New Rules on Cross-border Renminbi (RMB)

At the turn of the new year, the Circular on Further Optimizing the Cross-border RMB Policy to Support the Stabilization of Foreign Trade and Foreign Investment (YinFa [2020] No. 330) (hereinafter referred to as ‘Circular No. 330’) was published, which can further promote the role of cross-border RMB in the substantial economy.

Circular No. 330 makes adjustments on the cross-border RMB settlement process, including bank account use, investment and financing management.

ECOVIS Ruide China, as a professional service organization, reminds you to pay special attention to the following points:

(1) Restrictions on the use of cross-border RMB capital and foreign debts have been relaxed.

In the past, enterprises encountered many restrictions in the use of capital fund. Circular No. 330 has indeed optimized the investment and financing management of cross-border RMB, that is, enterprises can use the capital fund within the business scope approved by relevant departments.

(2) The management requirements of special accounts for foreign investment business no longer apply.

• a) Foreign invested enterprises are allowed to use their RMB capital for domestic reinvestment (except for the investment foreign-funded enterprises).
• b) If foreign investors use domestic RMB profits for domestic reinvestment, there is no need to open a special deposit account for RMB reinvestment.
• c) The Shanghai Branch of the People’s Bank of China issued another circular to cancel the RMB capital account of foreign direct investment for the pilot project of Shanghai Lingang New District .

(3) Facilitation of the cross-border RMB settlement process.

At the same time, Circular No. 330 also stipulates that banks can handle cross-border RMB settlement transactions under current accounts for enterprises by examining and approving the legally effective electronic documents or electronic information submitted by enterprises. In addition, the collection and payment of legal and compliant cross-border RMB, such as personal salary income, will also be further facilitated.

We suggest that foreign investors who plan to use cross-border RMB for investment, or enterprises with more cross-border RMB trade funds, should communicate with their domestic banks, paying attention to the implementation of relevant policies in Circular No. 330 so as to better enjoy optimal dividend policy. If you need our assistance and support, please do not hesitate to contact us.