• News
• 2024-05-20

Enhancing Financial Services for Cross-Border Trade and Investment

The Third Plenary Session of the 20th Party Congress clearly proposed to strengthen the synergy of trade policies with fiscal, tax, financial, and industrial policies, to build a system of institutional support and policy support for trade power, to accelerate the integration reform of domestic and foreign trade, and to actively respond to the trends of digitalization and greening of trade. Data from the General Administration of Customs shows that in the first half of the year, the total value of China's import and export of goods was 21.17 trillion yuan, a year-on-year increase of 6.1%, with the trade scale reaching a new high and the quarterly trend continuing to improve.

Improving the Quality and Efficiency of Financial Services

In July, the Ministry of Commerce, the People's Bank of China, the State Administration of Financial Regulation, and the State Administration of Foreign Exchange jointly issued the "Opinions on Strengthening Business and Financial Collaboration to Greaterly Support the High-Quality Development of Cross-Border Trade and Investment", guiding relevant departments and financial institutions to strengthen collaboration and form a greater joint force to support the high-quality development of cross-border trade and investment.

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Since last year, CITIC Bank has launched a pilot reform of foreign exchange business in Jiaxing, Wuxi, and Qingdao. MeiDe Group Co., Ltd. is a private enterprise group mainly providing products and related technical services such as fluid transportation and measurement products, power hardware, cast iron, and grouting sleeves, with product sales covering more than 130 countries and regions, and an average of more than 30 foreign exchange transactions per month for import and export and product certification fees. Previously, MeiDe Group handled foreign exchange transactions at CITIC Bank Jinan Branch, where business personnel needed to spend a long time sorting out materials for the authenticity of the business background. Su Jie, Deputy General Manager of the International Business Department of CITIC Bank Jinan Branch, introduced that since the launch of the foreign exchange business reform, the bank has conducted a comprehensive portrait of MeiDe Group based on an artificial intelligence model. After the portrait results were manually evaluated, the bank included the enterprise in the list of high-quality enterprises, allowing MeiDe Group to enjoy the convenience of handling foreign exchange transactions based on instructions. Compared to before, the cost of enterprises providing materials and the manpower and time cost of going back and forth to the bank have been greatly reduced, and the efficiency of business handling has been greatly improved, which the enterprise is very satisfied with. Since the implementation of this convenience measure, the bank has handled nearly 50 foreign exchange transactions for MeiDe Group based on instructions, with an amount of more than 6.1 million US dollars. Currently, CITIC Bank Jinan Branch has included more than 100 foreign trade enterprises in the list of high-quality enterprises after conducting a corporate portrait and manual evaluation through an artificial intelligence model, providing convenient foreign exchange services.

The "Opinions on Strengthening Business and Financial Collaboration to Greaterly Support the High-Quality Development of Cross-Border Trade and Investment" propose to encourage banks and insurance institutions to provide high-quality financial services for cross-border e-commerce and overseas warehouse enterprises based on real and credible data elements such as order flow, logistics, and fund flow. The China International Trade "Single Window" is an official government service platform for unified handling of customs clearance ports and related business in the field of international trade, led by the National Port Office of the General Administration of Customs. Reporters learned in interviews that in recent years, relying on the "Single Window", cooperation between government, banks, and insurance has been continuously deepening, and it can now meet the diversified needs of small and micro foreign trade enterprises for insurance and financing in one stop. Industrial Bank has launched the "Small and Micro Enterprise Cross-Border Financing - Credit Insurance Loan" financing product, introducing the "Small and Micro Enterprise Credit Insurance Easy" product of China Export and Credit Insurance Corporation to enhance credit, and obtaining customer policy and claim/compensation information through the "Single Window" by docking with China Export and Credit Insurance Corporation, realizing customer application for credit insurance financing in the scenario of underwriting export credit insurance, further improving the financing convenience of small and micro enterprises, and meeting the "short, urgent, fast, and frequent" funding needs of small and micro enterprises.

Strengthening Support for Key Areas

Against the backdrop of the accelerated adjustment of the global manufacturing industry pattern and the reconstruction of industrial chains and supply chains, new quality production forces have become a "must-have" for many enterprises to improve their strength and also a key word for financial institutions to promote the development of foreign trade enterprises. At the performance briefing in the first half of 2024, Lu Jingen, the business director of CITIC Bank, said that new quality production forces have provided a broad space for the operation of the banking industry. CITIC Bank will gather financial resources towards the key directions, key areas, and weak links of new quality production forces. In recent years, CITIC Bank has continued to increase its cooperation with departments such as commerce, customs, and the Federation of Industry and Commerce, as well as insurance companies such as China Credit Insurance, actively exploring new financial service models that meet the needs of foreign trade small and micro enterprises; organize activities such as foreign-oriented small and micro enterprise customer services, and introduce cross-border financial service plans covering products such as "Tariff e-loan, Export e-loan, Cross-Border E-Commerce e-loan, Foreign Exchange Transaction Pass", effectively helping foreign trade enterprises to set sail.

At the end of August this year, Industrial Bank successfully landed the "Unigroup acquisition of New H3C" merger syndicated loan, helping the new Unigroup and Unigroup to complete the acquisition of the remaining equity of New H3C. This business is the first time Industrial Bank has led the agency of a cross-border merger syndicated loan under the free trade zone mechanism. On the evening of May 24, Unigroup issued an announcement to quickly acquire 30% of the minority equity of its controlling subsidiary New H3C with self-raised funds. Faced with the cross-border financing needs of Unigroup, Industrial Bank quickly organized a free trade zone merger syndicate with peers to provide customers with nearly 9 billion yuan of financing support in a timely manner, helping Unigroup to focus more on the main business of integrated circuits and digital technology, leverage the synergy of the entire industry chain, and enhance competitive advantages. Hu Bin, General Manager of the Investment Banking Department of Industrial Bank, introduced that Industrial Bank insists on polishing the "investment banking" business card and continues to exert strength in the fields of mergers and acquisitions, syndicated loans, and capital markets to support the development of new quality production forces. As of the end of June, the total financing scale of the bank's major investment banking customers reached 4.43 trillion yuan, with 88.49 billion yuan of merger and acquisition financing put into place in the first half of the year, and 106.745 billion yuan of syndicated loan financing put into place, a year-on-year increase of 50.88%.

In April this year, the Financial Regulatory总局 and other departments issued the "Notice on Deepening Manufacturing Industry Financial Services to Help Promote the New Industrialization", requiring the strengthening of export credit insurance to support enterprises such as automobiles, home appliances, machinery, aviation, ships, and marine engineering equipment to "go global". At the beginning of September, the General Office of the State Council issued the "Opinions on Promoting the High-Quality Development of Service Trade with High-Level Opening Up", increasing the support of export credit insurance, expanding the coverage of the service trade field, and appropriately optimizing the underwriting methods for eligible small and medium-sized enterprises to improve the convenience level of insurance services.

Sheng Hetai, General Manager of China Credit Insurance, introduced that in helping traditional industries upgrade, China Credit Insurance continues to implement industry chain extension and expansion plans, continuously deepening support for key customers, and expanding and adding 4 industry chains including motorcycles and modern chemicals on the basis of the original 7 key industry chains. Among them, China Credit Insurance has achieved a significant increase in the insured amount under the electronic information industry chain, home appliance industry chain, and complete vehicle engineering machinery industry chain. In terms of cultivating specialized and sophisticated enterprises, China Credit Insurance prioritizes services for key technology enterprises such as specialized and sophisticated "little giants" and manufacturing single-champion enterprises, serving nearly 3,700 specialized and sophisticated "little giants" in the first half of the year. Data shows that in the first half of this year, China Credit Insurance supported 10.71 billion US dollars of new foreign trade formats for export, a growth of 13.4%; supported 5.77 billion US dollars of service exports, a growth of 29.7%.Helping Enterprises Guard Against and Resolve Risks

The "Opinion on Strengthening the Synergy of Commerce and Finance to Greaterly Support the High-Quality Development of Cross-Border Trade and Investment" proposes encouraging insurance institutions to leverage their advantages in credit investigation and country risk research to provide more robust support for enterprises in identifying risks associated with foreign clients.

In June of this year, the "2024 China Small and Medium-Sized Foreign Trade Enterprises Export Risk Index (SMERI) Report" was released. This index is jointly developed by China Export & Credit Insurance Corporation (Sinosure) and the Academy of International Trade and Economic Cooperation under the Ministry of Commerce, aiming to measure the comprehensive index of credit risk levels faced by China's small and medium-sized foreign trade enterprises in transactions with buyers from different countries (regions) and industries.

The report indicates that the overall credit risk faced by China's small and medium-sized foreign trade enterprises in exports has shown a trend of fluctuating increase in the past three years, mainly due to the rise in the international trade environment and enterprise payment risks. According to the report, the global macroeconomic risk has decreased compared to 2023, reflecting the overall slow recovery of the world economy. At the same time, the trend of global supply chain differentiation and relocation is becoming increasingly apparent, posing a continuous threat to the stability of world trade. This is the second consecutive year that Sinosure has released this index. Compared to the previous year, Sinosure has further expanded the risk assessment to 60 countries and added 7 industrial chain dimension indices including electronic information and new energy, basically covering the main export destinations and industrial chains of China's small and medium-sized foreign trade enterprises.

Terry Machine Co., Ltd. is a national specialized and innovative "little giant" enterprise located in Hangzhou City. In 2006, to explore the international market, Terry Machine started comprehensive cooperation with Sinosure, using policy-based export credit insurance to protect the risk of overseas accounts receivable collection. To date, $4 billion worth of products and complete sets of equipment exports have been insured by Sinosure, with products sold to more than 140 countries and regions. At the same time, to accelerate the overseas strategic layout, Terry Machine has established subsidiaries in Portugal, South Korea, Brazil, and Mexico, and Sinosure has issued overseas investment insurance policies for them to protect against expropriation, exchange restrictions, and war and other political risks in the project countries. In addition, to support enterprises in actively exploring cross-border e-commerce business, in 2023, Sinosure issued the first cross-border e-commerce export political risk insurance policy in the country for it, making Terry Machine one of the first batch of enterprises in the country to enjoy the innovative product services of Sinosure's cross-border e-commerce.

The "Opinion on Promoting the High-Quality Development of Service Trade with High-Level Opening" proposes to optimize the management of cross-border capital flows. Improve foreign exchange management measures, explore grading management based on enterprise credit, and improve the convenience of foreign exchange business for service trade and service field foreign investment. Recently, the State Administration of Foreign Exchange fully considered the actual needs of foreign-related entities and organized the compilation and issuance of the "Enterprise Exchange Rate Risk Management Guidelines" (2024 Edition), which mainly added three aspects of content: First, the enterprise practice chapter, which refines important links such as full-scenario analysis, professional management, and digital solutions for exchange rate risk management; Second, the enterprise case chapter, which selects 16 representative cases for sharing by industry and business characteristics; Third, the enterprise foreign exchange hedging accounting topic, which introduces the requirements of hedging accounting standards, usage conditions, accounting principles, etc. In addition, the State Administration of Foreign Exchange website has simultaneously launched a "Corporate Exchange Rate Risk Management" column, setting up five sub-columns: policy interpretation, operation guidance, practical cases, industry discussions, and media reports. Enterprises and banks can "one-stop" obtain relevant policies, regulations, and information about foreign exchange derivative products. In the first seven months of this year, the total transaction scale of China's foreign exchange market was close to 23 trillion US dollars, a year-on-year increase of 8.7%; during the same period, more than 20,000 merchants handled exchange rate hedging for the first time, helping more enterprises to use foreign exchange derivative products to better manage exchange rate risks.