The central bank set a limit on the amount companies and non-banking financial institutions inside the zone can borrow based on their registered capital and a government-set parameter, the Shanghai branch of PBOC said in a statement on its website today. The money can only be used for operations and project construction within the zone or overseas, the statement said.
China opened the free-trade zone in September as a testing ground for reforms, with the Communist Party leadership pledging in November to accelerate the convertibility of the yuan under the capital account. The policies announced today are built on the central bank’s opinion released in December.
“The new policy measures provide more detailed guidance for financial institutions to serve customers in China (Shanghai) Pilot Free Trade Zone, particularly relating to technical and operational aspects of RMB cross-border transactions,” Helen Wong, Chief Executive Officer of HSBC Holdings Plc (HSBA)’s China unit, said in a statement. “China continues to rise as a world economic powerhouse, and the RMB is fast developing into a global currency for trade and investment.”
Industrial & Commercial Bank of China Ltd., the nation’s largest lender, said in a statement its Singapore branch lent 170 million yuan ($28 million) to two companies in the free-trade zone after receiving the rules yesterday.
To contact the editor responsible for this story: Chitra Somayaji at firstname.lastname@example.org