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China further expands RMB cross-border use


27 February 2014
To implement the opinions published last December by People's Bank of China (PBOC), the Shanghai Headquarters of PBOC issued on February 20, 2014 the Circular on Supporting Shanghai Free Trade Zone to Expand RMB Cross-border Use.
According to the Circular, a multinational group may establish in the Shanghai Free Trade Zone ("FTZ") a subsidiary that is allowed to open a RMB special account with a bank to be used as a pool of RMB fund. The members of the group may, through that pool, provide RMB loans to each other (including domestic RMB loans and cross-border RMB loans). In addition, a company situated in the FTZ as a member of a group may open a RMB special account with a bank to carry out the centralized settlement (in RMB) for current account transactions among the prescribed domestic and overseas related companies which include all members of that group and all the other entities that have supply chain and close business relationship with a member of that group. In principle, the above RMB lending transactions and RMB centralized settlements are not subject to governmental approval and can be handled directly by the account opening bank.
The Circular also includes stipulations in other respects, such as stipulations on cross-border RMB loans to be borrowed by enterprises in the FTZ, cross-border RMB settlement services to be provided to e-commerce operators registered in the FTZ, etc..

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Any legal information contained in this newsletter is general in nature and laws and regulations are changing from time to time and compliance will always depend upon the particular circumstances. We have not attempted to give exhaustive descriptions of law or to give a legal opinion on specific legal issues. You should not rely on this newsletter as a legal advice for any particular purpose.

 

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