PBOC promotes new cross border financing rule throughout China

Coming after the PBOC Notice Regarding the Expansion of the Pilot Scheme for Macro Prudential Management of Cross Border Financing (“Pilot Notice”)(《中国人民银行关于扩大口径跨境融资宏观审慎管理试点的通知》) implemented in four free trade zones only three months later, the PBOC Notice extends the mplementation of macro prudential management of cross border financing to all non-financial enterprises established in China (excluding government financing vehicles and real estate enterprises) (“Enterprises”) and various legal person financial institutions whose incorporation are approved by the PBOC, the China Banking Regulatory Commission, the China Securities Regulatory Commission and the China Insurance Regulatory Commission (“Financial Institutions”). It shows a clear determination of Chinese government to encourage inflow of capital in proportion to the assets scale of Enterprises and Financial Institutions, and liberalize, to some extent, PRC domestic institutions in financial arrangements. The management regime under the PBOC Notice is very different from the current foreign debt quota regime, the key features include: