China to grant multinationals greater leeway in managing cross-border funds
Published: May 19, 2023 09:45 PM
Shenzhen Photo: VCG

Shenzhen Photo: VCG

China on Friday announced that it will carry out pilot programs for centralized operation of cross-border funds in local and foreign currencies for multinational companies, granting firms greater freedom in managing cross-border funds.

The move represents another step taken by Chinese officials to continuously improve business environment for foreign companies and will help attract more global investors, analysts noted. 

The People's Bank of China (PBC), the country's central bank, and the State Administration of Foreign Exchange (SAFE) said in a statement that they have decided to carry out pilot projects in Beijing, Guangdong and Shenzhen to optimize and upgrade policies on centralized operation and management of cross-border funds for multinational companies in local and foreign currencies.

As part of the pilot projects, existing policy requirements related to the centralized operation of cross-border funds of multinational corporations will be optimized and integrated to benefit more enterprises.

In addition, multinationals will be granted greater freedom, as they are allowed to decide on their own the proportion of foreign debt and overseas lending according to macro-prudential principles.

"China's optimization of the management of cross-border funds of multinational firms indicates that the country is actively opening its doors to welcome the inflow of financial and industrial capital," Dong Dengxin, director of the Finance and Securities Institute of the Wuhan University of Science and Technology, told the Global Times on Friday.

Dong noted that the three pilot locations are the country's major financial centers, where capital activities are concentrated and many multinationals are based. "The optimization of related policies will provide multinational companies with a more relaxed environment for capital flows, which will better attract foreign investment," Dong said.

In addition, the PBC and the SAFE will also support multinational corporations in carrying out centralized operation of cross-border funds in yuan and simplify the filing process and the review of materials related to the use of funds, according to the statement.

Going forward, the PBC and the SAFE will continuously deepen reform and opening-up in the field of foreign exchange, further enhance the facilitation of cross-border trade, investment and fundraising, and constantly optimize the policies related to the centralized operation and management of cross-border funds of multinational companies, in a bid to better serve the high-quality development of the real economy, read the announcement.

Dong said that such moves will also further help boost the internationalization of the Chinese yuan.

Friday's move came as China has rolled out multiple measures to continuously improve the investment and business environment for foreign companies, contrary to claims hyped by foreign media outlets and pundits to smear China's business environment. 

In April, Meng Wei, a spokesperson of the National Development and Reform Commission, said at a press conference that the country will appropriately shorten the negative list for foreign investment, as part of efforts to promote high-level opening-up.

Special working mechanisms for major foreign investment projects will be further explored, while development zones will be better leveraged to attract overseas investors and better services will be provided, Meng said.

Global Times