The city is expanding offshore financial services and simplifying cross-border transactions as Chinese companies seek greater flexibility in managing funds overseas.
Photo from Jiemian News
by YANG Zhijin
Shanghai banks have begun operating in all six areas of a new offshore finance pilot program, four months after the city unveiled measures to strengthen its role as an international financial center.
The pilots cover offshore trade financing, bond issuance, reinsurance, corporate treasury management, renminbi foreign exchange trading and banking services for nonresident individuals, according to the Shanghai Banking Association.
At an October 13 briefing, banking executives outlined progress under the offshore finance plan introduced in June and a separate package of 18 measures issued in April 2025 to streamline cross-border financial services.
The initiatives come as Chinese companies expand overseas, increasing demand for international financing, currency hedging and more flexible management of funds across markets.
One of the more active areas has been free trade zone offshore bonds. By the end of September, 22 bonds worth a combined 8.6 billion yuan (US$1.2 billion) had been issued, according to Jiemian News' tally. Most issuers were overseas branches of Chinese financial institutions.
Bank of China has conducted business across all six pilot areas, including several first-of-their-kind transactions, said CHEN Zhineng, president of the Shanghai Banking Association and head of the bank's Shanghai branch.
Another priority is attracting multinational companies to establish treasury centers in Shanghai, allowing them to manage cash, financing and foreign exchange exposure across their global operations.
ZHANG Wenjie, president of Citi China and CEO of Citigroup China, told Jiemian News that established financial hubs such as Hong Kong and Singapore attract multinational treasury centers through flexible foreign exchange rules, favorable tax policies and regulatory stability.
Zhang called for faster implementation of detailed rules governing multinational treasury centers in Shanghai, alongside further improvements in cross-border cash management for Chinese and foreign companies.
Citi plans to expand services combining cross-border cash pooling, international fund transfers and foreign exchange hedging to support multinational companies' regional headquarters, he added.
LIU Xiaochun, an adjunct professor at Shanghai Advanced Institute of Finance and former president of China Zheshang Bank, told Jiemian News that Shanghai's offshore finance initiative could provide Chinese companies with a more secure location to manage overseas funds and reduce certain legal and regulatory risks associated with operating abroad.
Shanghai banks have also reported progress under the separate 18-point cross-border finance plan, which aims to reduce paperwork, speed up international payments and improve access to foreign exchange risk management tools.
By the end of June, 11 locally incorporated banks and 31 bank branches in Shanghai were participating in a reform allowing simplified foreign exchange procedures for qualifying corporate customers.
The number of customers receiving the highest level of streamlined services reached 5,340, up 31% year on year, while transactions processed on customer instructions without additional document-by-document verification totaled US$106.7 billion, nearly double the previous year's level.
Banks are increasingly using technology to accelerate processing. Shanghai Pudong Development Bank, for example, uses artificial intelligence to recognize and verify transaction documents, reducing manual checks. Its express cross-border remittance service takes an average of 2.5 seconds to process outgoing transfers, according to Wang Sunan, head of the bank's Shanghai branch.
Currency hedging has also gained traction. About 38% of corporate customers in Shanghai had entered into foreign exchange hedging agreements, eight percentage points above the national average, according to the banking association.
Agricultural Bank of China's Shanghai branch said it had helped more than 600 companies access currency hedging support this year, saving them nearly 20 million yuan in financial costs.
Meanwhile, Shanghai has established more than 1,600 cross-border renminbi cash pools under various regulatory arrangements, allowing multinational companies and Chinese businesses operating overseas to centralize and transfer funds more efficiently.
The changes are intended to address a persistent challenge for companies operating internationally: managing liquidity across different jurisdictions while navigating currency controls, financing requirements and regulatory differences.
