The State Administration of Foreign Exchange (SAFE) has launched a new trial initiative for the “high-level opening of cross-border trade and investment.”
SAFE said on 4 January that the State Council had approved the launch of trials in the Shanghai Free Trade Pilot Zone Lingang District; the Guangdong Free Trade Pilot Zone Nansha District, the Hainan Free Trade Port Yangpu Economic Development Zone, and Ningbo’s Beilun District.
The trials encompasses a total of 9 capital account reform measures, 4 current account facilitation measures, as well as requirements in relation to strengthening risk prevention and control and regulatory capabilities.
Capital account reforms include:
- Expanding channels for cross-border investment and financing by enterprises.
- Supporting micro, small and medium-sized tech companies in independently making offshore borrowing within set quotas.
- Undertaking qualified foreign limited partnership (QFLP) and qualified domestic limited partnerships (QDLP) trials.
- Prudential opening up of cross-border asset transfer operations.
- Undertaking multinational company domestic-foreign currency integrated fund pool trials.
- Raising the level of convenience of cross-border investment and financing – foreign-invested enterprises will no longer need to register for the re-investment of funds domestically.
- Direct handling by banks of capital account forex registration for qualified non-financial enterprises.
- Expansion of the capital account revenue fund usage scope.
- Allowing qualified enterprises to independently select cross-border investment and financing currencies.
- Appropriately raising the ceiling on offshore lending for non-financial enterprises.
With regard to the current account, SAFE said that it would “increase the convenience of current account funds and receipts for high-quality enterprises; support banks in optimising new forms of international trade settlement; engage in the orderly expansion of the trade balance netting net settlement enterprise scope, and provide special refunds for trade in goods.”
In order to strengthen risk prevention and regulatory capabilities, SAFE will further improve the forex market’s “macro-prudential + micro-regulatory” framework, as well as strengthen cross-border fund liquidity risk monitoring and early warning systems alongside counter-cyclical adjustments.
State media said that the release of the trial policies will “help to support the orderly free flow of domestic and foreign factors of production; ongoing optimisation of the financial environment, spur the development of the digital economy, employ the leading role of innovation, and drive the transformation and upgrade of industry.”