A truck driver walks in the Yangshan Deep Water Port, part of the China (Shanghai) Pilot Free Trade Zone. [Photo/Agencies] 

The Shanghai Branch of the State Administration of Foreign Exchange recently issued version 4.0 of enforcement regulation further promoting pilot reform of foreign exchange management in the China (Shanghai) Pilot Free Trade Zone.

It added new momentum for Shanghai FTZ in fields of streamline administration and institute decentralization, trade and investment facilitation, headquarters economic development, and offshore financial services.

According to the Shanghai Branch of the State Administration of Foreign Exchange, the enforcement regulation not only reflected independent innovation of the Shanghai market, but also covered exploration experience of other FTZs and special economic regions.

Streamline administration and institute decentralization will be intensified with reduced market cost. Online administrative license application will be offered, including directory registration of import and export companies, and registration of equity incentive plans of domestic individuals participating in overseas listed companies. Registration of external debt cancellation will be transferred to banks with no processing time limit.

The trade investment and financing facilitation degree will be continuously enhanced with macro-prudential capital flow management established and improved. Capital account foreign exchange income payment facilitation will be piloted in the region to support authentic and compliant domestic equity investment of non-investment foreign-funded enterprises. Those with foreign borrowing based on the difference between the total amount of investment and the registered capital can be adjusted to the macro-prudential management model for cross-border financing, with permission of inconformity among reasonable financing withdrawal currency, repayment currency and contract currency.

The pilot of capital account foreign exchange income payment facilitation refers that honest and high-quality enterprises meeting requirements can directly handle settlement and payment of capital account income in banks relying on the order for payment of funds from foreign exchange account under capital account. Document materials proving the authenticity of the transaction are not a must any more prior submission. The pre-approval of authenticity check of fund utilizing will be changed.

Centralized operation of cross-border funds will be continuously optimized to serve the headquarters economic and settlement center development and decrease the threshold of international balance of payments scale among enterprises with cross-border capital pools in the region from $100 million to $50 million to encourage headquarter enterprises to develop in the Shanghai FTZ.

Banks in the region can issue and handle trade finance loans to overseas agencies and provide foreign exchange NRA service. Fund pledge foreign exchange loan service is also supported to realize cross-border financial linkage and enhance offshore service radiation level.

The Shanghai Branch of the State Administration of Foreign Exchange showed that the new version of the enforcement regulation aimed to respond to market demands and innovative policies from system usage.

It also revealed that the Shanghai FTZ has the longest testing duration, most test content and participants. Its rich experience is the objective basis of reform and setting out again. Next, it will continue to implement policies on foreign exchange management reform and support construction of the Shanghai FTZ and new free trade zones.

Yi Gang, director of People's Bank of China, showed support at the 11th Lujiazui Forum held in June to establish an integrated domestic and foreign currency account system in Shanghai FTZ and implement a more convenient cross-border fund management system.