State Administration of Foreign Exchange, Issues Relevant to Simplifying the Verification Procedures for Sale of Foreign Exchange for Prepayment of Goods Circular

Issued: October 9 2003
Effective: as of the date of receipt of the Circular

Main contents: The Circular simplifies the procedures for sale of foreign exchange for prepayment of goods. A letter of indemnity issued by the bank of the foreign party is not required: (a) if the prepayment amount is US$200,000 or below; (b) if a foreign-invested enterprise in China is prepaying its imports to its overseas parent company, or a branch of the parent company or a company in which the parent company has equity participation in or a controlling interest in abroad (including Hong Kong, Macao and Taiwan); or (c) if a wholly Chinese-owned conglomerate is prepaying its imports to its branch or a company that it has equity participation in or a controlling interest in abroad (including Hong Kong, Macao and Taiwan) (Items One to Three). The procedures for purchase of foreign exchange for prepaying imported materials for processing trade have also been simplified (Item Four).