The five central departments jointly issued opinions, and virtual asset-related products are expected to be included in the "Cross-Border Wealth Management Connect."

Expand the range of investment products; support mainland residents of the Guangdong-Hong Kong-Macao Greater Bay Area in purchasing qualified investment products from Hong Kong and Macao.

Editor: Bowen, Bailu Reception Room

On January 22, 2025, the official website of the Central People's Government of the People's Republic of China announced that the People's Bank of China, the Ministry of Commerce, the Financial Regulatory Bureau, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange jointly issued the "Opinions on Promoting Institutional Opening Up in the Financial Sector in Conditional Free Trade Pilot Zones (Hong Kong) to Align with International High Standards," initiating a new wave of financial opening.

The opinions propose 20 policy measures, including supporting the optimization of the "Cross-Border Wealth Management Connect" pilot in the Guangdong-Hong Kong-Macao Greater Bay Area and allowing foreign financial institutions to provide new financial services. The focus is on three key points:

Allowing Chinese and foreign institutions to carry out new financial services that are not provided within our country but are offered and regulated in other countries or regions;
Continuously optimizing the "Cross-Border Wealth Management Connect" pilot in the Guangdong-Hong Kong-Macao Greater Bay Area, supporting mainland residents in the Greater Bay Area to purchase qualified investment products sold by Hong Kong and Macao financial institutions through these institutions; expanding the range of participating institutions and qualified investment products;
Under the premise of genuine compliance, allowing all transfers related to foreign investors' investments in the pilot areas to be freely remitted in and out without delay. Such transfers include: capital contributions; profits, dividends, interest, capital gains, royalties, management fees, technical guidance fees, and other expenses.

Under the new policy, products related to virtual assets may be included in the Cross-Border Wealth Management Connect; at the same time, it creates new possibilities for the integration of blockchain technology and traditional finance. Especially in the RWA field, cooperation between foreign financial institutions and blockchain companies is expected to become an important way for domestic enterprises to broaden their financing channels.

The following is the original text of the opinions:

In order to deeply implement the spirit of the Central Financial Work Conference and to implement the "Several Measures for Aligning with International High Standards to Promote Institutional Opening Up in Conditional Free Trade Pilot Zones and Free Trade Ports" and the "Overall Plan for High-Level Institutional Opening Up in the China (Shanghai) Free Trade Pilot Zone," the following opinions are proposed regarding the financial sector in conditional free trade pilot zones and free trade ports to align with international high standards for institutional opening.

(Including regions such as Shanghai, Guangdong, Tianjin, Fujian, Beijing Free Trade Pilot Zones, and Hainan Free Trade Port, as well as the Hengqin Guangdong-Macao Deep Cooperation Zone, Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone, and Guangzhou Nansha, which are important cooperation platforms open to Hong Kong and Macao, collectively referred to as pilot areas.)

Allow foreign financial institutions to carry out similar new financial services as Chinese financial institutions

(1) The new financial services referred to in this opinion are those that are not provided within our country but are offered and regulated in other countries or regions.

The development of new financial services follows the principle of consistency between domestic and foreign practices. Except for specific new financial services involving national security, financial security, and other factors, if Chinese financial institutions are allowed to carry out such services, foreign financial institutions in the pilot areas should also be allowed to do so.

The specific forms of developing new financial services can be through licensing or pilot programs.

(2) If a new financial service is carried out in a licensed manner, the financial regulatory authorities may determine the types and nature of institutions that can carry out this new financial service according to their authority and the principle of consistency between domestic and foreign practices, and require that a license be obtained to carry out this service.

The financial regulatory authorities should make a decision within a reasonable period and may only refuse to grant a license for prudent reasons.

(3) If a new financial service is carried out in a pilot manner, qualified foreign financial institutions should be actively supported to participate, and foreign financial institutions should not be excluded from the pilot scope.

If the pilot institutions do not include foreign financial institutions, a relevant explanation with sufficient reasons should be provided.

Decisions on applications for financial institutions to carry out related services within 120 days

(4) According to the principle of consistency between domestic and foreign practices, for complete and legally compliant applications submitted by foreign financial institutions, investors of foreign financial institutions, and cross-border financial service providers to carry out financial services in the pilot areas, a decision should be made within 120 days from the date of acceptance, and the applicant should be notified promptly.

If a decision cannot be made within 120 days, timely communication and explanation should be provided to the applicant. If the period specified by laws and administrative regulations exceeds 120 days, a decision should be made within that period.

(5) Optimize the administrative approval services related to securities and futures financial services.

Revise relevant approval systems and administrative licensing service guidelines, reducing the approval time for domestic and foreign securities companies (including specialized subsidiaries of securities companies), public fund management companies, and futures companies to be established in the pilot areas from 180 days to 120 days.

(6) Optimize the administrative approval services related to banking and insurance financial services. Refine the approval workflow, optimize approval services, and reduce the approval time for foreign bank operating institutions and foreign insurance institutions to be established in the pilot areas from 180 days to 120 days.

Support lawful cross-border purchases of certain types of foreign financial services

(7) According to China's commitments upon joining the World Trade Organization (WTO), the currently open areas under cross-border delivery include: the banking sector allows cross-border provision and transfer of financial information, financial data processing, and related software; consulting, intermediary, and other ancillary services.

The insurance sector allows for reinsurance, international maritime, air, and transport insurance, large commercial insurance brokerage, international maritime, air, and transport insurance brokerage, and reinsurance brokerage.

(8) Under the premise of genuine compliance, enterprises and individuals in the pilot areas may lawfully handle cross-border premium renewals, claims, and cancellations under current accounts.

(9) Continuously optimize the "Cross-Border Wealth Management Connect" pilot in the Guangdong-Hong Kong-Macao Greater Bay Area, supporting mainland residents in the Greater Bay Area to purchase qualified investment products sold by Hong Kong and Macao financial institutions through these institutions. Expand the range of participating institutions and qualified investment products, etc.

(10) Set up a financial service zone in the Macau New Neighborhood of the Hengqin Guangdong-Macao Deep Cooperation Zone, and explore providing relevant financial services to residents of the Macau New Neighborhood under a dual currency acceptance model of Renminbi and Macanese Pataca, under the premise of lawful compliance.

Facilitate the transfer of funds related to foreign investors' investments

(11) Under the premise of genuine compliance, allow all transfers related to foreign investors' investments in the pilot areas to be freely remitted in and out without delay. Such transfers include: capital contributions; profits, dividends, interest, capital gains, royalties, management fees, technical guidance fees, and other expenses;

All or part of the proceeds from the sale of investments, all or part of the proceeds from the liquidation of investments; payments made under contracts including loan agreements; compensations or indemnities obtained lawfully; amounts arising from dispute resolution.

(12) Under the macro-prudential management framework, continuously enhance the convenience of the entire process of foreign investment transactions in the pilot areas, guiding commercial banks to strengthen business reviews and confirm that the corresponding fund receipts and payments have a genuine and lawful transaction basis.

(13) Support the pilot areas in including more qualified foreign-invested enterprises in the coverage of trade and investment facilitation pilot policies, enhancing the convenience of settlement for foreign-invested enterprises.

(14) In Hainan Free Trade Port and Hengqin Guangdong-Macao Deep Cooperation Zone, establish a multi-functional free trade account system to enhance the convenience of cross-border capital flows.

Improve arrangements for the cross-border flow of financial data

(15) Facilitate and regulate the cross-border flow of data from financial institutions in the pilot areas, exploring the formation of a unified compliance standard for the cross-border flow of financial data within the framework of the national data cross-border transmission security management system, clarifying the rules for the cross-border flow of financial data, and allowing financial institutions in the pilot areas to lawfully transmit data necessary for daily operations abroad.

Management measures may be taken for the cross-border transmission of financial data for the purpose of protecting data security and personal information security or based on prudent considerations. Explore establishing a "white list" system for the cross-border circulation of financial data, including data that has been researched and matured in the pilot areas and approved by relevant national departments in the "white list."

In conjunction with the data cross-border transmission needs of financial institutions in the free trade pilot zones, research the data list that needs to be included in the security assessment for data exit, standard contracts for personal information exit, and the scope of personal information protection certification management, and efficiently carry out security assessments for the exit of important data and personal information in the financial sector.

(16) Formulate classification and grading rules and standards for financial data, research and issue a directory of important data in the financial sector, and supervise and guide financial institutions to carry out important data identification declarations and data exit security assessment declarations, promoting the proper protection of financial data in cross-border contexts.

(17) Support financial institutions and payment service providers in the pilot areas to research and launch internationally advanced standards for electronic payment systems, carry out cross-border certification and electronic identification of digital identities, support the lawful introduction of foreign electronic payment institutions, and research and improve the digital identity certification system in line with international standards.

(18) For the import, distribution, sale, or use of mass-market financial software (excluding software used for critical information infrastructure in the financial sector) and products containing such financial software, relevant departments and their staff shall not require the transfer or acquisition of the source code of the relevant financial software owned by enterprises or individuals as a condition.

Comprehensively strengthen financial regulation and effectively prevent and resolve financial risks

(19) Improve the risk monitoring, early warning, prevention, and resolution system.

Strengthen the identification of major financial risks in the pilot areas and the prevention of systemic financial risks, enhance cross-departmental financial regulatory collaboration in the pilot areas, strengthen the collection, monitoring, and utilization of data on cross-border receipts and payments, increase efforts to combat illegal financial activities, and improve the emergency response mechanism for financial risks.

(20) Establish a cross-border dispute resolution mechanism that aligns with international rules.

Improve the financial consumer rights protection system, support the development of international arbitration and mediation services in the pilot areas, and explore providing diversified and international solutions for cross-border disputes. Create a "commercial mediation + international arbitration" one-stop, diversified, and international financial dispute resolution platform.

The measures mentioned in this article regarding the opening of the market access for services and service providers in Hong Kong and Macao and the provision of separate preferential treatment are implemented under the framework of the "Arrangement for Establishing Closer Economic and Trade Relations between the Mainland and Hong Kong" (CEPA) and the "Arrangement for Establishing Closer Economic and Trade Relations between the Mainland and Macao." Relevant departments and pilot areas should strengthen organizational implementation, conduct effectiveness assessments, and promptly summarize experiences for replication and promotion.

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