China's forex pitfalls

According to Article 18 of the Provisional Measures on Administration of Foreign Debts (the "Measures") jointly promulgated by the State Development Planning Commission ("SDPC"), the Ministry of Finance ("MOF") and the State Administration of Foreign Exchange ("SAFE") on January 8, 2003, which became effective from March 1, 2003, the sum of cumulative amount of "medium and long-term", and balance of "short term", foreign exchange debts borrowed by a given Foreign Investment Enterprise ("FIE") is subject to, and cannot exceed, the difference between the amount of total investment and registered capital of the FIE. This difference is often referred to as "the foreign debt quota".