China Expands Cross-Border Funding Pilot Program for Multinationals
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China has extended its pilot cash-pooling program which allows multinational corporations to integrate domestic and foreign currency management, adding Jiangsu and Hainan provinces. At the same time, it has introduced policies to streamline cross-border fund management and reduce costs.
The pilot was launched in March 2021 by the People’s Bank of China and the State Administration of Foreign Exchange (SAFE). It allows certain multinational companies to combine their cross-border multiple-currency and yuan cash pools into a single pool and buy foreign currencies virtually at will to make cross-border payments.
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- China expanded its pilot cash-pooling program, initially launched in March 2021, to incorporate Jiangsu and Hainan and extend to 10 provinces and cities, allowing multinationals to streamline cross-border currency management.
- New policy enhancements permit domestic subsidiaries of multinationals to engage in cross-currency lending and set foreign debt limits, improving operational flexibility and reducing financing costs.
- As of November 2024, 101 multinational companies in Guangdong managed significant foreign debt and lending quotas, with benefits including improved liquidity management and simplified operations.
- Royal Dutch Shell Plc
- Royal Dutch Shell Plc is one of the multinationals involved in China's pilot cash-pooling program. The program allows them to buy foreign exchange within specified limits and manage international payments through domestic master fund accounts, enhancing efficiency in handling foreign debt and overseas lending caps.
- Sinochem Group Co. Ltd
- Sinochem Group Co. Ltd., a state-owned conglomerate, is part of the pilot cash-pooling program launched in Shenzhen and Beijing. The program allows Sinochem to buy foreign exchange within specified limits and use domestic master fund accounts for international payments while managing its foreign debt and overseas lending caps.
- March 2021：
- The pilot cash-pooling program was launched by the People's Bank of China and SAFE.
- July 2022：
- The program expanded to include eight additional areas, including Shanghai, Zhejiang, and Shaanxi.
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