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State Administration of Foreign Exchange’s new favourable policy for the development of new formats of trade

Recently, the State Administration of Foreign Exchange (SAFE) of China officially issued the “Notice on Supporting the Development of New Trade Formats” (SAFE [2020] No. 11), further relaxing the foreign exchange control for cross-border e-commerce, market procurement trade, and comprehensive foreign trade services during the process of a cross-border payment. This new policy is a manifestation of the State Administration of Foreign Exchange’s active response to the decisions and deployments of the Party Central Committee and the State Council, doing a solid job of “six fronts” and fully implementing the “maintain security in six areas” task. This new policy will be conducive to further deepening the reform and opening up in the foreign exchange field, the introduction of more foreign exchange facilitation services, and the resumption of production and production of foreign trade enterprises, so as to better meet the needs of trade innovation and development, and promote high-quality trade development, and support China’s new pattern of comprehensive opening up.

The “Notice” mainly focuses on solving the problem of inconvenient settlement of new trade formats in transactions. The policy design follows the principle of “encouraging innovation, tolerance and prudence”, and actively adapts to the actual needs of the development of new trade formats. In accordance with the requirements of “serving entities, facilitating opening up, leaving traces of transactions, and controlling risks”, the foreign exchange policy of the new trade format will be relaxed, foreign exchange services will be optimized, and the handling of relevant foreign exchange businesses will be facilitated.

The original intention of the self-financial service platform being built by Asia Digital Bank coincides with SAFE’s New Policy’s overall thinking. The completed platform will improve the efficiency of cross-border settlement for domestic trading companies with an optimized foreign exchange settlement model and reduce their overall costs. In addition to being able to solve the difficulties in the cross-border payment and settlement process for trading companies, the platform will also help the opening of cross-border transfer channels for domestic trade financing assets, further help companies reduce financing costs and promote investment trade liberalization and facilitation Promotion. By taking advantage of the unique advantages of the self-finance service platform and combining new blockchain technology with trade finance, it can not only effectively solve the industry pain points and difficulties in traditional cross-border trade in terms of identity authentication, information transmission, and data security, but also to allow trading companies to earnestly and timely enjoy the powerful advantages of operational convenience, timeliness and security brought by new policies and technologies in digital finance and foreign exchange management.

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