China to relax forex rules for trade in services

The State Administration of Foreign Exchange (SAFE) announced Wednesday a series of measures to relax forex regulations for trade in services, at a time when small exporters are suffering negative growth.

SAFE said in a statement on its website that, starting from September 1, it will allow companies in the services trade sector to deposit their foreign currency income overseas.

It will also scrap its review of documents for services trade deals worth less than $50,000, and let the firms deal with the banks directly, the regulator said.

SAFE said that it would simplify its forex approvals for services companies by inte­grating dozens of existing approval procedures and abolishing over 50 related regulations.

The move comes in response to the State Council's call to facilitate trade and investment and streamline forex regulations in order to delegate more authority to the banks, the forex regulator said in a press release on its website Monday.

At a time when Chinese exports are weak, SAFE's procedure simplification should help exports and encourage financial institutions to promote trade, Tan Yaling, head of the China Forex Investment Research Institute, told the Global Times Wednesday.

Besides relaxation of the rules, Tan suggested the ­government put more effort into making sure that exporters focus on their core business.

She cautioned that the regulators should avoid the risk of speculators taking advantage of the relaxed regulations, as witnessed in the first half of the year when trade was falsely inflated amid a sharp rise in hot money inflows.

She also said there should be better management of the yuan exchange rate in order to boost exports.

Chinese exports stood at $174.3 billion in June, down by 4.6 percent month-on-month, according to the General Administration of Customs.

SAFE said in its press release that it has set the approval waiver at $50,000 because 88 percent of the services traders are small ones whose individual transaction amount is usually under that level, according to its 2012 statistics.

Meanwhile, the remaining 12 percent of the services tra­ders, who still need to be regulated, accounted for 92 percent of the total value of services trade in 2012, it said.

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