Foreign Exchange Reform Powers Takeoff of Hainan Free Trade Port
On November 6, 2025, General Secretary Xi Jinping stressed the need to develop the Hainan Free Trade Port to high standards while receiving a briefing on its progress. Since the issuance of the Master Plan for the Construction of Hainan Free Trade Port (FTP), most of the foreign exchange reform tasks have been largely completed, and the foreign-oriented economy has been flourishing. The Hainan FTP is becoming a window for China to align with international high-standard economic and trade rules with an unprecedented level of openness. The foreign exchange reform of the FTP has continuously improved the quality and efficiency of foreign exchange services, strengthened safeguards against cross-border capital flow risks, supported the special customs operations and high-standard opening-up of the Hainan FTP.
The pilot program for high-standard opening-up of cross-border trade and investment has achieved remarkable results
In January 2022, with the approval of the State Council, the Yangpu Economic Development Zone in Hainan became one of the first four pilot regions in China to implement a package of pilot policies for high-standard opening-up of cross-border trade and investment. The package includes nine reform and innovation initiatives in cross-border investment and financing: greater autonomy to non-financial firms in borrowing foreign debt, support for cross-border investments by private equity funds, expansion of cross-border asset transfer businesses, launch of a pilot local and foreign currency integrated cash-pooling program for multinational enterprises, cancellation of registration requirements for domestic reinvestment by foreign-invested enterprises, direct handling of eligible non-financial enterprises' capital account foreign exchange registrations in banks, a shortening negative list for the use of capital account income, removal of currency-matching requirements for cross-border investment and financing, and a higher ceiling on overseas lending by non-financial enterprises. Additionally, it includes four facilitation measures for current account transactions: further convenience for the current account receipts and payments for high-quality enterprises, support for banks in optimizing new types of international trade settlements, expansion of the scope of enterprises eligible for netting settlement of balances in trade, andexemption from registration for special refunds for trade in goods.
The pilot program for regional high-standard opening-up follows a "comprehensive and integrated" reform approach. This approach shifts away from the previous model that primarily focused on fragmented reforms, which often failed to fully meet market entities' needs for facilitation. Instead, the pilot program aligns with the objective for real-economy enterprises of "greater convenience in current account transactions and basic convertibility in capital account operations", fully leveraging the systematic integration and synergistic efficiency of reform measures. The pilot program imposes minimal restrictions on cross-border trade and financing for non-financial enterprises, thus greatly facilitating fund usage and currency exchange. Moreover, it has generated replicable and scalable experiences, with many of its pilot policies being duplicated to broader areas and even implemented nationwide. In February 2024, the pilot program for high-standard opening-up of cross-border trade and investment was expanded to eight regions, including Hainan Province. Pilot policies such as further facilitating the receipts and payments of foreign exchange funds under the current account, supporting banks in optimizing new types of international trade settlements, and allowing banks to directly handle the foreign exchange registration of certain capital account transactions have all been rolled out to the entire Hainan Province. Simultaneously, two new policies have been introduced:improved regulation on advance payment or cost-sharing arrangements under trade in services and shared foreign debt quotas for parent and subsidiary companies in financial leasing sector. Currently, several pilot policies, including the elimination of registration requirements for domestic reinvestment by foreign-invested enterprises, have been extended nationwide. This has accumulated valuable experience for China's foreign exchange reform through the path of "regional pilot → expanded pilot → nationwide promotion".
The pilot program for regional high-standard opening-up has significantly boosted the rapid development of Hainan's foreign-related economy. Over the past five years, the number of market entities in the Hainan FTP has increased by more than two million, reaching a current total of 3.6 million. A total of 8,098 foreign-invested enterprises have been newly established, with an average annual growth rate of 43.7 percent. The actually utilized foreign capital has reached CNY 102.5 billion, with an average annual growth rate of 14.6 percent. Cross-border receipts and payments have grown at 55.0%, exceeding US$100 billion for the first time in 2024 and is expected to keep growing in 2025. As of the end of October 2025, there were 15 prudent and compliant banks in the Hainan FTP providing services for the high-standard opening-up of cross-border trade. They processed a total of US$43.05 billion in high-standard opening-up current account pilot businesses and US$2.8 billion in the capital account pilot businesses.
New Innovation in Cross-Border Asset Management Pilot Program
The pilot program for cross-border asset management business is a financial opening and innovation policy first pioneered by the Hainan FTP. In July 2025, the PBOC Hainan Provincial Branch and other institutions jointly issued the Implementation Rules for Cross-Border Asset Management Pilot Program in the Hainan FTP. These rules support overseas investors in investing in financial products in the Hainan FTP, such as wealth management products issued by financial institutions within the Hainan FTP, private asset management products offered by securities, fund, and futures operators, publicly offered securities investment funds, and insurance asset management products, providing new pathways for overseas investors to access the Chinese market, helping Hainan attract inbound foreign capital, promoting the establishment and operation of both domestic and foreign asset management institutions in the Hainan FTP, and supporting the FTP in exploring the capital account convertibility. The initial scale for the cross-border asset management pilot program is capped at a total of 10 billion yuan. By the end of October 2025, four financial institutions within the Hainan FTP had obtained pilot qualifications and registered for pilot quotas. Two private equity pilot products had completed subscriptions from overseas investors, and the funds were smoothly and efficiently transferred from the overseas investors' investment accounts to the banks' distribution accounts and the product fundraising accounts. The pilot program has been successfully implemented.
Exploring High-Standard Opening-up Based on Specific Account