PBOC Sheds Light on Financial Services Plans for Hainan Free Trade Port

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A senior official from the Chinese central bank has outlined its plans for the positioning of financial services for the development of the Hainan Free Trade Port.

On 1 June the Cen­tral Com­mit­tee of the Chi­nese Com­mu­nist Party and the State Coun­cil jointly is­sued the long-awaited “Hainan Free Trade Port Con­struc­tion Mas­ter Plan” (海南自由贸易港建设总体方案), providing a detailed blueprint for its ambitions to create a tariff-free low tax port in the province.

Pan Gongsheng (潘功胜), deputy-governor of the People’s Bank of China (PBOC) and head of the State Administration of Foreign Exchange (SAFE), fielded questions on the Master Plan at a press conference held on 8 June.

Pan said that the overall financial policy framework for supporting development of the Hainan Free Trade Port primarily encompassed four areas:

  1. Liquidity to facilitate cross-border trade and investment.
  2. Opening up of the financial services sector.
  3. Financial reform and innovation to support growth of the real economy.
  4. Creation of a system for controlling financial risk.

With regard to “financial services for freeing-up and facilitating cross-border trade and financing,” Pan said that:

Cross-border fund liquidity management policies are the most important and the most core financial policy for the Hainan Free Trade Port.

[We] will improve cross-border receipt and payments management policies for new forms of cross-border trade such as offshore trade and transfer trade, and establish a policy environment that will facilitate the operation of a global settlements centre for multi-national corporations.

With regard to cross-border direct investment, we will comprehensively implement a foreign investment management system comprised of “equal treatment with domestic citizens prior to entry” + “a negative list.”

Within the Hainan Free Trade Port we will trial the two systems of qualified foreign limited partnerships (QFLP), and qualified domestic limited liability partnerships (QDLP).

With regard to cross-border financing policies, we will establish new cross-border financing systems within Hainan, and a cross-border financial policy management framework combining trials with trade.

We will implement a macro-prudential administrative policy, and gradually achieve independent cross-border financing for market actors.

Pan said that the province would also “take the lead in implementing polices for expanding the opening of the financial sector of the Hainan Free Trade Port and diversify the Hainan financial sector.”

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