The new foreign exchange facilitation policy has been fully implemented, bringing great convenience to foreign trade companies.
The time for a single cross-border settlement has been shortened from the original 2 hours to 10 minutes. This huge change has brought benefits to the entire industry chain, especially playing a positive role in promoting the development of the foreign trade sector.
The core changes in the policy are mainly reflected in the following aspects.
First of all, the audit mode has undergone major changes, from the original inspection of orders one by one beforehand to spot inspection afterward.
High-quality and compliant foreign trade companies have canceled the paper verification of the entire set of contracts and invoices before collecting and paying foreign exchange, and only need to keep basic documents for archiving.
The bank has also simplified the implementation review process, reducing the time for a single cross-border foreign exchange collection and settlement from 1-2 hours to 10 minutes, increasing efficiency by more than 80%.
Secondly, four major implementation rules have been expanded nationwide.
Cross-border e-commerce, market procurement, and processing trade are all included in the convenience list, supporting online paperless foreign exchange settlement, which greatly improves the efficiency of settlement.
At the same time, the net settlement of import and export payments for processing trade has been relaxed, and the net settlement of import and export balances has been adopted to reduce the occupation of funds.
The foreign debt limit for small and medium-sized manufacturing enterprises that specialize in new, high-tech industries has been relaxed to US$10 million, lowering the threshold for cross-border financing.
The domestic and foreign currency capital pool of multinational companies has also been expanded, and the group’s domestic and foreign funds can be freely pooled and adjusted, reducing exchange costs.
In addition, many banks have also reduced the spreads on foreign exchange settlement and sales and cross-border remittance fees, further reducing the financial costs of small and medium-sized foreign trade enterprises.
This policy has three substantial benefits for real enterprises.
First, working capital has been revitalized, the repayment cycle has been significantly shortened, and payment deposits have been reduced. Enterprises can have more funds for stocking up and expanding overseas orders.
Second, labor costs are reduced. Enterprises no longer need to repeatedly sort out massive customs declaration documents, and financial labor costs are reduced.
Third, it is conducive to the overseas expansion of enterprises. The procedures for cross-border investment and financing, overseas factory construction, and overseas mergers and acquisitions have been simplified, and the pace of manufacturing overseas expansion has accelerated.
From the perspective of the A-share market, there are several main lines of benefit.
The first main line is the export manufacturing sector, including machinery, home appliances, auto parts, light industry and other industries.
Construction machinery companies such as Sany and XCMG, as well as home appliances, auto parts, outdoor light industry and other companies have accelerated their capital turnover, improved their order-taking capabilities, and revised their performance expectations upward.
Among them, cross-border e-commerce leaders such as Anke Innovation benefit most from paperless and rapid foreign exchange settlement.
The second main line is cross-border foreign trade comprehensive services and market procurement trade. It has deeply cultivated foreign trade service providers in Yiwu and coastal foreign trade distribution areas. The improvement of settlement efficiency has driven the increase in orders.
The third main line is banks, joint-stock banks and city commercial banks with a high proportion of foreign exchange business. The increase in foreign exchange settlement volume, cross-border exchange, and trade financing business are good for outstanding international business targets.
There are also branch lines, cross-border payment, CIPS industry chain, and the expansion of RMB cross-border settlement scenarios, which will benefit cross-border clearing, digital currency, and foreign trade digital service providers.
From the perspective of market logic, early funds are concentrated in technology and semiconductors, and the foreign trade sector as a whole is in a low and low valuation state.
This foreign exchange facilitation policy is a real benefit to the industry and has become an important layout direction for high-low switching funds. It is in line with the logic of the rotation of funds from high-level themes to low-level real performance sectors on June 8.
However, there are also some potential risks.
The facilitation policy is limited to compliant and high-quality whitelisted companies. Small workshops and non-compliant companies cannot enjoy dividends, and individual stocks may diverge.
In addition, overseas demand fluctuations and overseas tariff disturbances will still affect the implementation of export orders.
