August 8 2008 witnessed the issue of the New Forex Regulations in China. This step was nothing but the response to the growth of the forex reserves of the country that came closely to the point of $2 trillion as well as to the increased foreign currency flow.
The new regulations in the foreign exchange area don’t have any mandatory requirements for transfer and settlement of the foreign exchange. According to new rules the income of the internal institution or individual in foreign exchange may be transferred back to China as well as deposited outside of the country. The exclusion of the mandatory requirements is done with the aim to decrease the growth of the foreign exchange reserves of the country. However there are also new penalty inflicted on illegal collection and settlement of the foreign currency. These actions are considered as well as the illegal purchase of the foreign exchange and remittance offshore: 30 percent of the whole amount that is violated. Furthermore there is certain authenticity and lawfulness test intended to check the legality of the foreign exchange. Moreover another point of the new regulations is the increased control over the use of the settled foreign currency. In such case the foreign currency considered should strictly correspond to purposes set by forex administration body or another qualified financial organization.
Thus we should say that the new regulations say that in certain critical situations like serious unbalance of payment or even economic crisis the state authorities may take certain control over the assets and its protection.
And finally new regulations say that local financial institutions now have got the ability to provide commercial loans to certain offshore bodies, however implementing rules and registration requirements are not finished yet.