On June 9, 2016, the State Administration of Foreign Exchange ("SAFE") promulgated the Circular of the State Administration of Foreign Exchange Concerning Reform and Specifying of Policies for the Administration of Foreign Exchange Settlement under Capital Accounts (Hui Fa [2016] Circular 16, the "Circular"). In comparison to the Circular of the State Administration of Foreign Exchange Concerning Reform of the Administrative Approaches to Settlement of Foreign Exchange Capital of Foreign-Invested Enterprises (Hui Fa [2015] Circular 19, the "Circular 19"), the Circular expands the applicable scope of entities and sources of capital for the discretionary settlement of foreign exchange and further clarifies the administrative principles for the use of settled RMB funds. Compared to Circular 19, the Circular further reforms the administration of foreign exchange settlement under capital accounts in the following aspects:
