General

Recently, the People's Bank of China and the State Administration of Foreign Exchange announced that in order to enhance the linkage effect of domestic and international trade markets and resources, and better support the development of the headquarters economy, the People's Bank of China and the State Administration of Foreign Exchange have decided to carry out pilot projects in Beijing, Guangdong, and Shenzhen to optimize and upgrade the policy of centralized operation and management of domestic and foreign currency cross-border funds for cross-border companies.

Analysis shows that the optimization and upgrading of the cross-border fund centralized operation and management policy has made a lot of innovations in foreign RMB business, related fund operation freedom, collection ratio, and process optimization, which will greatly relax the restrictions on the use of cross-border funds, give cross-border enterprises a certain degree of freedom, and facilitate multinational companies to operate domestically and internationally.

Responding to industry demands and continuously upgrading policies

Multinational corporations are important participants and promoters of economic globalization, playing a crucial role in cross-border capital flows. Over the years, multinational corporations have maintained a stable investment scale in China, continuously optimized their investment structure, improved their business performance, and strengthened their confidence in investing in China. Public data shows that in 2021, the actual amount of foreign investment used by China's manufacturing industry reached 33.73 billion US dollars, a year-on-year increase of 8.8%, which is 1.1 percentage points higher than the global growth rate of manufacturing FDI. From January to April this year, China's actual use of foreign investment reached 499.46 billion yuan, attracting foreign investment and continuing a steady growth trend, promoting the development of international trade.

With the deepening of China's opening up to the outside world, Chinese enterprises are increasingly growing and expanding in the domestic market competition, and are beginning to enter the world. A group of outstanding Chinese international trade enterprises, including PetroChina, COSCO, Changhong, ZTE, Huawei, Haier, etc., have established branches overseas and started implementing international operations and operations in procurement, sales, and fund management.

With the development and growth of multinational corporations' investment in China and the acceleration of Chinese enterprises' "going global", the policy demands of multinational corporations in the use of cross-border funds have correspondingly increased. In response to the above demands, the State Administration of Foreign Exchange issued the "Regulations on the Centralized Operation and Management of Cross border Funds of Multinational Companies" in 2019, implementing the integrated management of domestic and foreign currencies, significantly simplifying the registration procedures for foreign debt and overseas loans of cross-border fund pool business of multinational companies, allowing multinational companies to carry out pilot projects to facilitate income settlement and payment of capital projects, moderately increasing the amount of foreign debt concentration, promoting the development of headquarters economy and optimizing the allocation of foreign exchange resources for multinational companies Improve the efficiency of using foreign exchange funds.

Afterwards, the People's Bank of China and the State Administration of Foreign Exchange launched the first batch of pilot projects for the integration of domestic and foreign currency capital pools for multinational corporations in Beijing and Shenzhen in March 2021; In July 2022, the two departments decided to carry out the second batch of pilot projects for the integration of domestic and foreign currency funds for multinational corporations in Shanghai, Guangdong, Beijing, Shenzhen, Qingdao, Ningbo, and other places.

The two departments are conducting pilot projects in Beijing, Guangdong, and Shenzhen to optimize and upgrade the centralized operation and management policies for cross-border funds in both domestic and foreign currencies of multinational corporations. This is another important measure for the continuous opening of domestic foreign exchange regulation. "Wei Hongxu, a researcher at Anbang Think Tank, told reporters that this move will greatly relax the restrictions on the use of cross-border funds, give cross-border enterprises a certain degree of freedom, facilitate their operations both domestically and internationally, reduce the time and policy costs of cross-border fund use, and have a positive effect on the gradual opening of domestic capital accounts, It has also continuously released policy signals to encourage foreign-funded enterprises to operate and develop in China.

Facilitate the use of funds and facilitate cross-border operations

The reporter noticed that the main content of this optimization and upgrading policy includes four parts: optimizing and integrating the relevant policy requirements for the centralized operation of cross-border funds of existing multinational corporations to benefit more enterprises; Increase the freedom of cross-border fund operation for enterprises, allowing multinational corporations to determine the collection ratio of foreign debts and overseas loans based on macro prudential principles; Support multinational corporations to carry out cross-border fund centralized operation business in RMB; Simplify the filing process and review materials related to fund use.

Chen Jia, a researcher at the International Monetary Research Institute of Renmin University of China, told reporters: "This optimization and upgrading policy is more specific and clear, with a wider and wider scope of opening up, which is more conducive to the collection of funds for cross-border operations of excellent and compliant foreign-funded enterprises, further improving the convenience level of cross-border international trade and foreign investment and financing for foreign-funded enterprises.

Specifically, Chen Jia analyzed that compared to the 2022 policy of integrating domestic and foreign currency fund pools, the innovation of this optimization and upgrading policy is mainly reflected in two aspects: firstly, the pilot area and the number of enterprises have comprehensively increased. This pilot will focus more on opening up to the entire jurisdiction under the condition of expanding its scope. At the same time, the new pilot policy has moderately lowered the entry threshold, allowing more high-quality foreign-funded enterprises to participate and enjoy various conveniences of China's high-level opening up new pattern.

The second is to have more depth and breadth in business innovation. Not only have multiple measures been taken to further increase the convenience of cross-border RMB receipts and payments for foreign enterprises, but also on the basis of allowing qualified foreign domestic companies to handle centralized collection and payment services in the early stage, further opening up and promoting their agency functions to play a role, and accelerating the innovation of micro entities in the field of domestic and foreign currency fund collection for overseas members. "Chen Jia said.

Wei Hongxu believes that there are still strict regulations in China regarding the cross-border flow of funds, and this optimization and upgrade is worth looking forward to some new changes compared to the past. For example, the foreign debt limit and overseas loan limit of subsidiaries of multinational corporations can be centrally used, and supervision within the limit will be relaxed. These regulations will reduce the cost and time of cross-border capital transactions for multinational corporations, facilitate their cross-border operations, and also help multinational corporations arrange cross-border financing reasonably to improve the efficiency of fund utilization. At the same time, the new pilot program will help cross-border use of the RMB, facilitate China's capital outflow, and promote the development of international trade