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Questions and Answers Regarding the Policies on RMB Settlement Business in Cross-border Trade
 

1. How shall onshore banks link their systems to RMB Cross-border Receipt and Payment Management Information System ("RCPMIS")? What are the detailed procedures?

A nationwide bank can link its system to RCPMIS through the head office of People's Bank of China ("PBOC"); a local or regional bank can link its system to RCPMIS through the local branch of PBOC where such bank is located; a wholly foreign owned bank or a Chinese-foreign equity joint bank can link its system to RCPMIS through the local branch of PBOC where such bank is located; a qualified branch of the foreign bank can link its system to RCPMIS through the branch of PBOC where its leading reporting bank is located.

A bank shall report the preparation status in writing to Shanghai head office of PBOC through its head office (or leading reporting bank) after the completion of relevant preparation of business and internal system. The Shanghai Head Office of PBOC will notify that bank and the Science and Technology Department of PBOC in writing upon its acceptance of such report. The Science and Technology Department of PBOC or the science and technology department of local branch of PBOC where the bank is located will notify the bank to obtain the interface reporting specifications of RCPMIS and process the system linking. With its letter of introduction from the business department of Shanghai Head Office or local branch of PBOC, the bank can obtain the testing user's name and password of RCPMIS and fill in the System Administrator Identity Information Registration Form for Bank User. The bank will obtain the RCPMIS production system identity documents (including user's name and password) after the completion of join-test verification and the passing of business inspection and approval arranged by Shanghai Head Office of PBOC.

2. Article 6 of Detailed Rules for the Implementation of the Measures for the Administration of Pilot RMB Settlement in Cross-border Trade ("Implementing Rules") provides that "The PBOC shall adopt a two-way scale management of annual end-of-day accumulative net amount of RMB purchases and sales to the business of RMB purchase and sale between domestic agent banks and overseas participating banks". How to determine end-of-day accumulative net amount?

Onshore agent bank may sell RMB funds to offshore participating bank as well as purchase RMB funds from offshore participating bank. End-of-day accumulative net amount means the net amount between the RMB funds sold by an onshore agent bank as one legal person to all offshore participating banks and the RMB funds purchased by that onshore agent bank from all offshore participating banks in a day. The absolute value of annual accumulative net amount shall not exceed the RMB purchase and sale scale determined by PBOC.

3. Article 7 of Implementing Rules provides that, the total balance of account financing provided by a domestic agent bank for overseas participating banks shall not exceed 1% of the balance of various RMB deposits by the end of last year. How to determine the balance of various the RMB deposits of an onshore agent bank?

The balance of various RMB deposits of an onshore agent bank provided by Article 7 of Implementing Rules means all the RMB deposits balance of such onshore agent bank.

4. How to square the RMB exposure generated from the purchase and sale of RMB operated by an onshore agent bank for offshore participating bank?

The transaction of RMB purchase and sale operated by an onshore agent bank for offshore participating banks shall not subject to the administration on comprehensive positions of foreign exchange purchase and sale by the State Administration of Foreign Exchange ("SAFE"). The corresponding RMB positions may be squared in the inter-bank foreign exchange market.

5. Can funds be transferred among different RMB inter-bank nostro accounts opened by the same offshore participating bank? Can the fund could be transferred between the onshore RMB inter-bank nostro account opened by offshore participating bank and the RMB account opened in Hong Kong or Macau RMB clearing banks?

The funds can be transferred among the RMB inter-bank nostro accounts opened in different onshore agent banks by the same offshore participating bank. The funds can be transferred for the demand of trade settlement between the onshore inter-bank nostro account opened by offshore participating bank and the RMB account opened in Hong Kong or Macau RMB clearing banks.

6. Which type of message shall be used when the funds in the settlement of cross-border trade are transferred between onshore settlement banks and Hong Kong or Macau RMB clearing banks?

RMB funds in the settlement of cross-border trade between onshore settlement banks and Hong Kong or Macau RMB clearing banks shall be transferred under "60 - settlement in export trade" and "62 - settlement in import trade" in the remittance and payment message (CMT100) of the high-value payment system shall be used for the transfer of funds of cross-border trade.

7. Which type of message shall be used when the funds in the settlement of cross-border trade are transferred between the onshore agent banks? Can the funds be transferred through the intra-bank system between different branches of one bank?

When an onshore agent bank conducts cross-border RMB settlement with other onshore settlement banks on behalf of an offshore participating bank, "60 - settlement in export trade" and "62 - settlement in import trade" of the remittance and payment message (CMT100) of the high-value payment system shall be used for the funds transfer in cross-border trade. The funds transfer among different branches of one bank can be conducted through its internal system with the corresponding cross-border information enclosed.

8. How to understand "the domestic settlement bank shall not handle the RMB receipt and payment for pilot enterprises until it has completed the examination and verification for the authenticity and consistency of the corresponding trade documents as required" as provided by the Implementing Rules?

According this provision, the onshore settlement banks shall perform its corresponding obligations of examining the trade authenticity when conducting RMB settlement business for the pilot enterprises; however, the onshore settlement banks may make the entry for the pilot enterprises in advance and go through the relevant formalities (including examining the trade authenticity and consistency) simultaneously if the RMB funds of the pilot enterprises under settlement in trade needs to be credited into the account automatically.

9. What fundamental works shall be done by a pilot enterprise to ensure the trade authenticity of the cross-border trades to be settled in RMB?

Firstly, when conducting collection/payment of RMB in cross-border trade, a pilot enterprise shall truthfully fill in and provide onshore settlement banks with the Cross-Border Trade RMB Settlement Export Collection Statement or Cross-Border Trade RMB Settlement Import Payment Statement, submit documents and certificates (contracts and invoices) evidencing the authentic trade background, and cooperate with the onshore settlement banks in examining the authenticity of trade documents and the consistency between trade documents and the RMB collection/payment.

Secondly, a pilot enterprise shall establish the cross border trade RMB settlement account and keep an accurate record of the import and export customs declaration information and the RMB collection/payment information.

Thirdly, a pilot enterprise shall, upon receiving cross-border RMB funds, fill in the Foreign Income Report Form and make the declaration within 5 working days. When the pilot enterprise makes RMB payment, it shall simultaneously make the declaration and submit the Overseas Remittance Application or Overseas Payment/Acceptance Notice.

10. Can the pilot enterprise conduct RMB settlement in cross-border trade in a place other than its registered address?

A pilot enterprise can conduct RMB settlement with onshore settlement banks in other pilot regions.

11. Can the branches of a pilot enterprise located outside the pilot cities conduct RMB settlement in cross-border trades?

The onshore non-legal person branches of a pilot enterprise (e.g. branch company) can conduct RMB settlement in cross-border trades pursuant to relevant laws and regulations.

12. Can a pilot enterprise make the declaration to the customs located in a place other than its registered address?

According to the Notice of the Supervision Department of the General Administration of Customs on Issues concerning the Pilot RMB Settlement in Cross-Border Trade, a pilot enterprise may declare the export of goods in RMB across the regions without providing foreign exchange verification and write-off forms.

13. What formalities shall be gone through if a pilot enterprise has not received the RMB payment for goods over 210 days from the date of export declaration to the customs?

If the pilot enterprise has not received the RMB payment for goods over 210 days from the date of export, it shall within 5 working days fill in the Enterprise Export Collection Delay and Overseas Deposit Registration Form (provided by the banks) with its settlement bank, report to PBOC the outstanding amount of such payment for the goods and the serial number of the corresponding export declaration form, and submit a written explanation and relevant supporting materials of the outstanding amount.

14. What formalities shall be gone through if the pilot enterprise deposits its RMB export proceeds in an offshore bank?

If a pilot enterprise contemplates to deposit its RMB proceeds from export in an offshore bank shall file with the local branch of PBOC through its onshore settlement bank and the filing information shall include the amount of the RMB funds to be deposited offshore, the account opening bank, account information, purpose of the funds, the serial number of the corresponding export declaration form and other information.

15. How shall a pilot enterprise conduct the advance collection and payment of RMB funds?

The advance collection and payment of RMB funds of a pilot enterprise shall be subject to proportional management, and the specific management measures shall be formulated by local branches of the PBOC. Where the RMB funds received or paid in advance by a pilot enterprise exceeds 25% of the contract value, such enterprise shall provide the corresponding original and copy of the trade contract to its onshore settlement bank. A pilot enterprise shall notify its onshore settlement bank in writing for the actual timing of declaration after its completion of advance collection/payment corresponding goods declaration, or the adjusted timing of declaration if the declaration may not made as scheduled.

16. How shall the pilot enterprise conduct the collection of funds exceeding the specified ratio under the processing on order trade?

Where RMB funds received from the export in processing on order trade exceeds 30% of the contract value, a pilot enterprise shall, within 10 working days from the receipt of such offshore RMB funds, submit a written explanation and the original and copy of following materials to its onshore settlement bank: (1) the Export Declaration Form; (2) the processing trade contract or the license for processing trade business issued by local commerce authorities.

An onshore settlement banks shall not continuously handle the collection/payment of RMB funds exceeding the specified ratio for a pilot enterprise, if it fails to submit the above-mentioned documents or certificates within the prescribed period. In serious cases, the onshore settlement bank shall suspend the cross-border trade RMB settlement service for that pilot enterprise and promptly report such case to local branches of PBOC.

17. Shall the export tax rebate (exemption) policies apply to the cross-border export settled in RMB? How to go through the application procedures for the tax rebate (exemption)?

The export tax rebate (exemption) policies shall apply to the export trades settled in RMB pursuant to the relevant regulations. When applying for export tax rebate (exemption) for cross-border trade settled in RMB, a pilot enterprise is not required to provide export foreign exchange collection verification and writing-off form; however, it shall make a separate declaration to the competent tax authority. If it makes the declaration along with other export goods, it shall mark the customs declaration form for cross-border trade export settled in RMB in its tax declaration.

18. Is the cross-border trade RMB settlement subject to foreign exchange verification and write-off formalities?

Cross-border trade RMB settlement is not subject to the foreign exchange verification and write-off administration and the pilot enterprise is not required to go through the formalities of foreign exchange collection and payment verification and write-off in import and export.

19. Shall the foreign exchange verification and write-off form be used for the export declaration denominated in RMB under cross-border trade settled in RMB?

The pilot enterprise is not required to provide the export collection verification and write-off form when making the export declaration denominated in RMB. The pilot enterprise is also not required to provide the export collection verification and write-off form when making cross-region declaration.

20. How to report the balance of international payment with respect to balance of international payments transactions under RMB settlement in cross-border trades?

An onshore settlement bank shall firstly improve and perfect their interface programs in accordance with the Circular of the State Administration of Foreign Exchange Concerning the Preparatory Work for Further Implementing the Pilot Operations of the SAFE Sub-project of the Jinhong Project (Hui Fa No.7 [2009]) and relevant regulations.

With respect to international balance payment transactions under RMB settlement in cross-border trades, a pilot enterprise shall report the balance of international trade in accordance with relevant provisions of Circular of the General Affairs Department of the SAFE on Issues Concerning the Declaration of Balance of Payments Statistics for RMB Settlement in Cross-border Trade(Hui Zong Fa No.90 [2009]). Onshore agent banks shall transmit the information of RMB proceeds arising from cross-border trade to onshore settlement banks so as to facilitate onshore settlement banks in identifying the source of the RMB remittances, and promptly notify the pilot enterprise of indirect report of the balance of international payments. Upon receiving cross-border payments in RMB, a pilot enterprise shall fill in the Foreign-related Income Declaration Form and go through the formalities of declaration within 5 working days. Upon making cross-border payments in RMB, a pilot enterprise shall simultaneously make the declaration and submit the Overseas Remittance Application or Foreign Payment/Acceptance Notice. Onshore agent banks shall report data of its offshore assets and liabilities of financial institutions generated in RMB by filling in Declaration Form for Inter-bank Deposits and Loans of Financial Institutions, and report its RMB account data by filling in the Form of RMB Account Balance and Change for Non-resident Bank. When providing offshore enterprises with trade financing services in RMB, onshore settlement banks shall make reports on the overseas assets and liabilities, and profits and losses of the financial institutions.

21. Can the funds deposited in the onshore non-resident RMB account be used for payment in cross-border trades?

The RMB funds deposited in the RMB account opened by offshore banks and offshore enterprises in an onshore bank can be used for the payment in cross-border trades.

22. Is the guarantee a type of cross-border trade RMB settlement business?

The onshore banks may provide service of outbound security, such as issuing the bank guarantee in RMB, for pilot enterprises under the RMB settlement in cross-border trades; the pilot enterprise may also conduct business of RMB outbound security under the RMB settlement in cross-border trades.

23. Is the collection and payment of RMB funds between an offshore participating banks in the ASEAN (the Association of Southeast Asian Nations) through its RMB nostro account opened with the banks in Yunnan or Guangxi for border trades and the pilot regions in mainland China a type of cross-border trade RMB settlement business? If yes, how to report the business information to RCPMIS?

Such business is a type of cross-border trade RMB settlement business. PBOC will combine the existing RMB nostro account for border trades with the RCPMIS and onshore banks shall report to RCPMIS with information of all RMB deposit accounts opened for offshore enterprises and offshore banks and the collection and payment information of RMB funds.

24. Shall the financial institutions apply the criteria for RMB high-value transaction or that for foreign currency high-value transaction when submitting high-value transaction report in respect of the RMB funds received from or paid to offshore entity or invididual by an onshore enterprise?

Financial institutions shall submit the high-value transaction report to Anti-Money Laundering Monitoring and Analysis Center of PBOC in accordance with the criteria for RMB high-value transaction.

25. Is it allowed to conduct the cross-border collection and payment in RMB related to trade without goods flow, such as payment of commission and discount?

Onshore settlement banks and onshore agent banks are allowed to conduct cross-border collection and payment in RMB related to trade for pilot enterprise within the scope of incidental fees and charges for the trades.

26. Can the service part be settled in RMB in the case of large project contracting or export of complete set of equipment which always involves the export of goods as well as the rendering of services? If the goods purchase offshore in offshore project contracting will be used offshore and not enter into mainland China, can such purchase be settled in RMB?

Onshore settlement banks are allowed to conduct the above-mentioned RMB settlement business for pilot enterprises and shall be responsible to examine the trade authenticity. The pilot enterprises shall submit the commercial contracts to onshore settlement banks for the banks' examining of the trade authenticity and conducting corresponding collection and payment of RMB funds. If the goods purchase offshore in offshore project contracting will be used offshore and not enter into mainland China, onshore settlement banks may conduct RMB settlement for enterprises after examining the trade authenticity based on the relevant documents such as the bill of lading.

27. How to determine the interest rate for the RMB deposit in RMB nostro account opened by offshore participating banks and the account financing provided by onshore agent banks?

The interest rate for RMB funding between onshore banks and offshore banks shall be negotiated and determined by both parities.

28. Can the ASEAN countries which have entered into currency swap agreement with China use the RMB funds under swap agreement for trade settlement?

Yes, the detailed operation procedures need to be further discussed and determined by PBOC and the central banks of such ASEAN countries.

29. Can a enterprise located in special economic regions, such as duty-free zone, participates in the pilot RMB settlement in cross-border trades?

The trade between an enterprise located in special economic regions (such as duty-free zone) and an onshore enterprise outside such regions are not cross-border trades; and the trade between an enterprise located in special economic regions and an offshore enterprise is cross-border trade. The enterprises located in special economic regions may apply to the relevant department of local provincial government for conducting RMB settlement business in cross-border trade when the scope of pilot enterprise is expanded in the future.

30. Can the onshore banks open RMB offshore account for offshore enterprises?
Onshore banks may open offshore RMB accounts for the offshore enterprises under RMB cross-border trade financing; however, it shall make explicit mark in the system and report the relevant information to the RCPMIS of PBOC.


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