| Brief Analysis |

Under the Provisions on Foreign Exchange Administration of Cross-border Guarantee, it states that, “without the approval of the relevant Foreign Exchange Bureau, the debtor shall not directly or indirectly repatriate the funds under guarantee for use domestically by way of domestic borrowing, equity or securities investment, or by other means”. Under the recent measures, the SAFE is clearly beginning to indicate that debtors will now be allowed to be repatriate to the Mainland funds under overseas loans secured by domestic guarantees, for domestic use. According to official SAFE response, the primary consideration for the policy is, that since the implementation of the Macro-Prudential Management Policy of overall Cross-border Financing in 2016, foreign funded enterprises could borrow external debts in their net assets, within a certain percentage. In the framework of the Macro-Prudential Management Policy of overall Cross-border Financing, funds in the form of external debts under overseas loans secured by domestic guarantee are allowed to be repatriated to the Mainland for domestic use, this would further facilitate cross-border investment and financing of enterprises, making full use of domestic and foreign resources in the two markets, alleviate the problems of financing difficulties of financing expenses, and serve the real economy. Practically speaking, in accordance with exiting regulations relating to external debt management, you can apply for registration of external debts. Meanwhile, funds under overseas loans secured by domestic guarantee, which are in accordance with relevant provisions and in the form of equity investments, are also allowed to be repatriated to the Mainland for domestic use.

| Brief Analysis |

In accordance with article 14 of the Guidelines for Foreign Exchange Administration of Trade in Goods, as well as article 2 of the Detailed rules for the Implementation of the Guidelines for Foreign Exchange Administration of Trade in Goods, enterprises shall process the collection and payment of foreign exchange in accordance with the principle of “whoever exports shall collect foreign exchanges, and whoever imports shall make foreign exchange payments”, and export businesses shall, in accordance with the contractual agreement, receive payment on time and in full. Agents of import and export businesses should also be the agents who collect and make foreign exchange payment. Meanwhile, for inconsistencies with regards to compliance of collection and payment of foreign exchange rules and import and export rules, enterprises can go through their local Foreign Exchange Bureau for the main changes to the procedures. Recently the Foreign Exchange Bureau found in their monitoring and verification, that a small number of enterprises with existing exports collected little to no foreign exchange payments, and  have import and export declarations inconsistent with collection and payment of foreign exchange, which disrupted the normal order of foreign exchange receipt and payment. For this reason, the Notice in regards to the above requirements reaffirms and stresses authentic compliance by foreign exchange businesses and warns of the risks involved if there is not any authentic compliance, to prevent enterprises, often on the side of export and collection of foreign exchange, from using the business for other purposes. 

| Brief Analysis |

In recent years, in terms of foreign direct investment policies, we are seeing a trend of continuing decentralization, with a shifting from more reviews and approvals to registration, but at the same time there are also re-emphasizes of authenticity and compliance review of foreign direct investments. Hence, businesses nevertheless still face potential obsticals when providing review information and applyng for loans.

| Brief Analysis |

The PBOC published the Notice of the People’s Bank of China on Implementing Full-coverage Macro-prudent Management of Cross-border Financing Nationwide (Yin Fa [2016] No. 132) in April 2016, which expanded the pilot implementation nationwide of integrating RMB and foreign currencies, which is part of the full-coverage macro-prudent management of cross-border financing to the financial institutions and enterprises. Correspondingly, the Circular proclaimed and emphasized that domestic enterprises’ overseas loans business shall be subject to macro-prudent management that integrates RMB and foreign currencies. On the basis of Yin Fa [2016] No. 306 and Hui Fa [2009] No. 24, the Notice further stated that the upper limit of the balance of overseas RMB loans and the balance of overseas foreign currencies loans of domestic institutions shall be 30% of ownership interests in its audited financial statements of the previous year.