China's currency, the RMB Yuan, is not freely convertible on world markets. Although this fact has presented some foreign currency exchange complications for companies in China, new Measures have been introduced to help streamline the process somewhat.

The "Measures Concerning the Administration of Foreign Currency Liquidation" went into effect on August 1, 1999. These measures provide financial institutions engaged in foreign exchange business more specific regulations concerning the liquidation of foreign exchange. Previously, different PRC financial institutions would open their own foreign currency accounts at foreign banks. With so many different banks being involved, there arose several administrative issues.One of the main considerations of these new measures is that now PRC financial institutions are to adopt the member system with respect to their foreign exchange liquidation processing. This member system will be a network assembled by the State Administration of Foreign Exchange Control ("SAFE"). Under the system, the network as a whole will use one foreign bank, selected by SAFE, for foreign currency accounts, thus streamlining the ability of the PRC banks to settle foreign currency for their clients.

Although these measures are aimed at streamlining the administrative process for PRC banks, what still remains unclear is exactly how the dealings by the network with the foreign SAFE-approved bank(s) will be handled. Whether one foreign bank will be used to handle settlements in various foreign currencies, or one foreign bank in each foreign country will be used to settle accounts in its own foreign currency has not been specified, and remains to be seen.
　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　-- Justin Chen