On January 22, 2016, the People’s Bank of China (“PBOC”) issued the Notice Regarding the Expansion of the Pilot Scheme for Macro Prudential Management of Cross Border Financing (“PBOC Notice”) (《中国人民银行关于扩大口径跨境融资宏观审慎管理试点的通知》) which was implemented on 25 January 2016.
PBOC defines the Cross Border Financing as the capital in RMB or foreign currency financed by non-resident enterprises or individuals to domestic institutions. After a certain period running of the macro prudential management regime of cross border financing in Shanghai Free Trade Zone, this year, PBOC decides to expend the new cross border financing management regime to four free trade zones, i.e. Shanghai, Guangdong, Tianjin and Fujian.
The new management regime is very different from the current foreign debt quota regime in China. The key features of this new regime are introduced as follows:
1. Macro Prudential Management Policies
2. Flexible Filing Procedure
3. Parallel Cross Border Financing Regimes
4. Other issues to be further clarified by the authorities