SAFE Expands Trials for Cross-border Financing by Small Tech Firms to Shanghai and Hubei

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The State Administration of Foreign Exchange (SAFE) has flagged the expansion of trials for facilitating foreign borrowing by small-scale Chinese tech companies.

SAFE said to Financial News that it would expand foreign debt facilitation trials (外债便利化试) from Beijing to Shanghai, Hubei province, Guangdong province and Shenzhen.

The trials will now encompass the Shanghai free trade pilot zone, the Hubei free trade pilot zone and the Wuhan Donghu Hi-tech Development Zone, as well as Guangdong and Shenzhen in the Greater Bay Area.

According to SAFE the goal of the trial expansion will be to “further facilitate micro, small and medium-sized hi-tech companies making full use of domestic and offshore markets.”

In 2018 SAFE launched foreign debt facilitation trials in Beijing’s Zhongguancun National Innovation Demonstration Park, allowing qualified micro, small and medium-sized enterprises (MSME’s) to borrow abroad within set quotas.

SAFE says the trials helped MSME’s to to reduce their financing costs by tapping into overseas sources of funds.

In 2016 the People’s Bank of China (PBOC) and SAFE established the “Full Process Cross-border Financing Macro-prudential Administrative Policy Framework,” as well as cancelled the advanced review and approvals for foreign borrowing, in order to greatly facilitate cross-border financing by domestic institutions.

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