To implement the decisions and arrangements of the CPC Central Committee and the State Council to boost the building of Shanghai into an International Financial Hub, step up financial support for the construction of the Lin-gang Special Area in China (Shanghai) Pilot Free Trade Zone (Lin-gang Special Area) and for the integrated development of the Yangtze River Delta, deepen the supply-side structural reform in the financial community and drive the higher-level opening up and innovation in finance, we put forward our opinions as follows, with approval from the State Council:
I. General requirements
1. Serving the high-quality growth of the real economy. Based on the functional positioning and industrial system of Lin-gang Special Area, Shanghai shall pilot more open and convenient financial policies to stably boost RMB internationalization and introduce green financial policies. Shanghai shall accelerate the building of an international financial hub to push ahead with the opening up of the financial industry, optimize the allocation of financial resources and improve the quality and effectiveness of financial services. Shanghai shall also play its leading and radiating role as an international financial hub to improve the systems and mechanisms for financially supporting the integrated development of the Yangtze River Delta and intensify key national strategies such as financial support for coordinated regional development and innovation-driven development.
2. Deepening the reform of financial systems and mechanisms. With a focus on system innovation, Shanghai shall revitalize financial innovation and explore more flexible financial policy systems, regulatory models and management systems. It shall improve the environment for rule of law in finance, and adopt the pre-access national treatment plus negative list management system in all respects. It shall impose equal regulatory requirements on domestic and foreign-funded financial institutions and integrate with the international high-standard rules to boost the high-level opening up of the financial industry.
3. Guarding against systematic financial risks. While ensuring compliance with laws and regulations, risk controllability and business voluntarity, Shanghai shall systematically press ahead with the introduction of innovative measures for financial opening-up and pilot a selection of them in Lin-gang Special Area. It shall also build and refine the financial regulation and coordination mechanisms, improve the prevention and control system against financial risks and apply more financial technology in regulation to ensure our bottom line that systematic financial risks will not occur.
II. Boosting financial piloting in Lin-gang Special Area
1. Supporting the development of key industries with global competitiveness in Lin-gang Special Area.
(1) Shanghai shall pilot the building of wealth management subsidiaries by eligible commercial banks. It shall encourage them to set up professional subsidiaries in Shanghai in line with the business voluntarity principle to invest in key construction projects and companies that are not listed in Lin-gang Special Area and the Yangtze River Delta. Shanghai shall also encourage insurers to invest in technical innovation investment funds or directly in technical innovation companies in Lin-gang Special Area in compliance with laws and regulations.
(2) Shanghai shall support qualified commercial banks in establishing financial asset and investment companies in Shanghai in line with the business voluntarity principle. It shall pilot the creation of professional investment subsidiaries in Shanghai by qualified financial asset and investment companies to participate in business reorganization, equity investment and direct investment in relation to the construction of Lin-gang Special Area and economic restructuring, industry optimization and upgrading, and coordinated development in the Yangtze River Delta.
(3) Shanghai shall encourage financial institutions to provide market-based long-term credit for the development of key industries like high-tech and shipping industries in Lin-gang Special Area, to support key technical innovation and R&D projects in the area. Further, it shall encourage financial institutions to provide efficient and convenient financial services for companies in the area to engage in novel foreign trading activities based on the "three business principles", so as to support the development of novel foreign trade.
(4) Shanghai shall support financial institutions and large tech companies to incorporate fintech players in the area in compliance with laws to explore the applications of AI, big data, cloud computing and block chain in finance and stress fintech talent development.
2. Promoting trade and investment liberalization and facilitation.
(5) For eligible strong companies in Lin-gang Special Area, banks inside the area can follow the "three business principles" to directly handle RMB settlement for cross-border trade and domestic payment with RMB revenues from FDI, cross-border financing and overseas listing based on companies' receipt and payment orders.
(6) In Lin-gang Special Area, Shanghai can attempt the cancellation of special RMB capital accounts under FDI and pilot the cross-border cash pool for both foreign and domestic currencies. It shall support eligible multinationals to centralize deficiency transfers and collection of foreign and domestic currencies among domestic and overseas members with funds exchanged based on real demand and shall adopt two-way macro-prudential management of cross-border capital flows. It can also explore transformation and upgrading of foreign exchange administration.
(7) In Lin-gang Special Area, Shanghai can pilot cross-border transfers of domestic trade finance assets. It can drive the building of platforms relying on Shanghai Commercial Paper Exchange and relevant digital technology R&D support institutions to handle cross-border transfers of trade finance assets and boost the development of cross-border RMB trade finance.
III. Accelerating the opening up of the financial industry in Shanghai at a higher level
1. Boosting high-level opening-up of finance.
(8) In compliance with laws and regulations and the business voluntarity principle, Shanghai shall encourage eligible commercial banks to set up wealth management subsidiaries in Shanghai, pilot wealth management JVs between foreign institutions and large banks, and support commercial banks and their wealth management subsidiaries to choose eligible assets managers that are registered in Shanghai as their partners for wealth management and investment.
(9) Shanghai shall encourage foreign institutions to set up securities operators and asset managers in Shanghai or to acquire majority stakes in them. It shall push ahead with the relaxation of restrictions on foreign shareholdings in personal insurance from 51% to 100% in Shanghai first.
(10) If foreign financial institutions apply for incorporating or minority investment in pension fund managers in Shanghai, Shanghai shall approve them once they are mature. In addition, Shanghai shall encourage insurance asset managers to establish professional asset management subsidiaries, and pilot minority investment of insurance asset managers in wealth management companies incorporated by foreign asset managers in Shanghai. It shall also attempt the piloting of investing in bulk commodities like gold and oil by insurance funds through relevant exchanges in Shanghai.
(11) Shanghai shall support eligible non-financial groups to establish financial holding companies in Shanghai. It shall encourage multinationals to establish headquarters-like institutions in Shanghai such as global or regional fund management centers, which can be approved to trade in the interbank foreign exchange markets. Further, Shanghai shall allow financial leasing parent companies and their subsidiaries that are registered in China (Shanghai) Pilot Free Trade Zone to share the external debt quotas.
2. Boosting the building of RMB financial asset allocation and risk management centers.
(12) Shanghai shall open up the bond market wider, and further facilitate filing and entry into the market by foreign investors to diversify the type and number of foreign investors. It also shall boost the transformation of domestic settlement correspondent banks towards custodian banks to provide diversified services for foreign investors accessing the interbank bond market.
(13) Shanghai shall develop the RMB interest rate and foreign exchange derivatives markets, study and launch RMB interest rate options to diversify foreign exchange options.
(14) Shanghai shall optimize the foreign exchange rate risk management under financial investment for foreign institutions to facilitate trading by such institutions in interbank foreign exchange markets to square the position generated by their investments in domestic bond markets.
(15) Shanghai shall study how to ramp up the efficiency of integration with laws and systems for global financial markets as an international financial hub, and allow foreign institutions to sign master agreements on derivatives with National Association of Financial Market Institutional Investors (NAFMII), China Securities and Futures Market (SAC) or International Swaps and Derivatives Association (ISDA).
3. Building the high-quality financial business environment by international standards.
(16) Shanghai shall accelerate the adoption of the rule of law in finance and the establishment of financial rules and systems integrated with global ones. It shall intensify punishments for illegal financial activities and encourage the piloting of fintech innovations.
(17) Shanghai shall boost the reforms that delegate power, improve regulation, and upgrade services, screen documents unfavorable for the growth of private players in Shanghai and dismantle the "hidden doors" for market access. It needs to take a multi-faceted approach to incubating a level playing field.
(18) Shanghai shall study and boost Shanghai Financial Court and Shanghai Bankruptcy Court to adapt to the trends in financial markets, step up capability building, increase professionalism in case hearing and strengthen credibility and influence in upholding justice across the world, based on global high-standard practices.
IV. Financially supporting the integrated development of the Yangtze River Delta
1. Driving cross-regional collaboration among financial institutions.
(19) Shanghai shall take the lead in improving cross-province (city) mobile payment services in the Yangtze River Delta and fueling payment connectivity for public services in the Delta in compliance with laws and regulations.
(20) Shanghai shall drive every corporate bank in the Yangtze River Delta to integrate with the exclusive validation channels of legally licensed clearing institutions for opening personal banking accounts and provide cross-validation services for information of connected accounts.
(21) Shanghai shall work to strengthen collaboration among financial institutions in the banking sector in the Yangtze River Delta in project planning, project review and rating, credit line verification, repayment arrangements, credit management and risk mitigation, and explore cross-province (city) credit extension mechanisms in the Delta to drive credit flows. It shall support commercial banks to offer merger loans to players in the Delta. Under the existing policy framework, it shall support financial institutions to leverage refinance and rediscount to issue more credit to agricultural firms, rural areas and farmers, pollution control players, tech innovation companies, high-end manufacturers, micro and small businesses and private firms in the Delta.
2. Improving supporting services for finance.
(22) Shanghai shall boost institutions related to the G60 High-tech Corridor to issue VC-like bonds, and debt financing instruments, financial bonds, and corporate bonds for starting businesses and innovation, in interbank bond markets and exchange bond markets.
(23) Shanghai shall support eligible tech innovation companies to go public, encourage IP service and assessment institutions to develop patent value assessment models or instruments to promote IP transactions and flows. Shanghai also needs to study and provide convenient exchange services to support foreign investors to directly participate in issuance and trading on the STAR market.
(24) Shanghai shall establish the integrated and market-based credit system for the Yangtze River Delta to provide professional credit services for society. Relying on the national credit information sharing platform, Shanghai shall further refine the cross-regional credit information sharing mechanism, step up information collection, sharing, development and utilization to serve credit financing by micro and small businesses. It shall also support the Credit Reference Center of the People's Bank of China to fully cover lending information of firms and individuals in the Delta. It shall conduct regulatory cooperation and pilot the building of an off-site regulatory platform for credit institutions in the Delta.
(25) Shanghai shall drive the integrated construction of the green financial service platform for the Delta. It shall promote the application of the green financial information management system, boost the connectivity of regional markets for trading environmental rights and accelerate the building of a green project library in the Delta.
3. Building and refining the financial policy coordination and information sharing mechanism in the Yangtze River Delta.
(26) Shanghai shall build a unified financial stability assessment system, develop financial stability indices and establish an information sharing mechanism for financial stability in the Delta. It shall build an information sharing platform against financial risks and an information communication mechanism for anti-money laundering. It shall also stress data protection and management and strengthen cooperation on alternative dispute resolution (ADR) of disputes over financial consumption.
(27) Shanghai shall boost sharing of financial statistical information in the Delta, and study the centralized detection and analysis framework to perform more forward-looking analysis on the economy and finance.
(28) Shanghai shall promote communication on inclusive finance in the Delta, build an inclusive finance index system and prepare analysis reports on inclusive finance index together with other cities in the Delta.
V. Protective measures
(29) The People's Bank of China Shanghai Head Office shall organize the piloting of strengthening payment and settlement regulatory capabilities, and boost its credit system to build a same-city active-active disaster recovery center in Shanghai. The PBC shall study and drive the building of the Report Library on Trading in China's Financial Markets in Shanghai, integrate trading information on financial markets, improve detection capabilities and interface with relevant construction efforts in Xiong'an New Area.
(30) The financial policies already introduced and to be introduced that are applicable to China (Shanghai) Pilot Free Trade Zone, and policy measures for financially supporting trade and investment liberalization and facilitation introduced by the national financial management authorities, if suitable for meeting Shanghai's real needs, can be piloted in Shanghai first. The People's Bank of China Shanghai Head Office shall develop the implementation rules based on the Opinions together with the Shanghai Office of the China Banking and Insurance Regulatory Commission and submit the rules to the competent authority for filing.
The People's Bank of China
China Banking and Insurance Regulatory Commission
China Securities Regulatory Commission
State Administration of Foreign Exchange
Shanghai Municipal People's Government
February 14, 2020
