SAFE Liberalizes Foreign Exchange Rules … Or Not? -- Two recent circulars from China's foreign exchange regulator represent a welcome move towards streamlined forex transactions

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Is the State Administration of Foreign Exchange (“SAFE”) finally loosening its grip on foreign exchange transactions? Not exactly - the baseline principle of control and scrutiny over the flows of money into and out of China seems here to stay. However, in an attempt to make inflows easier and balance out an increasing outbound stream of RMB, SAFE appears to be looking for ways to ease the process of effectuating foreign exchange transactions where doing so does not come at a material cost to their supervisory powers.

SAFE’s “Circular on Further Improvement and Amendment of Foreign Exchange Control Policies on Direct Investment” ([2012] No. 59) (“SAFE 59”), effective December 17, 2012, eliminates many application requirements for standard forex-related activities (over 30 administrative examination and approval items were eliminated) and replaces them with a registration process that is largely based on electronic information maintained by banks.

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