The People’s Bank of China issued guidance on June 11 on the implementation of the State Council’s directives to support foreign trade.
Among the guidance items is point five, which says that multinationals will be allowed to carry out two-way cross-border renminbi transactions as part of their cash pooling and netting structures.
Two-way cross-border renminbi movements are currently allowed only in the Shanghai Free Trade Zone and for a small group of companies and banking providers.
Under the new guidance, companies and banks in the territory of the People’s Republic of China (not only in the Shanghai Free Trade Zone) will be able to move renminbi into and out of the country as part of their business operations, subject to central bank regulations.
Point six of the guidance also allows individuals to engage in cross-border trade in goods and services using the renminbi, subject to the banks’ due diligence, know-your-customer policy and other control measures.
Effective dates have yet to be specified.
The guidance also called on financial institutions to expand trade-related financing channels for enterprises, develop financial leasing products to support the import and export of equipment, enhance exchange rate flexibility and create exchange rate hedging instruments.