SCIO briefing on the progress of Hainan Free Trade Port policies

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Hainan Broadcasting Group:

What progress has the PBC and the SAFE made in promoting the construction of the Hainan FTP and facilitating the free cross-border capital flow since the release of the Master Plan for the Construction of the Hainan Free Trade Port last year? Thank you.

Wang Chunying:

Thanks for your question. It is stated in the master plan that "we should stick to the principle that finance serves the real economy; focus on trade and investment liberalization and facilitation to open capital accounts in phases; and promote the Hainan FTP and cross-border flow of funds in an orderly manner." According to the schedule laid out in the master plan, the PBC and the SAFE have adopted policies on the liberalization and facilitation of cross-border capital flow to support the development of the Hainan FTP. To sum up, the policies and their progress are mainly as follows:

First, the policy to promote the development of the accounting system. We support Hainan to launch free trade accounts, also known as FT accounts, to support enterprises' ability to handle local and foreign currency settlement of cross-border transactions and overseas financing business. The funds in FT accounts can be exchanged in the offshore market. In addition, we piloted the bank settlement account system in some regions, combining local currency with foreign currencies. Last September, Hainan was included as a pilot region and preparations for its launch sometime in the near future have been made.

Second, the policy to raise the facilitation of RMB settlement for cross-border investments. In September 2019, we began to support the offer of RMB settlement of cross-border goods and service trade at the banks in Hainan, upon the cross-border receipt and payment instructions submitted by the high-quality enterprises in the region. Additionally, we made the use of RMB capital account income more convenient within China. Last December, the PBC and the SAFE, together with the National Development and Reform Commission, the Ministry of Commerce, the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), and the China Banking and Insurance Regulatory Commission (CBIRC), jointly released a notice covering 15 articles in five aspects to further improve cross-border RMB policies. These policies mainly focus on the needs of the real economy, ways to promote higher levels of trade and investment of RMB settlement facilitation, means to further simplify the cross-border RMB settlement process, improving cross-border RMB investment and financing management, and facilitating the RMB receipt and payment under the current individual accounts and foreign institutions' use of RMB bank settlement accounts. Last year, cross-border RBM settlements in Hainan increased by nearly 50%.

Third, the policy for cross-border investment management in response to new forms of market demand, including implementation of the foreign investment management system of "pre-entry national treatment" plus the "negative list" in terms of foreign investment management. The exchange business related to foreign investment can be handled at the banks. The SAFE sets no limits on foreign investment not included in the negative list. Direct investments can basically be exchanged. Last December, the SAFE approved the launch of a pilot foreign investment by qualified domestic limited partners (QDLP) at the Hainan FTP and granted a pilot investment quota of $5 billion. At present, the Hainan branch of the SAFE has formulated the QDLP pilot management measures and is organizing and advancing specific pilot work.

Fourth, the policy of improving cross-border investment and financing exchange management. This policy was adopted mainly to meet the needs of investment and financing in Hainan's real economy, supporting the development of Hainan's specialty and relatively competitive industries and giving further priority support to overseas listings. Last September, we spearheaded a pilot reform of overseas listing registration for domestic companies in Hainan, which improves related registration procedures and allows companies registered in Hainan to go directly through overseas listing registration procedures at banks.

In general, the PBC and the SAFE actively implemented the master plan and specific planning work. We gave full play to the role of the Hainan FTP as an opening pilot zone at the forefront of reform. The implementation of pilot policies has been timely and effective and the policy support, including reducing processing hours and costs to enterprises, well meet the needs of Hainan's market players.

Recently, the State Council, the PBC, and the SAFE, together with the CBIRC and the China Securities Regulatory Commission (CSRC), jointly released the Guidelines for Financial Support for Hainan's Comprehensively Deepening Reform and Opening Up. The guidelines state the general principles and policy measures in six aspects on financial support for comprehensively deepening reform and opening up. These policy measures mainly include enhancing the convertibility of RMB to support the liberalization and facilitation of cross-border trade, investment, and financing; improving Hainan's financial market system; expanding the opening up of Hainan's financial industry; boosting the innovation of financial products and services; improving financial services; and strengthening financial regulation to prevent and defuse financial risks. The objective of these guidelines aims to promote the establishment of financial policies and an institutional framework suitable for the Hainan FTP and to consolidate the financial foundation of Hainan.

Next, the PBC and the SAFE will further follow the Master Plan for the Construction of the Hainan Free Trade Port to arrange key tasks step by step in phases by 2025; implement the guideline that finance serves real economy; continue to improve related policies while keeping them in line with actual economic needs and reducing risks; and further expand financial support for the reform and opening up of the Hainan FTP to promote the free and facilitated orderly flow of overseas funds. Recently, we are stepping up efforts to promote a pilot program for the higher-level opening up of cross-border trade and investment to boost innovation in cross-border investment and financial systems; improve the efficiency of market-based resource allocation; and strive to stimulate market vitality to better serve the new development paradigm. This is my response to your question. Thank you.

Chen Wenjun:

As time is limited today, our press conference ends here. Thanks to all speakers and friends from the media. Goodbye!

Translated and edited by Wang Yiming, Wang Wei, Yuan Fang, Wang Qian, Liu Jianing, Chen Xia, Lin Liyao, Fan Junmei, Zhang Tingting, Li Huiru, Cui Can, Liu Qiang, Duan Yaying, Zhang Rui, David Ball, Jay Birbeck, and Tom Arnstein. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.

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