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China Further Expands
Currency Conversion
Program for MNCs
By Arendse Huld, Posted by China Briefing
Monetary authorities in China have upgraded a cash pooling
pilot program, enabling multinational corporations (MNCs)
in specific regions to integrate cash pools consisting of both
Chinese yuan (RMB) and foreign currency. This upgrade
facilitates the cross-border utilization of funds. The most
recent revision of the pilot program provides enhanced
flexibility to participating MNCs, allowing them to determine
the collection ratio for foreign debt and overseas loans. In this
article, we examine the expansion of the China cash pooling
pilot program since its initial launch and discuss the benefits it
offers to MNCs and banks.
According to a joint announcement from the People’s Bank of China (PBOC), China’s
central bank, and the State Administration for Foreign Exchange (SAFE) released on May
19, 2023, the upgraded pilot program will now allow MNCs to determine the collection
ratio of foreign debts and overseas loans by themselves, among other changes.
The latest upgrade will initially be implemented as a pilot program in Beijing and
Guangdong. However, it is worth noting that the previous version of the pilot program
had already been expanded to multiple regions in July 2022.
Background
The China cash pooling pilot program was first launched in March 2021, when the PBOC
and SAFE released a joint statement announcing that certain multinationals in Beijing
and Shenzhen would be permitted to integrate RMB and foreign currency cash pools to
facilitate the use of cross-border funds.
Initially, 10 MNCs were selected for the pilot program, five each in Beijing and
Shenzhen, which included Sinochem Group, COFCO Corporation, China General
3 AMCHAM SOUTH CHINA
China Further Expands
Currency Conversion
Program for MNCs
By Arendse Huld, Posted by China Briefing
Monetary authorities in China have upgraded a cash pooling
pilot program, enabling multinational corporations (MNCs)
in specific regions to integrate cash pools consisting of both
Chinese yuan (RMB) and foreign currency. This upgrade
facilitates the cross-border utilization of funds. The most
recent revision of the pilot program provides enhanced
flexibility to participating MNCs, allowing them to determine
the collection ratio for foreign debt and overseas loans. In this
article, we examine the expansion of the China cash pooling
pilot program since its initial launch and discuss the benefits it
offers to MNCs and banks.
According to a joint announcement from the People’s Bank of China (PBOC), China’s
central bank, and the State Administration for Foreign Exchange (SAFE) released on May
19, 2023, the upgraded pilot program will now allow MNCs to determine the collection
ratio of foreign debts and overseas loans by themselves, among other changes.
The latest upgrade will initially be implemented as a pilot program in Beijing and
Guangdong. However, it is worth noting that the previous version of the pilot program
had already been expanded to multiple regions in July 2022.
Background
The China cash pooling pilot program was first launched in March 2021, when the PBOC
and SAFE released a joint statement announcing that certain multinationals in Beijing
and Shenzhen would be permitted to integrate RMB and foreign currency cash pools to
facilitate the use of cross-border funds.
Initially, 10 MNCs were selected for the pilot program, five each in Beijing and
Shenzhen, which included Sinochem Group, COFCO Corporation, China General
3 AMCHAM SOUTH CHINA
