Pudong New Area in Shanghai issued a notice on April 8, encouraging regional headquarters of multinational companies, as well as headquarters-type institutions and group treasuries, to establish their treasury centers in the area.

The document, titled "Several Opinions on Encouraging the Agglomeration of Treasury Centers of Regional Headquarters for Multinational Companies in Pudong New Area," will be in effect from May 15, 2024, to May 14, 2029.

A treasury center is a business unit, core department, or independent legal entity of a multinational company's headquarters that conducts centralized management activities for its subsidiaries. These activities include fund pooling, allocation, settlement, investment, financing, real-time monitoring, risk management, and foreign exchange conversion.

Highlights of the document, which consists of 13 articles, include:

1.Treasury centers are encouraged to pilot innovative businesses, with more convenient services to be provided for centralized management activities of treasury centers.

2. Pudong will encourage its large number of financial institutions, such as commercial banks, to support the establishment and development of treasury centers in various ways.

3. Treasury centers are encouraged to adopt new technologies, such as big data, artificial intelligence, mobile internet, cloud computing, and blockchain, along with advanced financial systems from both domestic and international sources. As natural data hubs, treasury centers are encouraged to upgrade their financial management from informatization to intelligent management.

4. For multinational companies' headquarters in Pudong New Area acting as Asia-Pacific or global treasury centers, Pudong will support their conduct of cross-border renminbi centralized receipts and payments and the net settlement of intra-group and supply chain-related current account items. Explore ways to enhance the facilitation of domestic and foreign currency investment and financing, as well as the facilitation of current account receipts and payments.

5. For multinational companies' headquarters in Pudong New Area acting as Asia-Pacific or global treasury centers, support the full utilization of free trade accounts to conduct global receipts and payments in both domestic and foreign currencies. Leverage the multi-currency cash pool's capabilities in the free cross-border exchange of domestic and foreign currencies and controlled use of domestic renminbi. Support the use of cash pool accounts to meet intra-group operational needs, financial management aimed at value preservation and appreciation, and centralized receipts and payments within the group and supply chain. Ensure strict controls to prevent the use of these accounts for non-self-use real estate investment and stock market investment. Facilitate the entry of cash pools into relevant domestic markets for investment in accordance with regulations. Support group headquarters in achieving the centralized onshore management of renminbi funds.

6. For multinational companies' regional treasury centers with independent legal person status, encourage these centers to act as primary operating entities. Support them in selecting appropriate cash pooling arrangements for centralized cross-border operations in both domestic and foreign currencies, facilitating the concentration of funds and balance optimization.

7. For qualified multinational companies whose financial subsidiaries serve as treasury centers, support these subsidiaries in conducting intra-group capital transfers and managing foreign exchange settlements among group members. Support qualified financial subsidiaries in participating in the interbank foreign exchange market and the Shanghai gold market.

8. Seek support from national ministries and commissions to promote the research and exploration of tax policies for cross-border treasury business conducted by qualified treasury centers.

9. Support treasury centers in managing the risks associated with cross-border capital flow by utilizing various business and monitoring systems for both domestic and foreign currencies. Collaborate with regulatory authorities on statistical monitoring and analysis, as well as off-site and on-site inspections.

10. Pudong will offer support in areas such as talent recruitment and incentives, personnel mobility, children's education, medical security, and talent housing.

Source: Pudong New Area government

The English version is for reference only; the official Chinese document shall prevail.