RESTRICTEDWORLD TRADE
ORGANIZATIONWT/BOP/R/69
28 November 2002
(02-6574)
Committee on Balance-of-Payments Restrictions
REPORT OF THE MEETING OF 18 NOVEMBER 2002
1. The Committee on Balance-of-Payments Restrictions met on 18 November 2002, under the
Chairmanship of Ambassador Filip (Romania), to  address the agenda as set out in WTO/AIR/1964.
2. Under agenda item A, work on implementation issues under paragraph 12(b) of the Doha
Declaration, Members agreed to submit the Report of the Committee to the Trade Negotiations
Committee (WT/BOP/R/66).
3. Under agenda item B, the Committee completed its first annual review of China under the
Transitional Review Mechanism of Paragraph 18 of the Protocol of Accession.
4. The representative of China provided information on the implementation of his country’s
commitments with regard to paragraph 18 of Chin a’s Protocol of Accession.  He pointed out that
China had fulfilled its commitments related to foreign exchange administration in accordance with
WTO provisions and its commitments under the Protocol, noting also that no trade restrictive
measures for balance-of-payments reasons had been taken.  For the sake of transparency and in orderto allow the Committee to have a better understanding of China’s efforts in this area, he cited recent
initiatives including simplification of regulations governing foreign exchange and greater flexibility
for banks’ foreign exchange operations.  The statement by the representative of China is attached as
Annex I.
5. The representative of the United States welcom ed the information provided by the delegation
of China and was encouraged by the signs of liberalization.  He stressed the importance his
Government attached to full currency convertibility.  He noted the systemic issue of differentinterpretations of China’s responsibilities under the TRM and that this would be taken up in other
fora, but suggested that advance information would make it easier for capitals to assess whether their
concerns had been addressed.
6. The representative of the European Communities also expressed appreciation for China’s
statement and, like the United States, considered that it was important to have information in advance
of the review;  he noted that information on exchange measures under Article VIII should be made
available to the Committee.
7. The representative of Chinese Taipei thanked the delegation for its statement and its
willingness to circulate the text.  He further noted that China’s balance-of-payments position was in
an enviably  healthy position and there would seem to be no immediate need to invoke restrictions.He recalled that China still maintained various capital account restrictions and said he would welcome
information on the increased capital flows in and out of China.
8. The representative of China acknowledged that there were different interpretations of the
Protocol as far as the TRM was concerned and considered that views could be exchanged on China’sWT/BOP/R/69
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current and future policies outside the TRM framework.  He noted that full convertibility was a goal
of economic policy but, as to the timing of further liberalization, he was not in a position to say.
9. In conclusion, the Committee took note of the comments made.
10. Under agenda item C, the Committee a dopted its Annual Report (WT/BOP/R/67).WT/BOP/R/69
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Annex 1
Statement by the Head of the Chinese delegation
1. Thank you for giving me the floor for a brief presentation to this Committee on the
implementation of China's commitments with regard to balance-of-payments restrictions within the
framework of paragraph 18 of China's Protocol of Accession.
2. Since China acceded to the WTO nearly one year ago, we have spared no effort in aligning
China's policies and practices with our accession commitments.  China has implemented its
obligations related to foreign exchange administrati on in accordance with the provisions of the WTO
agreement and its commitments made for accession.  Declarations and decisions of the WTO related
to the IMF have also been implemented.  China accepted Article 8 of the IMF's Articles of Agreement
and, since our accession, has not imposed any restrictions on making of transfer and payments for
current account transactions.  Apart from the above, China has so far not resorted to any laws,
regulations or other measures, including any requirements with respect to contractual terms, thatrestrict the availability to any individual or ente rprise of foreign exchange to current international
transactions to an amount related to the foreign ex change inflows attributable to that individual or
enterprise.  China has not taken any BOPs-related trade restrictive measures either.
3. Taking into account the above-mentioned facts that China has completely fulfilled its
obligations in accordance with its commitments, China does not assume necessary to make any
notifications to this Committee and to provide any information before this Committee meeting in this
regard.
4. Prior to this review, some questions were posed to Chine from the EU and the US regarding
BOPs issues.  China welcomes any questions raised in the framework of TRM, attaches importance to
them and will do our utmost to respond to those relevant to our commitments, thus making theCommittee a forum for candid information exchange am ong other terms of reference.  Most of the
questions before us reflected the interest of the members in the conformity of China's BOP regime
with WTO principles and rules.  A closer look, however, has revealed that some of these questions
appear to be requests in nature and go beyond our commitments for WTO accession, which we
believe are the only basis for the review.  Having sa id that, I would still like to give some response to
the relevant questions for transparency and facilitation of mutual understanding.
1. On providing information on balance-of-payments
5. The data on balance-of-payments for the year 2001 was provided to the IMF in the first half
of this year by the Government of China.  This information can be accessed through the website of
State Administration of Foreign Exchange at www.safe.gov.cn if members are interested in it.
2. On disclosure of information of the liberalization of capital account transactions
6. We understand the interest and concern of members on the issue of the liberalization by China
of the capital account transactions.  Full conversion of the RMB is the long-term goal for the reform
of foreign exchange administration system of China.  China has so far partly achieved capital account
convertibility.  With China's reform policy going deeper, the scope of convertible capital account will
increase gradually.  Any modification of the current policy on foreign exchange administration of
capital account transactions will be made known to the public in a timely manner through the Foreign
Trade and Economic Cooperation Gazette  or the State Administration of Foreign Exchange's Gazette .WT/BOP/R/69
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Related information can also be found at the offici al website of the State Administration of Foreign
Exchange as referred to above.
3. On simplification of regulations concerning foreign exchange transactions and foreign
investment
7. Since China's current account convertibility is based upon true transactions, some necessary
review measures are crucial to validate the current account transactions, through which the effective
supervision can be established for the foreign exchange payments under current account.  The laws
and regulations on approval procedures relating to current and capital account transactions are
administered in a transparent way and the texts of these laws and regulations are available for the
public on the official website of the State Administration of Foreign Exchange.
8. After China's accession to the WTO, in light of the overall reform of the administrative
system of approval, a range of measures were ta ken by various government bodies to trim down the
redundant approving procedures which would impede market access or harm fair competition. These
measures are effective and have resulted in a simplified administrative framework.  Moreover, the
market mechanism will gradually substitute those replaceable administrative measures as regulatory
instruments for foreign exchange and investment.
4. On flexibility in the conduction of foreign exchange business
9. Progress has been made since China's accession to provide more flexibility for banks to
engage in the foreign exchange business.  Throug h permitting more banks to provide the service of
the forward sale and purchase of foreign exchange , we provide facilities for market participants
during their operations to avoid exchange rate risks.  The area of the forward sale and purchase of
foreign exchange has been enlarged.  Beside the service of the forward sale and purchase of foreignexchange concerning current account transactions, the banks can also provide the service of the
forward sale and purchase of foreign exchange concerning some capital account transactions.
10. I hope the above response and explanations I made will help members understand the efforts
and achievements made by China for the implementation of its commitments concerning BOPs
measures.  I am convinced that with your able guidance, and with the cooperation form members, thereview can greatly improve the understanding between China and other members.  In conclusion,
allow me to take this opportunity to express our thanks to you and the WTO Secretariat for all the
work you have done for this meeting, including this review.
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