The visit of President XI Jinping to the Shanghai FTZ on May 22, prompted the Shanghai office of the People’s Bank of China (PBOC) to provide details of the free trade accounts (FTAs) available in the FTZ to individuals and companies registered in the Shanghai FTZ as well as non-resident individuals and institutions:

• all are able to set up different types of FTAs, which are treated similarly to bank accounts outside of China and are not affected by by Capital Account restrictions
• account holders are able to move funds between other resident and non-resident FTAs, offshore accounts and non-resident bank accounts in other parts of China for purposes of trade settlement, foreign direct investment and cross-border lending transactions (both inward and outward remittances)
• fund transfers between and regular onshore accounts in China remain regulated as cross-border transactions
• FTA transactions are limited to renminbi, but may be extended to foreign currencies in six months, after a review by PBOC and SAFE
• flows will continue to be monitored and transactions are subject to suspension at the central bank’s discretion if problems arise. 

As with other FTZ, corporates will now be able to make cross-border trade renminbi settlements will no longer require evidence of the underlying documents

Other transactions types, including investment in capital markets, derivatives and hedging activities, are likely to be considered next under a set of further implementation rules.