The Changes Of The Legislative System Of China's Foreign Exchange Administration

The legislative system of China's foreign currency administration holds a vital position in the area of financial legislation and plays an important role in the healthy development of China's financial economy. This thesis, from the historical viewpoint, provides an analysis and reflection on the changes of the legislative system of China's foreign currency administration in the last thirties years since the reform and opening up .The causes and the prerequisites for these changes are established firstly and then analysis of the features of the legislative system of China's foreign currency administration as well as the envision of the future legislation are provided.There are altogether one introduction and six chapters in this thesis.In the introduction the rationale for the theme is firstly explained. The background is that there has been an emerging interest in the field of legislative history making research into the legislative history of People's Republic of China and the sectional legislative system is coming into the research area of legalists. Therefore it is necessary to reconsider and reflect on the changes of the legislative system of China's foreign currency administration, which is a necessity to further propel the reform and opening-up progress and ensure the fruit of the progress. In the second part, the current research of the legislative system of foreign currency administration is introduced with comments on the related works and articles. The third part is about the theme and the methodology of this research. The theme is the changes of the legislative system of China's foreign currency administration while the methodology is the regulating analyzing method, comparative analyzing method and the historical analyzing method. In addition, the innovative features about this article are mentioned in the introductory part.In the following six chapters the changes of the related legislative system is analyzed, followed by summery comments. Detailed suggestions on legislation are also provided in these parts. These six chapters are as follows;Chapter One The change of the legislative system for the administration of the foreign currency accounts and buying and selling of foreign currency. This chapter is composed of two parts, one being the legislative system of the administration of the foreign currency accounts and the other being the changes of the legislative law system for the administration of the buying and selling of the foreign currency. Part I is composed of frequent project foreign currency account, capital project account and analysis of evolution of the legislative system of administration of the foreign currency accounts. It is concluded that there are positive effects from the reform of the legislative system for the administration of the frequent project foreign currency accounts, which are reflected in three ways. First, it has enhanced the development of import and export trades; second, it boosts the marketing competition among the enterprises; third, sufficiently reserved foreign currency renders the enterprises more motivated to manage the foreign currency. Compared to the changes of the legislative system of the administration of the frequent project foreign currency accounts, the reforms of that of the administration of the capital project accounts have been considerably less significant. The current legislative system of the administration of the capital project foreign currency accounts plays an important part in guarding against the financial risks. In Part II analysis is made on the evolution of the legislative system of the administration in three areas, which are buying, selling, and paying of foreign currency. It is concluded that flaws still exist in the current regulations in spite of the efforts on bettering the legislative system of the administration of the frequent project of buying, selling and paying foreign currency. One flaw is the limitation of the means of inspecting the foreign currency in goods trades. The other flaw is the lack of the measures to monitor and regulate the foreign currency in service trades. The legislative system for the administration of the buying, selling an paying of the foreign currency for the capital project is also in need of further improvement. There has so far been improvement in the legislative system of the administration of the buying, selling and paying of the foreign currency. One improvement is the adoption of the same standard for the administrative policy which allows the banks onto the market of buying, selling an paying the foreign currency and the same standard for the business of buying, selling and paying the foreign currency by either the domestic or the foreign funded banks. The foreign-funded banks now enjoy the same treatments as the domestic banks. This will ensure the fair competitions between the domestic and foreign-funded banks. The other improvement is that the banks which have the privilege of dealing with the foreign currency are now allowed to deal with the business of long-term buying, selling and paying foreign currency. This has expanded the market of financial by-products. In addition, it has enhanced the healthy and systematic improvement of the foreign currency market and propelled the process of freeing the RMB exchangesChapter Two The evolution of the legislative system of the administration for the foreign debts. The chapter is composed of four parts, namely the definition of foreign debts, the evolution of the legislative system of the administration of foreign debts, general evaluation of the legislative system of the administration of foreign debts, suggestions for legislation of the foreign debts administration. Part I analyses the definitions of foreign debts made by"the four international organizations"and the Chinese government. Foreign debts can be defined as a kind of credit which can be temporarily transferred in form of foreign currency or domestic currency from one country to anther with the countries as the subjects that take the concerned rights and obligations. The theoretical and practical significance for the new definition of the foreign debts are provided. Firstly the new definition helps us have a deeper understanding of foreign debts, which provides a substantial foundation for the establishment of theoretical system of foreign debts. Secondly, it helps for us clearly differentiate between debts and investment so as to make right decisions. Thirdly, it helps adjust the administrative system of foreign currency and enhance the administration of the foreign debts. Part II analyses the evolution of the legislative system of the foreign debts administration from four aspects. The four aspects are administrative regulations of overseas loan-in and loan-out fund, administrative regulations of foreign currency bonds issued by domestic organizations, administrative regulations of establishing administrative regulations for overseas guarantees, and administrative regulations of statistics and monitoring of foreign debts.Part III gives an evaluation on the legislative system for administration of foreign debts from three aspects, which are the legislative body, legislative guide, and the legislative contents. As far as the legislative body is concerned, the administrative legal documents have been issued by several governmental sections, which have led to some chaos in administration. Regarding to the legislative guide, the administrative influence is still strong although there has been more freedom allowed by the government. As far as the contents of the legislation, there are flaws in the system of the discrepancy between the invested and the registered capitals. The system of payment of sold foreign currency that has been set for the foreign enterprises has proved helpless. There exist the problems of lack of regulations for the invisible foreign debts and different standards for the administration of the domestic and foreign enterprises.In part four, suggestions are provided for perfecting the legislative system for administration of foreign debts concerning the reforms of the current administrative regulations of the enterprises and banks.Chapter Three The evolution of the legislative system of the administration of the foreign currency invested abroad. The chapter is composed of four parts, namely the evolution of the legislative system of the administration of the foreign currency directly invested abroad, the general discussion of the legislative system of the administration of the foreign currency indirectly invested abroad, evaluation of the legislative system of the administration of the foreign currency invested abroad, suggestions for the legislation of the administration of the foreign currency invested abroad. The first part emphasizes on analysis of the evolution of the legislative system of the administration of the foreign currency invested abroad since the pass of THE ADMINISTRATION OF THE FOREIGN CURRENCY INVESTED ABRAOD in 1989. Part two is about an analysis of the legislative system of the administration of the foreign currency invested abroad and special emphasis is placed on the origin and evolution of the QDII system. Part III argues the flaws of the legislative system for administration of the overseas foreign currency investment and the positive effects of the reforms of the legislative system of the administration of the overseas foreign currency investment since the turning of the new century. The latter has been concluded on the basis of the former one. There would be of great significance if some measures are adopted. These suggested measures are as follows: first, abolish the system of inspecting the risk of the overseas foreign currency investment and the system for send- back profit funds; second, add more sources of the foreign currency capital; third, lift the limitation on the enterprise buying foreign currency, fourth, equalize the rights granted to the domestic and the foreign enterprises on their overseas investments; finally carry out of QDII system. Part five provides suggestions on administration of foreign currency output overseas investment, administration of inter- overseas foreign currency investments, administration of foreign currency input overseas investment, and perfecting the QDII system.Chapter four The evolution of the legislative system of RMB exchange rates and foreign currency market. This chapter consists of two parts, which are the evolution of the legislative system of RMB exchange rates and the evolution of the legal system of foreign currency market. Part I firstly reflects on the legal system of RMB exchange rates since the establishment of People's Republic of China, which is followed by an analysis of the contents of the legislative system of RMB exchange rates as well as its changes. An evaluation is than made on the double legal system of the RMB exchange rates, merger of the two systems and the reforms on the legal system of the"7.21"exchange rates. It is than concluded that every exchange rate system on each stage , generally speaking, has been up to the economic development in that specific period. The reforms on the system of the"7.21"exchange rates are of special significance, which can be reflected on four aspects. The four aspects are effective upgrading of the currency policy, improvement of the environments for the RMB exchange market, significant changes in the foreign currency business carried by the commercial banks and the enhancement the process of freeing the RMB exchanges.In Part II there is an analysis and evaluation of the evolution of the legal system of"keeping part and selling out the rest of the foreign currency'and the evolution of the legislative system of the foreign currency market among the banks. Conclusion is made that while the legislative system of the China's foreign currency market is becoming better, it still falls behind that of the international foreign currency market in the aspect of enhancing the free exchanges of RMB. These discrepancies are mainly reflected on four aspects, namely the limitation on the activities of the market subjects, lack of the regulations on the agency, limited variety of the currencies allowed for exchanging on the market, and small variety of the exchanging types.Chapter Five Causes and conditions of the evolution of the legislative system of the administration of foreign currency. This chapter is composed of two parts, namely causes of the evolution of the legislative system of the administration of foreign currency and conditions of the evolution of the legislative system of the administration of foreign currency.In the first part it is argued that the freedom of RMB exchange is the main cause of the changes of the legal system of the administration of the foreign currency since the reform and opening-up. Both national and international factors are considered.Part two discusses the conditions for the evolution of the legal system of the administration of the foreign currency. It is argued that the fact that RMB is allowed to be exchanged freely is one of the main prerequisites for the evolution of the legal system of the administration of the foreign currency. These conditions include proper system for exchange rates, proper exchange rate levels, sufficient foreign currency reserve, rigid financial and currency policy, stable macro economical environment, good market price system and the enterprises'ability to make initiative and prompt reactions, and controllable foreign debts scale. In the mean time, financial legal environments have great influence on the evolution of the legal system of the administration of the foreign currencyChapter Six features of the legal system of the foreign currency administration and the outlook of it. This chapter consists of two parts, which are features of the legal system of the foreign currency administration and the outlook of the legal system of the foreign currency administration.Part I argues that there are four features of the legal system of foreign currency administration. first, there is a lack in regulations passed by People's Congresses; second, regulated documents are an vital means to adjust the relationship among the legal laws of foreign currency administration; third, there is a lack in co-ordination among the legal documents for foreign currency administration issued by different sections of the same governmental levels ; fourth, there have been conflicts among the legal documents for foreign currency administration issued by governmental sections of different levels ;fifth, there has been non-standard expressions of the legal stipulations; finally, the legislative model needs to be improved.Part II gives an envision of the future legislation of foreign currency administration from five aspects. The five aspects are fastening the pace of stipulation of THE PEOPLE'S REPUBLIC OF CHINA LAW OF FOREIGN CURRENCY , reorganization and revision the current documents for the foreign currency administration, emphasizing the legislative techniques and improving the legislative qualities, dealing with the relationship between the reform of foreign currency administration and the limitation of the superior laws, further propelling the process of RMB free exchanges .It is believed that a mature legislative system for foreign currency administration will make great contributions to strengthening our country's administrative system, reinforcing the fruit of the reform of the administrative system of foreign currency, keeping our country's international financial in good balance, promoting the international trades, enhancing the financial administration levels, and ensuring the final realization of total freedom of RMB exchanges.