In addition to the Provisions, 24 SAFE regulations on foreign exchange are abolished, relating to opening bank accounts, inbound and outbound remittance, FOREX settlement and other issues. Based on the latest FOREX administration reform, SAFE integrates and simplifies the extensive rules on foreign direct investment ("FDI"), aiming to further open up to foreign investors.

The Provisions establish an overall picture of the FOREX regime on FDI, introducing the major points below.

The Provisions define FDI as activities in which foreign investors establish foreign-invested enterprises or projects in China through new establishments, mergers and acquisitions and other ways, obtaining rights and interests such as ownership, right of control, and operation and management rights.

Together with the Operational Guidelines on FDI Activities issued simultaneously, the Provisions establish detailed examination and approval procedures for FOREX issues, such as opening upfront expense accounts, FIE incorporation, capital contribution, overseas mergers and acquisitions and other FDI-related activities.

As many of SAFE’s approval requirements have been eliminated, the Provisions require SAFE to verify or inspect the bank’s compliance when handling business related to FDI and its submission of relevant information. The bank must also verify or inspect institutions and individuals involved in abnormal or suspicious circumstances during FDI activities, to avoid any oversight of supervision.

Date of issue: May 10, 2013. Effective date: May 13, 2013