Mainland China is preparing a new package of foreign-exchange reforms covering direct investment, cross-border financing and capital-account registration. Although the detailed measures have not yet been published, the announcements provide a useful indication of how the State Administration of Foreign Exchange (“SAFE”) intends to manage cross-border capital flows in the next stage of reform.
The broader direction is a shift from facilitating individual transactions toward a more integrated system built around the enterprise, its compliance record and the full life cycle of its cross-border activities. SAFE also intends to give banks a larger operational role, coordinate RMB and foreign-currency rules more closely, and move more registration procedures online.
Three themes emerge from the policy announcements:
Enterprise conduct will matter more. Companies with stable operations and strong compliance records may receive more convenient treatment, while supervision moves toward transaction monitoring and post-transaction review.
Banks will take on a larger role. More capital-account registrations may be handled directly by banks, which could reduce administrative steps while preserving banks’ responsibility to review the substance of each transaction.
Cross-border funding may become more flexible. The proposed reforms could simplify the use of foreign-invested capital and widen access to cross-border financing policies, particularly for qualifying technology and green-finance businesses.
These developments suggest that SAFE is seeking to make legitimate cross-border investment and financing easier to administer while retaining risk-based supervision over the underlying transactions.
SAFE is changing how it manages cross-border capital flows
At the 2026 Lujiazui Forum, Zhu Hexin, Deputy Governor of the People’s Bank of China and Administrator of SAFE, described four directions for the continued opening of Mainland China’s capital account. Taken together, they show that SAFE plans to move beyond isolated transaction approvals and apply a broader model based on institutional consistency, enterprise conduct, currency coordination and full-cycle supervision.
More consistent rules
SAFE plans to make cross-border capital rules more transparent and predictable, while aligning relevant requirements more closely with international economic and trade standards and integrating existing market-access channels.
For international businesses, it signals a longer-term effort to make the rules governing inbound and outbound investment more consistent.
Greater weight on the enterprise’s compliance record
SAFE intends to move from facilitating individual transactions toward granting greater convenience to enterprises with stable operations and strong credit records. At the same time, it is shifting some regulatory attention from advance review to transaction monitoring and post-transaction examination.
A company’s compliance history may therefore affect how easily it can complete future cross-border transactions. Enterprises should maintain a clear connection among the underlying agreement, invoice, bank instruction, accounting entry, tax treatment and actual use of funds, because simpler advance procedures may be accompanied by closer review after the transaction.
Closer coordination of RMB and foreign-currency rules
SAFE also plans to coordinate foreign-exchange administration more closely with policies governing the cross-border use of RMB. This may give businesses more flexibility when choosing how to fund and settle investments, although the commercial merits of each currency will still depend on financing costs, cash-flow needs and exchange-rate exposure.
Supervision across the transaction cycle
SAFE’s proposed approach extends beyond the conversion and remittance of funds. It covers the underlying investment or financing, settlement, use of proceeds, payment and clearing arrangements, foreign-exchange risk management, repayment and exit.
Companies should review the complete transaction flow before approaching their bank, because the commercial basis and documentary support for each stage may affect the treatment of the final payment.
Three proposed measures may reduce administrative work
At a State Council Information Office press conference held on 17 July 2026, Xiao Sheng, Director-General of SAFE’s Capital Account Management Department, grouped the proposed measures into three areas: direct investment, cross-border financing and capital-account registration.
SAFE stated that the measures would be formally published and implemented after the relevant procedures had been completed. The proposals should therefore be treated as confirmed policy direction, but not as procedures that companies can already use.
Direct investment procedures may become simpler
SAFE plans to simplify capital-account settlement and payment procedures for foreign-invested enterprises. This could make it easier for a Mainland China subsidiary to convert and use capital contributed by an overseas shareholder, although the final rules will need to specify which procedures will change, how the funds may be used and what supporting documents banks must review.
SAFE also plans to simplify certain reviews of funds remitted by Mainland Chinese enterprises for genuine overseas operations. This may make approved outbound investment funds easier to deploy, but it does not remove the development and reform, commerce, foreign-exchange and banking requirements that apply to outbound direct investment.
More enterprises may qualify for cross-border financing policies
SAFE proposes to expand the range of enterprises covered by its cross-border financing policies, introduce the green foreign-debt pilot nationwide and adjust the macro-prudential framework for cross-border financing.
These changes may give qualifying businesses greater flexibility when borrowing from overseas shareholders, group companies or financial institutions. The position of an individual borrower will nevertheless depend on the final eligibility criteria, its available foreign-debt capacity and the registration and drawdown requirements that apply to the financing.
Banks may handle more registrations directly
SAFE plans to transfer certain capital-account registrations to banks and increase the number of procedures that companies can complete online. If implemented broadly, this could reduce direct applications to SAFE and shorten processing times.
The practical result will depend on which registrations are transferred and how servicing banks apply the new rules. Banks will remain responsible for checking the authenticity, legality and commercial basis of each transaction, so bank-handled registration should not be confused with registration-free treatment.
The reforms may affect several areas of business funding
The proposals are most relevant to companies that receive foreign-invested capital, borrow from overseas group companies, manage regular cross-border payments or plan centralized treasury arrangements.
| Area | Possible effect | Unresolved point |
|---|---|---|
| Capital contributions | Simpler settlement and use of foreign-invested capital | Procedures, supporting documents and permitted uses |
| Shareholder and group loans | Wider access to cross-border financing policies | Eligibility, borrowing capacity and registration |
| Capital-account registration | More applications handled by banks or online | Registrations covered and bank procedures |
| Cash pooling | More support for multinational treasury arrangements | Participating entities, transaction volume and programme conditions |
| RMB funding | Closer coordination with foreign-currency rules | Financing cost and commercial suitability |
| Foreign-exchange hedging | Wider access to risk-management products | Product suitability, credit requirements and cost |
These are possible business effects derived from SAFE’s stated policy direction; they are not benefits already available to every enterprise.
Multinational treasury arrangements require a separate commercial assessment
SAFE has reiterated its support for centralized cross-border fund management by multinational companies, while Shanghai is expected to remain a testing ground for more flexible settlement and treasury policies.
A cross-border cash pool or regional treasury function can centralize surplus cash, reduce fragmented borrowing and improve visibility over group liquidity, while also supporting more consistent management of foreign-exchange exposure. The structure may nevertheless be disproportionate for a group with only one material Mainland China subsidiary or limited cross-border payments.
Before establishing a treasury arrangement, a group should compare the expected financing and administrative savings with the implementation cost, banking requirements, internal controls and continuing compliance work. For businesses with limited transaction volume, a conventional intercompany loan or settlement arrangement may remain the more practical option.
Companies should prepare without changing existing procedures
The reforms do not require immediate restructuring, but advance preparation will help companies identify which measures are relevant once the rules are published.
- First, companies should prepare a 12-month forecast covering capital contributions, intercompany loans, repayments, dividends, overseas investments and foreign-exchange hedging. Cross-border service and royalty payments may be included in the wider cash-flow forecast, although companies should not assume that these current-account transactions fall within the announced capital-account reforms.
- Second, foreign-invested enterprises should confirm their registered capital, paid-in capital, existing foreign-debt registrations and available borrowing capacity. Where corporate, banking, accounting and regulatory records do not agree, the company should resolve the discrepancies before seeking new financing or applying for a simpler procedure.
- Third, companies should review the documents supporting their cross-border transactions. Agreements, invoices, payment instructions, accounting records, tax filings and evidence of fund use should describe the same commercial arrangement, because SAFE’s move toward entity-based treatment may make the overall compliance record more important.
- Finally, multinational groups should assess treasury structures in proportion to their activity. A formal cash pool should be compared with simpler funding arrangements by reference to transaction volume, participating entities, financing requirements, implementation costs and expected savings.
Existing rules continue to apply
SAFE has confirmed the direction of the reforms, but the operative requirements, effective dates and transitional arrangements have not yet been published. Until they are, companies should continue using the existing foreign-exchange, registration and banking procedures.
Once the implementing rules are available, businesses should compare them with their planned capital contributions, borrowing and treasury transactions, confirm the bank’s operating requirements and change their procedures only where the new rules apply.
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This article provides general information based on official materials available as of 3 August 2026. The treatment of a particular transaction will depend on its structure, location, currency, purpose, participating entities and the requirements applied by the competent authorities and servicing banks. Companies should obtain transaction-specific advice where necessary.
Sources
- State Administration of Foreign Exchange, “New Patterns in Global Capital Flows and China’s High-Level Opening-up,” speech by Zhu Hexin at the 2026 Lujiazui Forum, delivered and published 17 June 2026.
- Bank for International Settlements, English transcript of Zhu Hexin’s Lujiazui Forum speech, published 1 July 2026.
- State Council Information Office and State Administration of Foreign Exchange, transcript of the press conference on foreign-exchange receipts and payments in the first half of 2026, held 17 July 2026. The linked SAFE Beijing page is a later official republication.
- Ministry of Commerce, China Trade in Services Guide, report on SAFE’s proposed cross-border investment and financing measures, July 2026.