China closes online currency regulation loopholes to ease fears over foreign exchange transactions
- New rules from the State Administration of Foreign Exchange require cross-border payment services to more closely monitor and report international transactions
- China is increasingly sensitive to outflow pressure given it is expected to run a current account deficit this year
China has upgraded a set of “provisional guidelines” into mandatory rules covering its 134.7 billion yuan (US$20 billion) of online cross-border foreign currency transactions, as worries about the possibility of large capital outflows continue to haunt the world’s second largest economy.
The State Administration of Foreign Exchange (SAFE) announced on Monday that it will require all the cross-border payment businesses, which mainly provide services for individuals and corporations using e-commerce platforms, to register with local authorities. Last year, the value of cross-border e-commerce transactions jumped 50 per cent to 134.7 billion yuan.
SAFE is upgrading the rules to “facilitate cross-border e-commerce settlement, promote healthy development of foreign exchange business, and prevent foreign exchange payment risks”.
“During the previous pilot programme, a few payment firms were found to not have fully taken responsibility for checking the authenticity [of transactions],” the SAFE said.
[The new regulations will] facilitate cross-border e-commerce settlement, promote healthy development of foreign exchange business, and prevent foreign exchange payment risks.
The new regulations mark a significant expansion from the previous guidelines that were launched in 2015 as they contain 51 articles, up from 21.
