Beijing has revised its foreign-exchange control scheme to allow small and medium-sized mainland firms to retain part of their foreign-currency earnings. The policy change, to take effect at the start of next month, seeks to create a level playing field between small and medium-sized Chinese export businesses and their larger and foreign-funded counterparts. The revised scheme will also cut foreign-exchange control red-tape for all trade-oriented firms. 'It is part of our effort to streamline procedures for businesses and help them improve their export competitiveness,' a State Administration of Foreign Exchange (Safe) official said. Only foreign-funded firms and large Chinese enterprises are at present allowed to keep foreign-currency revenue from exports and trade as working capital. Smaller Chinese firms have been obliged to sell their foreign-currency earnings back to the state for yuan as part of Beijing's strict foreign exchange control scheme. The Safe official, who described the old scheme as having inconvenienced smaller Chinese firms, said the relaxation was prompted in part by China's fast-growing foreign-currency reserves, which had ballooned to US$195.76 billion by the end of September - a 22.28 per cent year-on-year surge. The relaxation also follows an August trade ministry rule granting direct import and export rights to non state-owned and smaller firms. The amended rules, outlined in Beijing's China Securities newspaper yesterday, will grant the right to Chinese-funded businesses with annual foreign-currency export revenue above US$2 million and minimum annual foreign-currency expenditure of US$200,000. Qualified businesses would also need to possess direct import and export authority, maintain good financial standing and abide by foreign-exchange regulations. The threshold has been lowered from a minimum annual trading volume of US$30 million and registered capital of at least 10 million yuan (about HK$9.37 million) for trading firms. The existing requirements for Chinese-funded manufacturers to open a so-called foreign-currency clearance account with Safe include a trading volume of at least US$10 million and registered capital in excess of 30 million yuan.