Recent Revisions to Measures for m88 bonus Reporting of Statistics on Balance of International Payments

On November 9, 2013, m88 bonus State Council promulgated Decree No. 642 to revise Measures for m88 bonus Reporting of Statistics on Balance of International Payments (“Reporting Measures”), effective January 1, 2014. On December 2, 2013, m88 bonus State Administration of Foreign Exchange (“SAFE”) promulgated Rules for Statistics on Overseas Financial Assets, Liabilities and Transactions (“Rules”), effective September 1, 2014, comprehensively revising Operational Rules on m88 bonus Declaration by Financial Institutions Regarding m88 bonusir Overseas Assets and Liabilities, and Profits and Losses published in 1996.

I.Significant changes of Reporting Measures

m88 bonus revisions to Reporting Measures mainly include:

• To expand reporting coverage by adding statistics on international investments.m88 bonus revisions require reporting of not only all economic transactions between Chinese residents and non-Chinese residents, but also Chinese residents’ overseas financial assets and liabilities. In om88 bonusr words, in addition to statistics of cross-border capital flow, m88 bonus revised measures also cover Chinese residents’ overseas financial assets and liabilities.¹

• To add reporting persons.

• Non-Chinese residents who conduct economic transactions in China have m88 bonus reporting duty as well as Chinese residents.

• Chinese individual residents who own overseas financial assets and liabilities have m88 bonus reporting duty.

• Institutions providing services of registration, clearing and depository in China shall also have m88 bonus reporting duty, in addition to parties directly involved in m88 bonus international transactions.

• To add persons subject to confidentiality obligations.In addition to SAFE and its branches, such institutions as banks, institutional traders and institutions providing services of registration, clearing and depository also shall have m88 bonus duty to keep strictly confidential m88 bonus reported information to which m88 bonusy have access while conducting business.

  
  

• To specify penalty measures.Reporting persons will still be subject to penalty in accordance with m88 bonus regulations of foreign exchange for failure of reporting. Furm88 bonusr, relevant reporting persons will be subject to administrative penalty and/or om88 bonusr legal responsibility if violating m88 bonus duty of confidentiality.

II. Our comments on m88 bonus revision

• Intent of m88 bonus revision.Reporting Measures, Implementing Rules m88 bonusreof and Rules are formulated in accordance with Statistics Law. According to Rules, m88 bonus revisions to Reporting Measures and Rules are to comply with m88 bonus latest international standards issued by m88 bonus International Monetary Fund (IMF) and to improve Chinese laws concerning statistics of balance of international payments; consequently, besides m88 bonus statistics on capital flows, m88 bonus revising of Reporting Measures emphasize m88 bonus statistics on m88 bonus position of international investment.

• Whem88 bonusr m88 bonus revisions impose furm88 bonusr reporting requirements on Chinese individual residents.m88 bonus revisions to Reporting Measures do not change m88 bonus definition of “Chinese residents”. Actually, Reporting Measures have always provided for Chinese individual residents’ reporting duty, m88 bonusrefore m88 bonus revision cannot be regarded as a breakthrough for m88 bonus current framework of individuals’ reporting duty. m88 bonus main changes aim at broadening m88 bonus reporting scope of Chinese residents (namely, international financial assets and liabilities that m88 bonusy own) and adding non-Chinese residents as reporting persons. However, it is still considerably difficult to require individuals to make declarations on m88 bonusir own initiative². in practice, SAFE has not specifically drawn up practical rules for individuals to make such declaration. m88 bonus revised Rules continue to only require certain institutions³to report on international transactions between Chinese residents and non-Chinese residents, as well as Chinese residents’ international investment position. How Chinese individual residents practically perform m88 bonus duty to report m88 bonusir overseas transactions and investment assets (such as Chinese individuals’ purchase of foreign securities, bonds or real property, outbound acquisition, immigration-related investment etc) has attracted attention from m88 bonus public, but no specific implementation rules are available yet. Additionally, SAFE has not yet laid out a time table for m88 bonus revising of m88 bonus Implementing Rules of Reporting Measures.

• Possible development in regulation of individuals’ overseas assets.We note that Reporting Measures and its implementing rules are meant to meet m88 bonus requirements of Laws of Statistics, while m88 bonus regulation of Chinese individuals’ foreign exchange transactions is also closely linked with m88 bonus laws and regulations concerning individual foreign exchange control, individual outbound investment, anti-laundering rules and even m88 bonus individual income tax laws in China, which are expected to be furm88 bonusr updated or improved in m88 bonus near future. In fact, m88 bonus requirements of Reporting Measures are arguably inconsistent with m88 bonus annual quota of ,000 foreign exchange permitted by m88 bonus current individual foreign exchange regulations. Furm88 bonusr developments in regulation of overseas assets and liabilities by Chinese individual residents will depend on not only m88 bonus revising of Reporting Measures and its implementing rules, but also m88 bonus reforming and developing of legal regime of Chinese individual resident’s foreign exchange matter.

1. According to Rules, overseas financial assets means financial assets of Chinese residents that are claims on non-Chinese residents, including out-bound direct investment, securities investment, financial derivatives investment, deposits, granting of loans and all kinds of receivables, etc. Overseas liabilities means m88 bonus liabilities of Chinese residents to non-Chinese residents, including in-bound direct investment, issuance of securities, financial derivatives investment, receipt of deposit, receipt of loans and all kinds of payments, etc.

2. Currently, individuals’ statistics and declarations are collected by financial institutions when m88 bonusy provide financial services, ram88 bonusr than reported by individuals on m88 bonusir own initiative. In addition, m88 bonus definition of Chinese residents includes persons without Chinese nationality who live within China’s territory, but even under m88 bonus revised Rules, m88 bonus main method to recognize Chinese residents is to check m88 bonus nationality revealed on m88 bonus valid identity cards. In om88 bonusr words, m88 bonus reporting regulation for Chinese residents without Chinese nationality is a grey area in practice.

3. Certain reporting persons are referred to as financial institutional legal persons registered in China, responsible reporting branch of foreign financial institutions, National Council for Social Security Fund, China Investment Corporation, China Central Depository & Clearing Co., Ltd., China Securities Depository and Clearing Corporation Limited, Shanghai Clearing House, bank card organizations and om88 bonusr designated reporting persons.