Provisions to promote development of free trade accounts passed

The provisions to promote the development of free trade accounts at the Pudong New Area were passed on Thursday, marking China's first local regulation specially promulgated for FT account businesses.

The new provisions, which come into effect on May 1, have optimized regulations concerning FT account opening, digital services and capital transfer facilitation.

Overseas companies are encouraged to open FT accounts, via which they can make investment and seek financing. Banks should optimize their FT account opening procedures and expand their digital services scope, according to the new provisions.

Banks and financial institutions are allowed to provide cross-border capital and asset management for multinational companies via the FT account. Integrated domestic and foreign currency services will also be available from the account.

When banks issue non-resident merger and acquisition loans to FT accounts through branches in the Lin-gang Special Area, restrictions regarding loan ratio and repayment period will be relaxed to some extent. Qualified enterprises engaged in bulk commodity production or cross-border trade shall entrust domestic futures operating institutions approved by the financial regulatory department of the State Council and qualified for overseas futures brokerage business if it comes to cross-border hedging business using the FT accounts, according to the new provisions.

Meanwhile, banks are given the green light to provide cross-border financial services via the FT account for qualified overseas individuals conducting domestic direct investment in the high-tech industries and strategic emerging industries. Banks can also provide transfers freely to non-resident accounts for overseas individuals who have opened FT accounts. Other settlement services aiming to facilitate the work and life for those living in the FTZ and holding FT accounts will also be provided.

The FT account mechanism was first experimented in Shanghai in 2014. As of end 2024, about 170,000 such accounts had been opened. Over the past decade, the average annual growth rate of cross-border receipts and payments in domestic and foreign currencies made via the accounts exceeded 30 percent, while that for cross-border receipts and payments handled by non-resident enterprises approached 40 percent.