| 国家外汇管理局 Guójiā wàihuì guǎnlǐ jú | |
 SAFE head office, part of thePeople's Bank of China complex onBeijing Financial Street | |
| Agency overview | |
|---|---|
| Formed | June 1979; 46 years ago (1979-06) |
| Jurisdiction | China |
| Headquarters | Beijing |
| Agency executive | |
| Parent agency | People's Bank of China |
| Child agency | |
| Website | www |
| State Administration of Foreign Exchange | |||||||
|---|---|---|---|---|---|---|---|
| Simplified Chinese | 国家外汇管理局 | ||||||
| Traditional Chinese | 國家外匯管理局 | ||||||
| |||||||
TheState Administration of Foreign Exchange (SAFE) of thePeople's Republic of China is an administrative agency under theState Council tasked with drafting rules and regulations governingforeign exchange market activities, and managing the stateforeign-exchange reserves, which at the end of December 2016 stood at $3.01trillion for thePeople's Bank of China. The current director isZhu Hexin.
In 1979, theState Council approved thePeople's Bank of China's Proposal on the Reform of China's Banking System.[1]: 152 This resulted in the establishment of the State Central Administration of Foreign Exchange (SCAFE), which managed China's then-small amount of foreign reserves.[1]: 152 Although under the authority of the State Council, SCAFE was administered by the People's Bank of China.[1]: 152 After the State Council reorganization in 1983, SCAFE became a subsidiary of the People's Bank of China and became known by its current name, the State Administration of Foreign Exchange.[1]: 152 In 1988, SAFE was elevated to report directly to the State Council, but remained under People's Bank of China's management.[1]: 152
SAFE has a vice-ministry level position within the Chinese bureaucracy.[1]: 153 Historically, its lead executive has also generally held the position of vice governor of the People's Bank of China.[1]: 153
SAFE is the foreign exchange management administrative body of the People's Bank of China.[1]: 5
SAFE's existence and role were initially closely guarded secrets, its subsidiaries were minor, but the funds under management have increased significantly in recent years. They were responsible for running SAFE's portfolio across the various time zones, replicating the investments of head office in Beijing.[2]
SAFE created and controlled theCentral Huijin Investment, but in September 2007, it sold Central Huijin to the newly formedsovereign wealth fund,China Investment Corporation (CIC).[1]: 136
With the burgeoning of China's reserves and amidst increasing rivalry between state agencies, there are signs of growing independence of and competition between the subsidiaries.[2]
Since CIC entered global markets shortly before the2008 financial crisis, its initial performance was lackluster.[1]: 14 This in turn created a political opening for SAFE to expand the sovereign funds under its jurisdiction, which it did in 2013.[1]: 14
SAFE's sovereign funds invest part of China's foreign exchange reserves in investment vehicles including infrastructure projects, real estate, private equity, and strategic resources.[1]: 30 SAFE's sovereign funds invest in both foreign and domestic Chinese companies.[1]: 14 It has indirectly contributed to the financing of theBelt and Road Initiative,[1]: 14 including through its 65% ownership of theSilk Road Fund.[1]: 161 It contributed some of the Fund's initial capital, along withChina Development Bank, CIC, andExport-Import Bank of China.[3]: 221
The SAFE Co-Financing Office extends foreign exchange entrusted loans to qualified Chinese companies seeking to engage in foreign investment, merger, or acquisition.[1]: 24–27 SAFE provides preferential loan access to the strategically importantstate-owned enterprises of theState-Owned Assets Supervision and Administration Commission (SASAC).[1]: 172
The current Administrator of SAFE is Zhu Hexin. Zheng Wei, Li Hongyan and Xu Zhibin are Deputy Administrators.[4]
| Name | Chinese name | Took office | Left office | Ref. |
|---|---|---|---|---|
| Bu Ming | 卜明 | June 1979 | April 1982 | |
| Tang Gengyao | 唐赓尧 | April 1982 | December 1990 | |
| Yin Jieyan | 殷介炎 | December 1990 | January 1994 | |
| Zhu Xiaohua | 朱小华 | January 1994 | September 1995 | |
| Zhou Xiaochuan | 周小川 | September 1995 | April 1998 | |
| Wu Xiaoling | 吴晓灵 | April 1998 | October 1998 | |
| Li Fuxiang | 李福祥 | October 1998 | May 2000 | |
| Wu Xiaoling | 吴晓灵 | May 2000 | April 2001 | |
| Guo Shuqing | 郭树清 | April 2001 | March 2005 | |
| Hu Xiaolian | 胡晓炼 | March 2005 | July 2009 | |
| Yi Gang | 易纲 | 17 July 2009 | 12 January 2016 | |
| Pan Gongsheng | 潘功胜 | 12 January 2016 | 24 November 2023 | |
| Zhu Hexin | 朱鹤新 | 24 November 2023 | Incumbent |
The magnitude of China's reserves is disclosed, but not its composition. At the end of 2006, approximately 70 percent of the reserves were in U.S. dollar assets, 20 per cent ineuros and 10 per cent in other currencies, according to economistBrad Setser. Most of China's currency reserves are invested in high grade U.S.-dollar-denominated debt, such asU.S. Treasuries, though as early as 2007 it was estimated that SAFE held $100 billion worth of U.S.mortgage-backed securities, hoping to achieve higher returns than those on U.S. Treasuries.[9]
"The Hong Kong subsidiary is notably taking more risk in managing reserves," according to an informed source.[2] The Financial Times reported on 4 January 2008 that the Hong Kong branch had bought stakes of less than 1 percent in bothCommonwealth Bank of Australia andAustralia and New Zealand Banking Group, respectively Australia's second and third-biggest lender by assets, over the preceding two months. The ANZ purchase has been confirmed by the bank.[10] SAFE also invested inBP[11] andTotal[12] in April 2008.
SAFE owns 65 percent of the Silk Road Fund.[1]: 161
SAFE owns the company Buttonwood Investment Holding Company Ltd.[13]: 85 As of 2019, Buttonwood is the majority owner ofExport-Import Bank of China and is an owner ofChina Development Bank, which are two of China'spolicy banks.[13]: 85
As the reserves continue to grow, the central bank is aiming to boost investment returns on its foreign-exchange holdings by making somewhat riskier but higher-yielding investments. Pronouncements of Chinese officials are consequently closely scrutinised;[14] each trade is reportedly up to US$1 billion.[2] As part of diversification in 2008, SAFE acquired small stakes in dozens of companies including British companiesRio Tinto,Royal Dutch Shell,BP,Barclays,Tesco andRBS.[15]
Brad Setser, speaking in March 2009 said losses as a result of this diversification at the peak of the market "would exceed US$80 billion."[15]
Brad Setser said: "SAFE has built up one of the largest US equity portfolios of any foreign government entity investing abroad, including the major sovereign wealth funds....It appears SAFE began diversifying into equities early in 2007 and, rather than being deterred by the subprime crisis, it continued to buy."[16]
On March 23, 2009, deputy governor of China's central bank,Hu Xiaolian told reporter:"China will continue investing in U.S. government bonds while paying close attention to possible fluctuations in the value of those assets.... Investing in U.S. Treasury bonds is an important component of China's foreign currency reserve investments..."[17]
SAFE has branches and offices in all provinces, autonomous regions and municipalities. As of 2005, it had 36 branch offices, 298 central sub-branches and 508 sub-branches.
It has branches inHong Kong,Singapore,London andNew York.[2]
The Hong Kong office (华安公司SAFE Investment Company Ltd) was set up just in June 1997, before thehandover of Hong Kong, and served an important role in defending the value of theRenminbi andHong Kong dollar'speg to theUS dollar against international speculators. It was a minor outpost for SAFE for several years, with only about $20bn in funds under management.[2]
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