Opinions of PBC, CBIRC, CSRC and SAFE on Financial Support for Hainan in Comprehensively Deepening Reform and Opening-up

Yinfa No.84 [2021]

The People's Government of Hainan Province:

In order to thoroughly implement the spirit of General Secretary Xi Jinping's important speech at the gathering celebrating the 30th anniversary of the establishment of the Hainan Provincial Special Economic Zone, put in place the relevant important strategic deployment of the Guiding Opinions of the Central Committee of the CPC and the State Council on Supporting Hainan for Comprehensively Deepening Reform and Opening-up and the Overall Plan for the Construction of Hainan Free Trade Port, support Hainan in comprehensively deepening reform and opening-up, and promote the establishment of a financial policy and institutional framework compatible with Hainan Free Trade Port, the following opinions are hereby put forward with the consent of the State Council.

I. General Principles

(1) The development of the real economy in Hainan shall be supported. We shall insist on deepening the financial supply-side structural reform, innovating financial policies, products, and instruments, focusing on the development of tourism, modern service industry, and high-tech industry, providing major support for the development of major fields such as marine industry, medical health, tourism and exhibition, transport, modern agriculture, and service outsourcing, promoting the establishment of an open eco-friendly and service-oriented industry system, advancing the optimization and upgrading of the service industry, and promoting the high-quality development of the economy.

(2) Services shall be provided for the construction of Hainan Free Trade Port. Focusing on its strategic positioning as a pilot zone for comprehensively deepening reform and opening-up, a national pilot zone for ecological conservation, an international tourism and consumption center, and a pilot zone serving national development strategies, Hainan shall facilitate the capital exchange between other domestic regions and itself as well as cross-border trade and investment liberalization and facilitation, implement various financial reform and opening-up and innovation initiatives in a phased, step by step approach, and make itself a new model for comprehensively deepening reform and opening-up in the new era.

(3) Financial reform and opening-up shall be deepened with institutional innovation as the core. We shall deepen financial reform and opening-up in alignment with international standards. According to the working ideas of combining long-term and short-term policies, making gradual progress, and highlighting key points, we shall carry out pilot programs in liberalization and facilitation of cross-border capital flow, facilitation of investment, financing, and foreign exchange, the opening up of the financial industry, and other aspects, and actively explore a financial policy system, a regulatory model, and a management regime that are more flexible.

(4) The construction of a financial risk prevention and control system shall be strengthened. We shall adhere to the bottom-line thinking and the consistent and step-by-step strategy, and improve the risk prevention and control system for cross-border capital flows in line with the opening up and innovation in the financial industry. As long as effective supervision and risk control measures are in place, we shall advance various financial opening up and innovation initiatives in a steady and orderly manner, make overall arrangements for the rhythm and progress of opening up, promote one project when it is mature, so as to firmly hold the bottom line that no systemic financial risk should occur.

II. Promoting the Convertibility of RMB and Supporting Cross-border Trade and Investment Liberalization and Facilitation

(5) The settlement facilitation of cross-border trade in goods and services and new international trade shall be further promoted. According to the principle of "understanding customers and their businesses and performing due diligence", prudent and compliant banks in Hainan Free Trade Port may carry out the pilot program for handling settlements for real and compliant  trade in goods and services for high-quality customers via payment instructions, to realize the shift of authenticity verification by banks from ex-ante examination to ex-post review. A capital payment and transfer system supporting cross-border trade in services shall be implemented. Pilot banks in Hainan Free Trade Port are supported in further facilitating the cross-border settlement of real and compliant new international trade on the basis of strengthening graded management of customers.

(6) The management of foreign exchange in cross-border investment adapted to new forms of market demand shall be explored. Subject to controllable risks, qualified foreign limited partners (QFLPs) in Hainan Free Trade Port are allowed to freely remit in and remit out funds according to the balance management mode and simplify the registration of foreign exchange. Hainan Free Trade Port shall be incorporated into the pilot program for qualified domestic limited partners (QDLPs), in which the pilot basic quota is granted to QDLPs in Hainan Free Trade Port, and an additional quota may be granted to QDLPs each year according to certain rules.

(7) The comprehensive macro-prudential management policy framework for cross-border financing  shall be improved. The upper limit of cross-border financing for non-financial enterprises (excluding real estate enterprises and local government financing platforms) registered in Hainan Free Trade Port may be appropriately increased to achieve a higher financing scale of cross-border funds.

(8) The pilot program for cross-border asset management business shall be explored. Foreign investors are supported in investing in the wealth management products issued by financial institutions in Hainan Free Trade Port, private asset management products of securities and futures operators, publicly offered securities investment funds, insurance asset management products, and other asset management products.

(9) The relaxation of individual cross-border trading policies shall be explored. Foreign individuals who are employed in Hainan Free Trade Port are supported in carrying out various domestic investments, including securities investment. Qualified non-residents are allowed to purchase real estate in Hainan Free Trade Port according to their actual needs, and given foreign exchange convenience in house purchase. The further facilitation for the use of foreign exchange by Hainan residents shall be studied.

(10) The pilot program for cross-border capital pool business integrating domestic and foreign currencies shall be carried out in Hainan. Qualified multinational enterprise groups are supported in carrying out the allocation and collection of surplus and shortage of funds in domestic and foreign currencies among their domestic and foreign member enterprises, converting funds in special accounts in real terms, and subjecting cross-border capital flows to two-way macro-prudential management.

(11) Qualified non-banking financial institutions are supported in carrying out the pilot program for the settlement and sale of foreign exchange. Qualified non-banking financial institutions may participate in the inter-bank foreign exchange market after satisfying certain conditions, and carry out spot RMB to foreign exchange business and related derivative transactions in accordance with laws and regulations.

III. Improving the Hainan Financial Market System

(12) The development of the Hainan banking industry shall be supported. Hainan is supported in introducing branches of national joint-stock commercial banks. We shall study the reform of rural credit cooperatives in Hainan, and promote their better services for the implementation of the rural revitalization strategy. We shall strengthen financial services in the fields of marine and high-tech industries. Hainan is supported in introducing foreign capital to invest in local asset management companies.

(13) Qualified Hainan enterprises are supported in their initial public offering and developing and expanding through multi-level equity markets. We will continue to support the mergers and acquisitions or reorganizations of Hainan enterprises to realize their transformation and upgrading.

(14) Hainan enterprises are supported in issuing bonds for financing purposes. Qualified Hainan enterprises are supported in issuing corporate credit bonds in the interbank market and exchanges, to further improve the size of direct financing. Market players are supported in enlarging the room to make their own choice for entrusted management institutions, trading venues, and so on. Hainan enterprises are supported in revitalizing the stock and broadening the source of funds through asset-backed securitization.

(15) The development of Hainan-related funds shall be supported. We support publicly offered funds in settling in Hainan, qualified institutions in applying for the legal establishment of joint-venture publicly offered fund management companies in Hainan, and qualified foreign financial institutions in wholly owning or controlling shares of futures companies in Hainan. For private equity investment funds invested in key fields such as the seed industry and modern agriculture of Hainan, a green channel for registration and record-filing shall be given.

IV. Expanding the Opening up of Hainan’s Financial Industry

(16) The opening up of the banking industry shall be expanded. Foreign financial institutions are encouraged to settle in Hainan and supported in establishing Sino-foreign joint-venture banks. Hainan banks are supported in introducing qualified foreign strategic investors, improving their equity structures, and perfecting their corporate governance, so as to further the opening up of the Hainan banking industry.

(17) The opening up of the insurance industry shall be expanded. We shall strengthen research on the in-depth cooperation between the insurance markets in Hainan and Hong Kong and Macao. By learning international experience and common practices, we shall explore the formulation of solvency regulatory policies suitable for the reinsurance offshore business.

(18) A rapid channel for banking access matters and a system for completing access matters within a time limit shall be established to improve the efficiency of examination and approval.

(19) The national treatment requirements for foreign investment shall be implemented, and qualified foreign-funded institutions are supported in obtaining payment business licenses in Hainan in accordance with the laws and regulations.

(20) The head offices of Chinese-funded commercial banks that have obtained the qualification for the offshore banking business are allowed to authorize branches in Hainan Free Trade Port to carry out the offshore banking business.

V. Strengthening the Innovation in Financial Products and Services

(21) Innovation in RMB financial products and business oriented to the international market is encouraged, and the scope of foreign RMB investment in Hainan financial products is expanded. Subject to the compliance with laws and regulations, Hainan market players are allowed to introduce foreign RMB funds by issuing products such as bonds denominated in RMB abroad, and focus on supporting the development of high-tech, medical health, tourism and exhibition, transport, and other industries.

(22) The scope of cross-border asset transfer shall be steadily expanded. Within the framework of macro-prudential management, the pilot program for expanding the scope of credit assets that can be transferred out across borders and the scope of participating institutions within Hainan Free Trade Port shall be expanded on the principles of controllable risks and adjustable scale.

(23) Hainan is supported in exploring and promoting the pilot program for mortgage guarantee of the right to use state-owned agricultural land for state farms, and promoting the improvement in the registration of authentic rights and issuance of certificates, registration of mortgage guarantees, construction of land circulation platforms, valuation of collaterals, and other supporting measures.

(24) The development of the insurance business shall be innovated. Qualified insurance institutions are supported in setting up insurance asset management companies in Hainan and issuing RMB-denominated asset management products abroad on the premise that independent accounts are maintained and risks are isolated. Hainan insurance institutions are supported in carrying out the overseas investment business. Insurance institutions are encouraged to strengthen innovation and develop characteristic insurance products adapted to Hainan's needs in the fields of environment, agriculture, tourism, health, and elderly care.

(25) Green finance shall be developed. We encourage the launch of the pilot program for the green finance innovation business in Hainan and support the construction of a national pilot zone for ecological conservation. Efforts will be made to increase the protection of the ecological environment, especially the investment and financing support for addressing climate change.

(26) We support the development of fintech and promote the development of ocean technology. Subject to the compliance with laws and regulations and controllable risks, Hainan corporate banks are encouraged to strengthen cooperation with venture capital institutions and explore new models of fintech, and Hainan is supported in strengthening deep-sea scientific and technological innovation. Fintech policies, products, and instruments shall be innovated.

(27) Subject to the compliance with laws and regulations and controllable risks, the innovative application of fintech shall be strengthened. Hainan Free Trade Port is supported in carrying out the pilot program for fintech innovation under the overall planning of financial regulators, to steadily advance the in-depth integration of technology and financial business.

VI. Improving Financial Services

(28) The exploration and implementation of the pilot bank account system integrating RMB and foreign currencies in Hainan shall be supported.

(29) Commercial banks and China UnionPay are supported in working together with all parties to promote businesses such as cards for small and micro enterprises and rural revitalization cards, focus on financial services in the payment and settlement, financing and credit enhancement, enterprise value-added service system, and other links for small and micro enterprises and "agriculture, farmers and rural areas", and meet the demand for Internet and mobile payment and settlement for small and micro enterprises and "agriculture, farmers and rural areas".

(30) Cross-border mobile payment facilitation shall be enhanced. Overseas residents shall be provided with facilitation for the use of mobile e-payment tools in Hainan. Domestic mobile payment institutions are supported in carrying out business overseas and gradually expanding their regional scope of cross-border mobile payment through the overseas participating institutions of the Cross-border Interbank Payment System (CIPS).

(31) Continuous efforts shall be made to promote the construction of a credit system for micro, small and medium-sized enterprises in Hainan, support the construction of a comprehensive financial service platform for small and micro enterprises, and have it connected with the national "celoan" platform, so as to properly collect and apply credit information of micro, small and medium-sized enterprises and handle financial services more efficiently. We shall further advance the construction of a rural credit system in Hainan, expand the coverage of credit information in rural areas, strengthen credit information services, effectively implement inclusive finance and rural revitalization strategies, and support the development of the real economy and Hainan's characteristic industries. Hainan is supported in introducing credit rating agencies with market influence. A credit information sharing mechanism shall be established and improved, and the construction of a Hainan local social credit system shall be supported.

(32) Hainan is supported in accelerating the development of modern service industries such as shipping finance and ship financing lease.

(33) The development of cultural, sports, and tourism industries shall be supported. Financial services in the fields of culture, sports, and tourism shall be strengthened. A credit big data platform for cultural, sports, and tourism enterprises shall be established, to break through financing bottlenecks such as insufficient credit of cultural, sports, and tourism enterprises, and asymmetric information between financial institutions. Efforts shall be made to promote special bonds for cultural, sports, and tourism industries, optimize the financing structures of such industries, and gradually reduce financing costs. A regional cultural and tourism financial service platform shall be built, and industry financial service systems shall be improved. For special industries of Hainan International Tourism Island, such as cruise and yacht industries, efforts shall be focused on supporting the construction of cruise and yacht industry agglomeration parks and related supporting public utilities.

(34) Within the framework of the long-term mechanism for real estate, Hainan is supported in developing real estate investment trusts (REITs) in the field of housing lease; banking financial institutions are encouraged to innovate financial products and services; and the standard development of the housing lease market shall be supported.

VII. Strengthening Financial Supervision and Preventing and Resolving Financial Risks

(35) A macro-prudential financial management system shall be constructed, to strengthen the identification of major risks and the prevention of systemic financial risks. The capital flow information monitoring and management system shall be relied on, to establish and improve the capital flow monitoring and risk prevention and control system. We shall improve the institutional system and working mechanism against money laundering, terrorist financing, and tax evasion, and study and establish a money laundering risk assessment mechanism, to regularly assess money laundering and terrorist financing risks. We shall construct a financial supervision coordination mechanism adapted to the construction of Hainan Free Trade Port, to effectively perform the duties for territorial financial supervision, and ensure that the risk prevention and control ability is compatible with financial reform and innovation.

(36) Hainan is supported in setting up professional financial and bankruptcy trial institutions, to centralize the trial of Hainan's financial and bankruptcy cases, improve the professional trial of financial and bankruptcy cases, and provide high-quality and efficient judicial guarantees for the parties concerned.

(37) The protection of financial consumer rights and interests shall be strengthened. Mediation organizations of consumer disputes in banking, securities, and insurance fields of Hainan are supported in fully playing their roles, and a fair, efficient, and convenient non-litigation third-party financial dispute settlement mechanism shall be established. We shall strengthen the communication and cooperation with local people's courts and judicial administrative departments, implement the contradiction, dispute, and litigation mediation mechanism in banking, securities, and insurance fields, give play to the professional advantages of mediation organizations in the financial industry, and explore the establishment of a dispute mediation agreement-based judicial confirmation system in the financial industry. Intensive financial knowledge popularization activities shall be carried out, and a popularization and education demonstration base for financial knowledge shall be established in Hainan. The role of securities and futures investor education base shall be further brought into play.

The People's Bank of China

China Banking and Insurance Regulatory Commission

China Securities Regulatory Commission

State Administration of Foreign Exchange

March 30, 2021