China announced on Wednesday new policy measures to improve the pilot program for integrated domestic and foreign currency cash pools, providing multinationals operating in China with greater flexibility and efficiency in managing their funds.
The new measures, issued by the People's Bank of China and the State Administration of Foreign Exchange, will apply to 10 regions, including provincial-level regions of Shanghai, Beijing, Jiangsu, Zhejiang, Guangdong, Hainan and Shaanxi, coupled with the cities of Ningbo, Qingdao and Shenzhen.
Under the new policies, multinationals are allowed to conduct cross-currency lending among their domestic subsidiaries — where the funds lent by one subsidiary and the funds borrowed by another are in different currencies — to facilitate cross-border payments under current account activities and thus reduce financing costs, SAFE said.
The administrative process for setting up cash pools and managing cross-border payments has been simplified to enable faster transactions, SAFE said.
Multinationals in the pilot program can also autonomously decide the ratio of foreign debt and overseas lending in their cash pools under macroprudential guidelines, giving them more flexibility in cross-border fund management.
The move is part of the country's broader efforts to deepen high-standard opening-up, with the PBOC and SAFE planning to further optimize relevant policies to offer multinationals even more convenient solutions for cross-border financing and investment.
