China allows companies to manage yuan and foreign currency through a single account nationwide
In the global economy, the speed and flexibility of capital management are becoming decisive advantages. When financial flows within a corporation can move freely across borders, business ceases to be hostage to fragmented accounts and bureaucratic barriers. China is taking another step towards openness by allowing multinational companies to centrally manage their funds in yuan and foreign currency across the entire country.
On Monday, a notice came into force allowing multinational companies to centrally manage their cross-border funds in yuan and foreign currency, expanding the pilot cross-border cash pooling programme to the whole country. This is expected to benefit more business entities.
Under the new policy, multinational companies can pool the external debt obligations and overseas lending quotas of their member companies, independently determine the share of funds to be centralised, and manage funds in yuan and foreign currency through the same account. This allows funds to be distributed at the group level, giving member companies greater flexibility in their use.
The notice also simplifies registration procedures by introducing a "one-stop shop" mechanism at local branches of the foreign exchange regulator, and allows partner banks to handle certain registration changes. It also sets out operational rules and requirements for ongoing and subsequent supervision to protect against risks associated with cross-border capital flows.
Thus, the new policy not only reduces the administrative burden but also gives companies a tool for more efficient liquidity management. For example, if one subsidiary has surplus funds and another faces a temporary shortage, the group can redistribute money internally without resorting to expensive external borrowing. This is especially important amid volatility in global markets.
As reported by CCTV+, the entry into force of the notice marks an important stage in the liberalisation of China's financial sector. Expanding the pilot programme nationwide and simplifying procedures should promote the internationalisation of the yuan and strengthen international business confidence in the Chinese market.
