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In the Shanghai FTZ, financial institutions have been actively making innovative cross-border solutions and have introduced a slew of services that enjoy great popularity among their enterprise clients, according to the Shanghai head office of the People’s Bank of China.
Innovation in the financial sector has been at the forefront of China (Shanghai) Pilot Free Trade Zone reforms over the past five years, and measures such as free trade accounts have been great facilitators for real economic development.
Launched by China’s central bank in 2014, the free trade account for Shanghai’s free trade zone functions as an instrument to test the country’s capital account conversion in a risk-controlled environment.
Thanks to this innovation among China’s broader financial reforms, companies registered in the area will be able to use the account for financing, investment and carry out other cross-border transactions..
So far, the Shanghai FTZ has seen more than 72,000 FT accounts opened by over 38,000 enterprises both at home and abroad. The outstanding cross-border yuan settlement within the zone has reached 25.9 trillion yuan (US$3.73 trillion), the banking regulator said.
The new cash-pooling structure is regarded as a useful tool for companies to manage their overseas portfolios. Nearly 800 multinational companies have used this two-way cross-border yuan capital pool service. The free trade account system has also brought benefits to technological startups and enterprises engaged in the Belt and Road Initiative in their cross-border business.
Authorities added that while great advances have been made in financial reforms, they have managed risks in an innovative way and businesses are sound.
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