China's Foreign Exchange Regulator Outlines Key Reforms and Risk Controls for H2 2026

The State Administration of Foreign Exchange (SAFE) held its semi-annual work conference on August 1, 2026, setting strategic priorities for the second half of the year. Led by Administrator Zhu Hexin, the regulator committed to expanding foreign exchange institutional openness, including the nationwide rollout of unified local-and-foreign-currency fund management for multinational corporations and new rules on domestic foreign exchange loans. SAFE also emphasized strengthening oversight, advancing revisions to the Regulations on Foreign Exchange Administration, and constructing risk buffers to insulate domestic financial markets from external shocks.

The meeting sets the direction for China's foreign exchange policy through late 2026, balancing cross-border capital facilitation with risk prevention. Expanding fund-pooling programs and encouraging currency hedging will reduce operating costs for multinational firms and foreign trade enterprises, while enhanced monitoring aims to preserve capital account stability amid shifting international monetary cycles.

On August 1, 2026, the State Administration of Foreign Exchange (SAFE) convened its semi-annual work exchange conference via video link to review performance from the first half of the year and outline priority tasks for the second half, according to coverage by Securities Times and Daily Economic News. Party Secretary and Administrator Zhu Hexin presented the central work report. Reviewing H1 2026 performance, SAFE reported that China's foreign exchange market maintained steady operation, characterized by two-way RMB exchange rate flexibility, continuous net capital inflows, and foreign exchange reserves holding above $3.3 trillion. To assist domestic enterprises, SAFE expanded cross-border trade facilitation pilots and granted $5.3 billion in new investment quotas under the Qualified Domestic Institutional Investor (QDII) program. Meanwhile, corporate adoptability of currency risk management tools widened, driving the enterprise foreign exchange hedging ratio to 35.3% in the first half of the year. For the second half of 2026, SAFE pledged to steadily broaden institutional openness across both current and capital accounts. In trade, the authority plans to issue a comprehensive package of measures optimizing current account administration, facilitating foreign exchange settlements for service and intermediate goods trade, and supporting cross-border e-commerce. On capital account reform, SAFE announced it will expand centralized local-and-foreign-currency fund pooling policies for multinational corporations nationwide, issue explicit administration rules on domestic foreign exchange loans, and cautiously broaden financial market connectivity. Alongside opening measures, regulators placed renewed emphasis on risk prevention and regulatory modernization, as reported by People's Daily. SAFE mandated building robust 'breakwaters' against external financial shocks by strengthening monitoring of cross-border capital flows and sharpening macro-prudential management. Furthermore, SAFE plans to accelerate the legislative revision of the Regulations on Foreign Exchange Administration, leverage artificial intelligence and big data to monitor market transactions, and maintain firm enforcement against illegal cross-border financial activities such as underground banking.