exchange authorities should improve the BOP statistics system, reinforce the capability of offsite regulation, develop and improve a digital regulatory platform. Taking the good opportunity of the establishment of the Foreign Exchange Research Center, they should further enhance the capability of doing researches in foreign exchange and the level of making decisions on foreign exchange services. The fifth is to improve the operation and management of foreign exchange reserves, safeguard the security, liquidity, value growth and maintenance of foreign exchange reserves. Efforts will be made to drive the high-quality development of diversified use of foreign exchange reserves.

Heads of departments and units of the SAFE attended the meeting at the main venue. Relevant officials of the Discipline Inspection Group dispatched by the Central Commission for Discipline Inspection and the National Supervisory Commission to the People’s Bank of China, relevant departments and bureaus of the People’s Bank of China and Financial Audit Bureau I of the National Audit Office were invited to the conference. Members of the leaderships and department heads of SAFE branches (foreign exchange administrative departments) and central sub-branches were present at local venues. (End)