The phrase “export-related moneys received in advance in connection with trade in goods” refers to the receipt of foreign exchange before the export date specified in a contract, or before the actual export and customs clearance date. Such moneys may be paid in advance by a foreign purchaser to a PRC exporter.
Cooling hot money
In recent years, “hot money” from abroad has entered the PRC through three main channels: the current account, the capital account and underground money changers. To stem this inflow, the government has strengthened exchange controls. In 2008, the Foreign Exchange Administrative Regulations were comprehensively revised, and new exchange control measures imposed. Control was increased over the receipt and conversion of foreign exchange received in advance in connection with goods exported on the current account.
The Administrative Regulations require that receipts and payments of foreign exchange on the current account are linked to a true and lawful underlying transaction. Financial institutions engaging in foreign exchange business are required to verify the genuineness of the transaction documents and their consistency with the foreign exchange receipts or payments made. The exchange control authorities are authorized to monitor this.
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Yu Feng is a senior partner at Dacheng Law Offices
Dacheng Law Offices LLP, Shanghai
14/F China Development Bank Tower
500 Pudong South Road, Shanghai
Postal code: 200120
Tel: +86 21 3872 2401
Fax: +86 21 3872 2400