New Action Plan advances cross-border financial services in Shanghai

知识亮点 9 May 2025

On 23 April 2025, the People’s Bank of China announced the launch of the Action Plan for Further Enhancing Cross-Border Financial Services in the Shanghai International Financial Center (“Action Plan”), issued in collaboration with the National Financial Regulatory Administration, the State Administration of Foreign Exchange, and the Shanghai Municipal Government. 

The Action Plan seeks to improve access to cross-border financial services in Shanghai, reinforcing its status as a global financial hub. It also supports broader national goals of deepening international financial ties and enabling Chinese companies to expand globally.

This article provides an overview of the key measures outlined in the Action Plan.

Key measures

Enhancing cross-border settlement efficiency

The Action Plan sets out initiatives to streamline foreign exchange procedures by reducing administrative barriers and simplifying approval requirements for cross-border transactions. This includes expanding the functions of free trade accounts to allow for a broader range of financial operations and optimising the integrated cross-border cash pooling and funds transfer in the Shanghai Pilot Free Trade Zone. It also states that the Cross-Border Interbank Payment System (“CIPS”) will be upgraded to improve functionality and reach, with more banks encouraged to participate. The proposed enhancements are expected to enhance the speed, reliability, and global connectivity of Renminbi-denominated transactions, reinforcing Shanghai’s role as a key hub for cross-border finance.

Optimising foreign exchange risk hedging

Financial institutions are encouraged to develop a more diverse range of hedging instruments, including customised derivatives and structured products tailored to sector-specific needs. The Action Plan promotes wider adoption of the Renminbi in cross-border trade and investment, helping reduce exposure to exchange rate volatility. Small and medium-sized enterprises and foreign-invested enterprises may also have more access to affordable and effective foreign exchange risk management tools.

Strengthening financing support for global investment and financing

The Action Plan urges financial institutions to provide dedicated financing solutions for Chinese enterprises expanding overseas, particularly those building global logistics and sales networks. This includes cross-border consortium loans, trade financing, blockchain financing, and parent-subsidiary shared foreign debt quota. Additionally, policies will be introduced to facilitate cross-border financial leasing transactions, especially in the aviation and maritime sectors. Select banks will also pilot trade refinancing initiatives, supported by rediscount mechanisms to inject liquidity into import-export activities.

Enhancing insurance and comprehensive financial services

Efforts will be made to expand the availability of cross-border insurance products tailored to international business operations, including coverage for overseas liabilities and trade-related risks and export-oriented enterprises in industries such as new energy vehicles and large-scale equipment. Financial institutions are encouraged to offer integrated service packages combining financing, settlement, insurance, and risk mitigation tailored to the needs of enterprises engaged in global trade.

Advancing digital financial infrastructure

The Action Plan calls on financial institutions to enhance their digital capabilities and invest in emerging technologies. In particular, the Action Plan promotes the adoption of blockchain for its potential to enhance the security, transparency, and traceability in cross-border financial transactions. At the same time, further upgrades to the CIPS system will support more complex and varied cross-border financial scenarios, such as investment, trade, and shipping payments. These developments will be underpinned by measures to ensure compliance and strengthen cross-border risk monitoring systems.

Expanding the Qualified Domestic Limited Partner program

The Action Plan outlines several upgrades to the Qualified Domestic Limited Partner (“QDLP”) program, reinforcing Shanghai’s leadership in global asset management. Eligible QDLP pilot enterprises will be able to invest in a broader range of short-term, low-risk cash management products within China - such as money market funds, time deposits, and structured cash products - as well as certain offshore products. The Action Plan also supports more flexible foreign exchange arrangements, allowing QDLP firms to repatriate capital in tranches based on actual needs after onshore fundraising. The authorities will also evaluate ways to broaden fundraising sources for QDLP funds, thereby expanding the program’s capacity for global asset allocation.

Facilitating cross-border investment by institutional investors

The Action Plan includes measures to enhance the efficiency and convenience of cross-border investment by qualified institutional investors. It encourages improvements to investment channels and access mechanisms to support participation in China’s financial markets while maintaining prudent oversight of capital flows.

Improving financial services for tech innovation and small enterprises

To better support innovation-led development, the Action Plan calls for improvements to cross-border financial service systems tailored to technology enterprises and micro, small, and medium-sized enterprises. Financial institutions are encouraged to strengthen service capabilities to better support these entities’ international operations.