What benefits will the policy of opening up cross-border trade and investment bring to enterprises?

The State Administration of Foreign Exchange has recently issued notices, launching 8 pilot expansion policies and 9 national promotion policies to further promote the facilitation of cross-border trade and investment, making "bringing in" and "going out" more convenient.

The Central Financial Work Conference pointed out that we should adhere to the equal emphasis on "bringing in" and "going out", steadily expand institutional openness in the financial field, enhance cross-border investment and financing facilitation, and attract more foreign financial institutions and long-term capital to China for business development.

"Based on an in-depth evaluation of the research results on high-level opening-up pilot projects for cross-border trade and investment, some pilot policies already implemented in the early stages, and integrated management of cross-border domestic and foreign currencies, we have formulated a package of implementable and promotable policy measures."

Pilot projects with larger steps first——

The high-level opening-up pilot program for cross-border trade and investment is a high-level opening-up policy launched by the State Administration of Foreign Exchange in 2022, aimed at promoting the facilitation of cross-border trade and investment.

The person in charge of relevant departments of the State Administration of Foreign Exchange introduced that the pilot program has achieved good results, effectively preventing and controlling risks while effectively promoting the development of foreign-related economy in the pilot area.

The pilot program for expanding high-level opening up of cross-border trade and investment will extend from four regions to Shanghai, Jiangsu Province, Guangdong Province (including Shenzhen), Beijing, Zhejiang Province (including Ningbo), and Hainan Province as a whole.

When high-quality enterprises in pilot areas conduct specific current account foreign exchange business with the same overseas counterparty, prudent and compliant banks in pilot areas can handle net settlement of differences for high-quality enterprises while ensuring controllable risks; Prudent and compliant banks in the pilot areas can directly handle special return of goods trade for high-quality pilot enterprises, and enterprises do not need to register with the foreign exchange bureau in advance; Non financial enterprises in pilot areas that meet the conditions for borrowing foreign debt and going public overseas can directly handle relevant registration procedures at the bank

The pilot policy measures for this expansion include 5 current account policy measures and 3 capital account policy measures. These policy measures are conducive to reducing the transaction costs of foreign-related economic activities of enterprises, improving the efficiency of capital turnover, and providing more convenient conditions for cross-border trade and investment and financing activities of enterprises.

Stable and mature promotion nationwide——

Among the 9 policies promoted nationwide, some are pilot policies in the early stage, while others are further extensions of the original policies.

For example, the policy of expanding cross-border financing facilitation pilot this time is based on the cross-border financing facilitation pilot policy previously introduced for high-tech enterprises and "specialized, refined, special, and new" enterprises, expanding from the 17 provinces (cities) previously pilot to the whole country, including technology-based small and medium-sized enterprises as the main body, and increasing the facilitation quota of the previous 17 provinces (cities) to an equivalent of 10 million US dollars, The facilitation quota for other regions is tentatively set at an equivalent of 5 million US dollars.

This policy measure can better utilize both domestic and international markets and resources, expand more financing channels and financial resources, and provide a positive solution for solving the financing pain points of technology-based small and medium-sized enterprises.

In recent years, the State Administration of Foreign Exchange has continued to simplify business procedures and processes in supporting foreign exchange facilitation measures for foreign investment in China, facilitating foreign-invested enterprises to handle capital related businesses. This time, in order to further facilitate the foreign exchange receipts and payments of foreign-invested enterprises, the original asset realization account has been adjusted to a capital account settlement account, and the funds in the account can be used for independent foreign exchange settlement.

These funds mainly include foreign direct investment and domestic reinvestment, domestic equity transferors receiving equity transfer consideration funds for foreign direct investment, and foreign exchange funds raised by domestic enterprises going public overseas. This will greatly enhance the convenience level of foreign investment and reinvestment in China, improve the financial efficiency of foreign investment in China, and provide effective support for foreign investment to continue to deeply cultivate the Chinese market and expand investment in China.

Coordinate financial openness and security. "The State Administration of Foreign Exchange has always adhered to the pilot and integrated promotion of reform and opening up and risk prevention and control, supported the construction of a new system of a higher-level open economy, and explored a 'more open and safer' foreign exchange management model," said the person in charge of the State Administration of Foreign Exchange.

The person in charge stated that the State Administration of Foreign Exchange will continue to increase the supply of foreign exchange facilitation policies through measures such as expanding pilot programs and nationwide promotion, with a focus on supporting technological innovation and small and medium-sized enterprises to optimize foreign exchange services, continuously improve the convenience level of operating entities in handling cross-border trade and investment and financing business in compliance, effectively stimulate market vitality, and better serve the high-quality development of the real economy.