China's State Administration of Foreign Exchange (SAFE) recently held a press conference with regard to the cross-border capital flow in October 2016, from which it could be understood that, China's cross-border capital flow remains basically stable going forward with the increasingly steady economic environment. Based on the statistics provided by the SAFE, the outflow stress of cross-border capital in October 2016 has been relieved. Although the deficit of foreign exchange (forex) sales and purchases by banks continues, but such deficit significantly decreased compared to the statistics in September. Meanwhile, the forex settlement deficit by the non-banking organizations continues to decline, the proportion of forex purchase in China has decreased on a month-on-month basis. On the contrary, the statistics of the People's Bank of China (PBOC) shows that China's forex reserves kept decreasing in November 2016, reduced by 69.1 billion US dollars compared with last month, which witnesses the largest drop since January 2016 and marks the fifth continuous decrease over the last five months in China.
We have observed recently that, in order to maintain the stable flow of cross-border capital, prevent the arbitrage activities by applying RMB and related cross-border policies, the SAFE and the PBOC have set forth new supervision and administrative measures on the cross-border capital flow under the capital account. In this issue of China Tax/Business News Flash, we will share with you the development of administration on cross-border capital flow under capital account, new regulations on RMB cross-border lending, as well as our recommendations on implementation of forex remittance under the new trend.