IV. Overseas RMB Borrowing in the PFTZ

Financial institutions and enterprises in the PFTZ may borrow RMB funds from overseas (excluding trade credits and intercompany operational financing) to use in the fields that are consistent with national macro-control programs. It is not allowed for the time being to use such funds in investing in negotiable securities (including wealth management products and other asset management products) or derivative products, or in entrusted loans.

1. The upper limit of the size (balance) of overseas RMB funds that enterprises in the PFTZ may borrow must not exceed the paid-up capital * 100% * the macro-prudential policy parameters, where: the paid-up capital shall be that as indicated in the latest capital verification report, and the term of loan shall be longer than one year (not inclusive). Such borrowers in the PFTZ may, according to the Administrative Measures for RMB Bank Settlement Accounts, open special deposit accounts at banks in Shanghai to exclusively deposit RMB funds borrowed outside China. Such funds may only be used inside the PFTZ or outside China for the purposes including production and operation inside the PFTZ, and project construction inside the PFTZ or outside China.

Foreign enterprises established in the PFTZ before the launch of the PFTZ may use their own discretion to elect to follow the previous method to determine the quota (i.e., the ceiling amount is calculated as the difference between the total investment and the registered capital), or to observe the rules as set forth by this Circular when borrowing RMB funds outside China, and file their decisions with PBC Shanghai through banks with which their accounts are opened. Once an election has been made, no change shall be made.

2. The upper limit of the size (balance) of overseas RMB funds borrowed by non-banking institutions in the PFTZ must not exceed the paid-up capital * 150% * the macro-prudential policy parameters. The term of loan shall be longer than one year (not inclusive). The borrowed funds may be transferred back and deposited into their special deposit accounts opened with banks in Shanghai, and may only be used inside the PFTZ or outside China for the purposes including production and operation inside the PFTZ, and project construction inside SHFTZ or outside China.

3. The interest of the RMB funds borrowed from overseas and then retained in the dedicated deposit account opened by the enterprises and non-banking financial institutions in the PFTZ shall be calculated at the rate of current deposit.

4. The RMB funds borrowed outside China by banks in the PFTZ shall be subject to separate accounting in the PFTZ, and shall be used within the PFTZ, for real economy development purposes.