Financial players gear up to help expand FTP gateway

The island-wide special customs operations mark the beginning of a new stage in the opening-up and development of the Hainan Free Trade Port.

Against this backdrop, financial institutions are fully integrating into the overall development of the Hainan FTP, helping the island to become an important gateway in leading China's opening-up in the new era, analysts said.

In recent years, Hainan province has stepped up efforts to build the hard and soft infrastructure required for the island-wide special customs operations. The Hainan Office of the National Financial Regulatory Administration issued guidelines in December 2024, setting out requirements for local banking and insurance institutions to support the construction of hardware facilities for the island-wide special customs operations and to strengthen financial infrastructure development.

In April 2024, the Hainan branch of the People's Bank of China released measures for the administration of multifunctional free trade accounts, also known as EF accounts, of the Hainan FTP, providing an institutional framework to ensure the free flow of cross-border capital.

As of end-October, 11 banks in Hainan had opened a total of 658 EF accounts. The cumulative transaction volume reached nearly 270 billion yuan ($38.5 billion), and account holders conducted fund transfers with entities in 80 countries and regions, according to the PBOC, China's central bank.

The same day as Hainan launched the opening-up move, on Dec 18, Bank of China started handling fund transfers between EF accounts held by companies registered in the Hainan FTP and ordinary bank accounts held by firms in the mainland.

Bank of China has rolled out dedicated "cross-border finance plus industrial chain" service solutions. Particularly in the context of the Regional Comprehensive Economic Partnership and China's cooperation with the Middle East, the bank is encouraging more local companies to engage in cross-border renminbi settlement, investment and financing.

BOC said the formal launch of the island-wide special customs operations in the Hainan FTP is a landmark move demonstrating China's unwavering commitment to expanding high-standard opening-up. The bank aims to build a solid financial bridge connecting Hainan with international markets through a broader range of products and higher-quality services.

Zeng Gang, chief expert and director of the Shanghai Institution for Finance and Development, said,"Following the launch of island-wide special customs operations, Hainan will become a hub linking domestic and international economic circulations with new business models, such as entrepot trade, offshore trade and bonded maintenance flourishing."

Banking institutions can deeply participate in industrial chain restructuring through products such as supply chain finance, trade finance and letters of credit, particularly by serving key sectors including tourism, modern services and high-tech industries, Zeng said.

At the same time, as multinational corporations establish regional headquarters in Hainan, banks can provide comprehensive financial services such as cash management, capital pooling, and cross-border mergers and acquisitions, he added.

China Construction Bank has been ramping up efforts to increase credit support in Hainan for technology companies, strategic emerging industries, and "specialized, sophisticated, distinctive and innovative" enterprises. As of the end of November, outstanding loans to high-tech industries at CCB's Hainan branch exceeded 2.6 billion yuan, with more than 1.1 billion yuan in new loans this year.

China CITIC Bank's Haikou branch has guided financial resources toward technological innovation, while continuously expanding services for enterprises in deep-sea technology and aerospace technology. The branch has extended multiple patent-backed loans and supply chain financing facilities.

It has actively advanced cross-border financial innovation and became one of the first banks to launch EF accounts on May 6, 2024.As of the end of November, the number of EF accounts at the branch had reached 191, with cumulative transaction volume exceeding 75 billion yuan.

The free and convenient flow of cross-border capital is a hallmark of high-standard opening-up at the Hainan FTP. To achieve this goal, the PBOC has rolled out a series of pilot financial innovation policies. From January to November, cross-border receipts and payments in Hainan totaled $101.61 billion, with an average annual growth rate of 55 percent since 2020.