The State Administration of Foreign Exchange (SAFE) took four measures to tighten the management of foreign exchange inflow, in an effort to supervise and guard against the entering of speculative capital to China, according to the Economic Daily.

First, the paper quoted a SAFE official as saying, the administration will gradually establish a framework to balance the inflow and outflow of foreign exchanges,

The framework should satisfy the rational and legal demand of foreign exchanges and simplify their circulation procedures, and, with greater selectivity in the management system, could prevent inflow of speculative foreign exchanges.

Second, in response to the relatively rapid growth of China's foreign debt in recent years, especially short-term debt, SAFE has strengthened supervision of the lending of foreign-funded banks and foreign-funded enterprises and encouraged them to replace short-term debts with long-term ones to improve the term structure of China's foreign debts.

Third, SAFE strengthened auditing during the settlement of foreign exchanges to ensure the authenticity of the settlement. This has proven to be a key measure to prevent possible impact by short-term flow of capital.

For the settlement of more than 200,000 US dollars of capital or foreign exchanges by foreign-funded companies, the companies should be able to prove their actual paying demand by RMB and make clear that the settlement of foreign exchanges would not be used to pay the RMB loans.

Settlement of over 50,000 US dollars of foreign exchanges by individuals is required to be approved by departments in charge of foreign exchanges.

Fourth, China urges the designated banks doing foreign exchange services to perform the supervision duties, so as to gradually shift the government's management of foreign exchange from direct administration to indirect supervision.

It will to a large extent depend on the banks to implement the above-mentioned measures, so SAFE would supervise and urge the banks to fulfill their duties mainly through business guidance and after-action inspections, said the paper.