Fresh trials set to boost real economy

SAFE to deepen reform, opening-up in forex sector and cross-border trade

China's new trials of cross-border trade and investment opening-up measures are expected to facilitate the operation of real-economy enterprises and bring more business opportunities to overseas financial institutions, experts said on Wednesday.

"The new pilot programs have marked the nation's latest step to open up the capital account steadily and prudently," said Liu Chunsheng, an associate professor of international trade at the Central University of Finance and Economics in Beijing.

"They are set to serve the development of real-economy businesses, especially small trade companies, by diversifying their financing channels and improving their operational efficiency," Liu said.

Meanwhile, the pilot programs, which support small tech firms to borrow from overseas foreign debt within a certain quota, will also help overseas financial institutions access more domestic business clients with buoyant demand for fundraising, he added.

The comments came after the State Administration of Foreign Exchange said on Tuesday that it has launched pilot opening-up schemes focused on facilitating cross-border trade and investment in four regions, including the China (Shanghai) Pilot Free Trade Zone Lin-gang Special Area.

The other pilot regions are Nansha district in the China (Guangdong) Pilot Free Trade Zone, Yangpu economic development zone in Hainan province and Beilun district, Ningbo, Zhejiang province, the administration said in a statement.

The trials are aimed at widening the channels of cross-border financing and investment for businesses and streamlining relevant procedures, while strengthening risk prevention and regulatory capacity to fit in the higher level of opening-up in the pilot regions, SAFE said.

Specifically, the trials will support medium, small and micro-sized high-tech enterprises to borrow money from overseas autonomously within a certain quota, waive administrative registrations of onshore reinvestment by foreign-invested businesses, and allow multinationals to integrate local and foreign currencies into one cash pool.

The pilot regions will also test the programs of Qualified Foreign Limited Partner and Qualified Domestic Limited Partner－pilot schemes that allow cross-border private equity investment.

Deng Yu, a senior researcher at Bank of Communications' Financial Research Center, said the launch of the pilot programs signals that China's opening-up in the field of cross-border trade and investment may speed up this year, though the nation is expected to retain an overall prudent pace in pushing capital account opening-up.

The trials will help accumulate necessary experience for wider capital account opening-up and further internationalization of the renminbi, contributing to the nation's pursuit of high-standard opening-up in the 14th Five-Year Plan period (2021-25), Deng said.

SAFE vowed in the statement that it will continue to deepen reform and opening-up in the foreign exchange sector, liberalize and facilitate cross-border trade and investment, improve the business environment and serve the development of the real economy.

At its annual conference that set out key tasks for 2022, the People's Bank of China, the country's central bank, also decided that it will pursue improvements in foreign exchange services and management, enhance capital account convertibility in an orderly manner and steadily internationalize the renminbi.