New Overseas Financing Policies for Enterprises in SPFTZ Issued

The Shanghai Head Office of the People's Bank of China has issued the Implementing Rules of the China (Shanghai) Pilot Free Trade Zone for the Prudent Macro Management of Overseas Financing and Cross-border Cash Flows in Separate Accounting Business (for Trial Implementation) (the "Implementing Rules") with effect from the date of promulgation.

The Implementing Rules clarify that enterprises, non-banking financial institutions and financial institutions providing separate accounting business within the Shanghai Pilot Free Trade Zone ("SPFTZ") may adopt financing in China (including the SPFTZ) or overseas financing under the principle of controllable risks. Overseas financing shall be managed by way of the leverage ratio for overseas financing, risk conversion factor and prudent macro regulation parameters. In addition, the Implementing Rules cancel the pre-approval process for overseas financing. The borrowers may, based on the scale of their capital and within the approved scale, determine themselves the way, time limit, currency and others relating to overseas financing after considering such factors as the time limit, currency and type of financing.