(Yicai) July 30 -- Since Shanghai began piloting upgraded corporate free trade accounts at the end of last year to simplify cross-border money transfers, currency conversions, and international trade settlements, over CNY133 billion of receipts and payments have been made. The pilot also completed its first trans-border payment using China’s digital yuan earlier this month.

Unrestricted fund receipts and payments between FTAs and bank accounts overseas has been the pilot's main achievement, Shi Jiandong, deputy director of the macro prudential management department of the People's Bank of China's Shanghai office, said at a press conference yesterday.

The initiative represents an important step in the central bank’s efforts to deepen institutional opening-up of cross-border capital flows in the Shanghai Free Trade Zone and to explore greater convertibility under China's capital account, Shi added.

FTAs, an intermediary layer between overseas counterparties and a firm's bank accounts held in China, were created in the FTZ last December as a convenience for companies doing international business. While the upgraded pilot seeks to enable freer cross-border transfers, any from FTAs back into standard accounts in China remain subject to foreign exchange regulations.

The upgraded accounts allow cross-border money transfers based simply on corporate payment instructions, greatly enhancing the convenience of trade, investment, and financing, Shi said. Eleven banks and 42 selected businesses have taken part in the pilot, including state-owned enterprises, foreign companies, and private firms working in the automotive, modern agriculture, semiconductor, and other sectors.

The pilot's scope has expanded beyond goods trade to encompass services, offshore, and processing trade, and capital-account activities such as cross-border financing and overseas lending, effectively addressing the increasingly diverse cross-border financial service needs of businesses across a wide range of sectors, Shi pointed out.

The pilot recently completed its first digital yuan payment transaction. Through a digital currency bridge, a participating bank processed an e-yuan payment for cross-border freight charges on behalf of a participating business, helping the company improve both the efficiency and security of its cross-border fund transfers, according to Shi.

Launched under a framework of prudent risk control, the pilot seeks to explore freer trans-border receipts and payments through FTAs, advance institutional opening-up of cross-border capital flows, and conduct stress tests on capital account convertibility.

At the same time, it is intended to support Shanghai's development as a global financial center and international trade hub while generating policy experience that can be replicated to support China's broader agenda of high-level financial opening-up.

Editors: Tang Shihua, Martin Kadiev