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hnology (Group) Holding, China Aviation supervision list of companies settling in
Industry Corporation, and Shell Group. These RMB for export goods trade under
companies reportedly engaged in cross-border key supervision.
fund transactions worth a total of US$50 billion
during the pilot program’s initial phase. • For foreign member companies: Must
not belong to the companies that are
Within one year of its launch, the pilot program restricted and prohibited from overseas
in Shenzhen expanded to include 35 companies, investment under the Guiding Opinions
including notable names like Walmart and Flex Ltd. on Further Guiding and Regulating
the Direction of Overseas Investment
In July 2022, the pilot program’s reach was (Guobanfa [2017] No. 74).
extended to additional cities and provinces,
including Shanghai, Guangdong, Shaanxi, What can the MNCs do under
Zhejiang, and Qingdao. On July 6, the first MNC the pilot program?
joined the program in Hainan. Moreover, the
scope of the program itself was also expanded. With the launch of the program in 2021,
the MNCs were permitted to integrate
Who is eligible for the pilot various existing cash pools to enable
program? cross-border funds in RMB and foreign
currencies between their domestic and
The participating MNCs are selected by the local overseas subsidiaries.
branch of the SAFE in each jurisdiction in which
the pilot program is running. Under the program, the cap on foreign debt
for MNCs is set at two times the accrued
According to the 2021 rules, the pilot program is owner’s equity of the cash pool, which is
targeted at large multinationals with high credit in line with SAFE’s 2019 Regulations on the
ratings. In addition, the domestic and foreign Centralized Operation and Management
member companies under the MNC must meet of Cross-border Funds of Multinational
the following conditions: Corporations. Meanwhile, the cap on
overseas lending is set at 0.8 times the
• For domestic member enterprises: Have an accrued owner’s equity of the fund pool.
operating income in the previous year of at
least RMB 10 billion (US$1.4 billion), and a total The pilot program also facilitates the transfer
balance of payments in domestic and foreign and use of funds by allowing the foreign
currencies in the previous year of at least RMB 7 exchange settlement funds in the domestic
billion (US$988.9 million). capital account to be directly transferred to
the domestic RMB capital account.
• For foreign member companies: Have a
total operating income of at least RMB 2 billion Participating companies are also permitted
(US$282.5 million) in the previous year. to use domestic foreign exchange
derivatives to hedge against the risks posed
• For both domestic and foreign member by currency exchange fluctuations.
companies: Have no record of violations of UN
Security Council sanctions resolutions. Finally, participating MNCs can purchase a
certain quota of foreign currency as needed,
• For domestic member companies: Have without seeking approval from SAFE every
no record of major violations of laws and time they want to buy foreign currency
regulations in the process of carrying out under the capital account, and can deposit
cross-border business in the past two years. the funds raised from the purchase of
Companies included in the list of enterprises foreign currencies into the domestic account
with foreign exchange receipts and payments for overseas payments. The quota for foreign
for trade should be classified as Class-A currency purchases is determined on a case-
companies and not be included in the key by-case basis by SAFE.
SOUTH CHINA BUSINESS JOURNAL 4
Industry Corporation, and Shell Group. These RMB for export goods trade under
companies reportedly engaged in cross-border key supervision.
fund transactions worth a total of US$50 billion
during the pilot program’s initial phase. • For foreign member companies: Must
not belong to the companies that are
Within one year of its launch, the pilot program restricted and prohibited from overseas
in Shenzhen expanded to include 35 companies, investment under the Guiding Opinions
including notable names like Walmart and Flex Ltd. on Further Guiding and Regulating
the Direction of Overseas Investment
In July 2022, the pilot program’s reach was (Guobanfa [2017] No. 74).
extended to additional cities and provinces,
including Shanghai, Guangdong, Shaanxi, What can the MNCs do under
Zhejiang, and Qingdao. On July 6, the first MNC the pilot program?
joined the program in Hainan. Moreover, the
scope of the program itself was also expanded. With the launch of the program in 2021,
the MNCs were permitted to integrate
Who is eligible for the pilot various existing cash pools to enable
program? cross-border funds in RMB and foreign
currencies between their domestic and
The participating MNCs are selected by the local overseas subsidiaries.
branch of the SAFE in each jurisdiction in which
the pilot program is running. Under the program, the cap on foreign debt
for MNCs is set at two times the accrued
According to the 2021 rules, the pilot program is owner’s equity of the cash pool, which is
targeted at large multinationals with high credit in line with SAFE’s 2019 Regulations on the
ratings. In addition, the domestic and foreign Centralized Operation and Management
member companies under the MNC must meet of Cross-border Funds of Multinational
the following conditions: Corporations. Meanwhile, the cap on
overseas lending is set at 0.8 times the
• For domestic member enterprises: Have an accrued owner’s equity of the fund pool.
operating income in the previous year of at
least RMB 10 billion (US$1.4 billion), and a total The pilot program also facilitates the transfer
balance of payments in domestic and foreign and use of funds by allowing the foreign
currencies in the previous year of at least RMB 7 exchange settlement funds in the domestic
billion (US$988.9 million). capital account to be directly transferred to
the domestic RMB capital account.
• For foreign member companies: Have a
total operating income of at least RMB 2 billion Participating companies are also permitted
(US$282.5 million) in the previous year. to use domestic foreign exchange
derivatives to hedge against the risks posed
• For both domestic and foreign member by currency exchange fluctuations.
companies: Have no record of violations of UN
Security Council sanctions resolutions. Finally, participating MNCs can purchase a
certain quota of foreign currency as needed,
• For domestic member companies: Have without seeking approval from SAFE every
no record of major violations of laws and time they want to buy foreign currency
regulations in the process of carrying out under the capital account, and can deposit
cross-border business in the past two years. the funds raised from the purchase of
Companies included in the list of enterprises foreign currencies into the domestic account
with foreign exchange receipts and payments for overseas payments. The quota for foreign
for trade should be classified as Class-A currency purchases is determined on a case-
companies and not be included in the key by-case basis by SAFE.
SOUTH CHINA BUSINESS JOURNAL 4
