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    PBC Deputy Governor Pan Gongsheng Attends Press Conference of State Council Information Office
PBC Deputy Governor Pan Gongsheng Attends Press Conference of State Council Information Office

On the morning of June 8, Pan Gongsheng, Deputy Governor of the People’s Bank of China (PBC) and Administrator of the State Administration of Foreign Exchange (SAFE), attended the press conference held by the State Council Information Office on issues concerning the Master Plan for the Construction of Hainan Free Trade Port (FTP) to introduce financial policies in support of the construction of the Hainan FTP.
Deputy Governor Pan noted that, the free flow of factors is the defining feature of a high-level FTP. In particular, the free flow of capital is the fundamental and essential one in this process, constituting a basic condition for trade and investment liberalization and facilitation. In the construction of the Hainan FTP, financial policies will be designed and advanced following three principles. First, FTP policies and systems should be established step by step and phase by phase, as specified in the Master Plan. Second, the financial sector should serve cross-border trade and investment liberalization and facilitation. Third, preventing systemic financial risks should be taken as the bottom line.
Deputy Governor Pan pointed out that the overall framework of financial policies supporting the construction of the Hainan FTP mainly consisted of four aspects: facilitating the capital flow in cross-border trade and investment, opening-up of the financial service sector, financial reform and innovation in support of the development of the real economy, and the building of a financial risk prevention and control system.
First, the financial sector should serve the liberalization and facilitation of cross-border trade, investment and financing. Policies regarding the high-level opening-up of the current account and the capital account as well as the cross-border capital flow regulation are the essential and core financial policies in the construction of the Hainan FTP.
In terms of cross-border trade, fund exchange for trade in goods and services in the Hainan FTP should be highly facilitated, and the authenticity verification of commercial banks be completely shifted from ex-ante reviews to ex-post checks. Meanwhile, measures should be taken to improve the cross-border receipt and payment management policies for new patterns of cross-border trade such as offshore trade and entrepot trade. A policy environment that facilitates the operation of a global settlement center for multinational companies should be fostered.
In terms of cross-border direct investment, we will fully implement the foreign investment management system which combines pre-entry national treatment with a management mode based on negative list, explore cross-border direct investment which meets the demand of new market patterns, and launch the systems of Qualified Foreign Limited Partner (QFLP) and Qualified Domestic Limited Partner (QDLP) within the Hainan FTP on a pilot basis.
In terms of cross-border financing policies, steps should be taken to establish a new cross-border financing system in Hainan, pilot the cross-border financing policy management framework which merges trading links, implement unified macro-prudential management policies and gradually enable independent cross-border financing by market entities. As the construction of the Hainan FTP is advanced, ways will be explored to give greater autonomy to Hainan resident individuals in the use of foreign exchange.
In the meantime, given the strong spillover effects of financial opening-up policies, it is necessary to, based on the existing RMB and foreign currency accounts and free trade accounts, establish an “electronic fence” for funds and build a basic platform for the opening-up of the financian sector in Hainan.
Second, financial policies should serve the building of an opening financial service system and the improvement of financial service capabilities in Hainan. The policies for wider opening-up of the financial service sector will be first implemented in the Hainan FTP. We will also further diversify the formats of financial businesses in Hainan, cultivate the financial capabilities of commercial banks and other financial institutions to serve an open economy, and support the construction of international trading platform for factors such as energy, shipping and bulk commodities.
Third, the policies should focus on key industries in building a modern industrial system in Hainan. Financial support as well as reform and innovation measures should be enhanced, so as to expand the scale of industrial agglomeration and enhance the competitiveness of key industries in Hainan. Trade finance, consumer finance, green finance as well as the Fintech are to be developed in an innovative manner.
Fourth, a financial risk prevention and control system should be established for the construction of the Hainan FTP. A monitoring, early-warning and assessment system, as well as a macro-prudential management system will be established for cross-border capital flow. A review mechanism will be put in place to combat money laundering, terrorism financing and tax evasion. A mechanism of financial regulation coordination that adapts to the construction of the Hainan FTP will also be set up.
Deputy Governor Pan stressed that, in the next step, the PBC and the SAFE will, in accordance with the overall arrangements of the CPC Central Committee and the State Council and the implementation of the Master Plan, work together with the Government of Hainan Province and relevant financial regulators to proactively provide financial support for the reform and opening-up in Hainan.




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