From the first bank-based equity investment fund, the Shanghai Yangtze River Delta Bank of China Capital Equity Investment Fund, to the first domestic Sino-foreign joint venture wealth management company, Huihua Wealth Management, to the Shanghai branch of Credit Suisse Securities, a foreign-funded securities firm; these firms all chose to settle in the Shanghai Free Trade Zone. The Lingang Special Area is an experimental area. The advantages and effects of the “first trial, open collaboration” of financial innovation in the Lingang Special Area are emerging.
Facilitating settlement of foreign-funded enterprises
In a blink of an eye, the Lingang Special Area has been established for two years. In the past two years, the Lingang Special Area has launched several innovative businesses, and positive progress has been made in financial pilot projects.
Perennial Group, headquartered in Singapore, established a wholly owned subsidiary in Lingang Special Area in September 2020. In order to guarantee the construction of the Hangzhou West Railway Station complex project, the newly registered subsidiary urgently needs to secure the funds of foreign shareholders to pay the land deposit.
According to previous investment experience, it takes at least a week for an enterprise to open a special capital account, receive capital remittances, and pay land deposits, which will delay land auctions. After learning about the situation, China Construction Bank introduced the new RMB capital policy to the company in a timely manner, helping it to collect RMB capital directly from overseas to pay the land deposit through the basic account opened in the new branch of CCB. It only took two working days.
This is the acceleration of international financial innovation in the Lingang Special Area. In May of this year, the bank-enterprise direct connection system between China Construction Bank and Tesla (Shanghai) Co., Ltd., a company in the Lingang Special Area, was officially launched. The successful establishment of this system has realized the seamless connection between Tesla’s domestic enterprises and the ERP financial system of its overseas headquarters. It not only meets Tesla’s paperless and convenient settlement needs, but also solves the pain points of its ERP system.
Build a cross-border RMB fund pool
Relying on Lingang Special Area, the Shanghai Pudong Development Bank New Area Branch has since established 16 innovations including RMB capital accounts, offshore economic and trade, and cross-border trade financing asset transfers. Xibohan (Shanghai) Marine Equipment Technology Co., Ltd., which has nearly 160 independent intellectual property rights, has obvious scientific and technological innovation attributes and R&D attributes, has benefited from this, because its domestic and overseas business has great capital needs.
After the Lingang Special Area was established in 2019, Shanghai Pudong Development Bank, with the support of the free trade policy, opened the first integrated free trade account of local and foreign currencies in the special area for Xibohan (Shanghai), enabling it to enjoy “free capital flow and free currency exchange.” International financial services and the establishment of a cross-border RMB two-way capital pool has opened up channels for the company’s cross-border production and operation of domestic and foreign capital allocation. With the help of financial innovation, Xibhan (Shanghai)’s sales revenue has grown steadily.
Bank of China is also continuously exploring new offshore trade scenarios, innovating risk control management measures, continuously optimizing products such as “BOC Cross-border e-Commerce”, and cooperating with payment institutions, cross-border e-commerce platforms, legal transit clearing institutions and other channels. This is to create and improve a comprehensive cross-border e-commerce financial service system covering domestic and foreign currencies, online and offline, and fully support the high-quality development of new forms and models of foreign trade such as cross-border e-commerce.
Support the development of high-tech industries
On August 12, 2021, the Shanghai Municipal People’s Government officially released the “Fourteenth Five-Year Plan for the Development of the Lingang Special Area of the Shanghai Pilot Free Trade Zone”, proposing to build world-class industrial clusters. One of these clusters is a hydrogen energy vehicle industry chain. The focus is on promoting the demonstration application of hydrogen fuel vehicles, build a medium-duty hydrogen fuel cell power line, and explore typical application demonstrations such as hydrogen energy logistics, hydrogen energy buses, and hydrogen energy heavy trucks.
Bank of Communications Shanghai Branch and Bank of Communications Financial Technology Co., Ltd. cooperated with Lingang Transportation to complete the loading and commissioning of the first hydrogen energy bus line in the special area. The China Transportation Capacity Demonstration Line’s digital currency equipment takes the lead in realizing digital RMB in Lingang.
Not only hydrogen energy vehicles, but also key high-tech industries such as integrated circuits, biomedicine, artificial intelligence, civil aviation, intelligent manufacturing, and high-end equipment. More and more financial institutions take the initiative to connect and support the development of these industries.
On September 27, Lingang Special Area held the 2021 Dishui Lake Industry Investor Conference, which attracted nearly 60 well-known equity investment fund management institutions to participate. The Shanghai Stock Exchange, the Lingang Special Area Management Committee, and the Lingang Special Area Investment Promotion Service Center jointly established the “Lingang Special Area Capital Market Service Base” and became a new platform for the capital market to serve the regional economy.