BEIJING, July 10 (Xinhua) -- China has scrapped a
reward scheme set up eight years ago that gave preferential treatment to
domestic companies which earned the largest amounts of foreign currency in the
latest attempt to keep tabs on its soaring trade surplus and foreign exchange
The State Administration of Foreign Exchange and the
Ministry of Commerce on Monday told local foreign exchange and trade departments
in a joint statement to stop grading local companies based upon their previous
year's foreign currency revenue. The regulation took effect on July 1.
The annual grading, which began in 1999, divided
export companies into three categories: honorary foreign exchange earners, the
average and the high risk.
Companies rewarded with distinctions would then enjoy
preferential interest rates for loans, more access to foreign trade development
funds, higher export tax rebates and greater freedom in the management of their
own foreign currency revenue.
They were allowed to keep a maximum of 30 percent of
their annual foreign trade volume in their current accounts, double the figure
allowed for average companies.
Export firms that were deemed "high risk" and failed
to report their foreign exchange revenue correctly to local authorities, or had
been ranked high risk for two consecutive years, had their imports and exports
"The system played a significant role in encouraging
firms to declare their export revenue in full, strengthening foreign exchange
controls and preventing arbitrage," said the joint statement.
"Ending the grading system was a decision made in
line with the current trade situation," it said.
The past ten years has seen China develop from a
country facing foreign exchange shortages to a global trade power with a trade
surplus for the first five months of this year of 85.7 billion U.S. dollars, up
84 percent over the figure of the same period last year.
By the end of March, China's foreign exchange
reserves had surged by 37 percent to exceed 1.2 trillion U.S. dollars, the
The Ministry of Finance imposed extra export tariffs
and cut import duties on June 1 to narrow China's widening trade surplus and
recently issued special bonds for foreign exchange investment to absorb excess