A scene (drone photo) in the Dongjiang area of ​​Tianjin Free Trade Pilot Zone taken on March 20, 2024. Photo by Xinhua News Agency reporter Zhao Zishuo

Xinhua News Agency, Tianjin, April 26th Title: China's first free trade pilot zone in northern China uses financial opening to serve foreign trade

Xinhua News Agency reporters Li Kun, Song Rui, and Yang Wen

Shiqiao Group, a logistics platform company located in the central business area of ​​the Tianjin Free Trade Pilot Zone, has received a foreign capital credit of more than 1.8 billion yuan since 2020. After the funds enter the country, they are mainly used to invest in new financial leasing business. Relying on "financial + technology" means, the company provides financial support for more than 8,000 vehicles.

"With the policy support of the free trade pilot zone, we have been approved to apply to join the People's Bank of China credit reporting system, 'portrait' for truck drivers, helping them raise funds to buy cars, effectively lowering the threshold." said Liu Le, compliance director of Shiqiao Group.

Since April 2015, in Tianjin, which has the development positioning of "Financial Innovation Operation Demonstration Zone", the first free trade pilot zone in the north has been settled and has continuously deepened open innovation in the financial field.

In May 2022, Italy-based Golier (Tianjin) Packaging Co., Ltd. completed its first offshore trade settlement under the "Tianjin model" of offshore trade. Now such businesses have been carried out on a regular basis.

"Tianjin companies can purchase raw materials from global suppliers, and after assembly through overseas manufacturing bases such as Italy and the Netherlands, they will be sent directly to overseas sales destinations such as Thailand. The transaction of collection and payment of foreign exchange occurs in Tianjin companies." said Mirco Turina, Gorill (Tianjin) Packaging Co., Ltd.

Under the traditional model, cross-border capital flow and logistics must be consistent, while the "Tianjin model" approves related businesses in the form of a multi-party "on-site office meeting" of foreign exchange management department + local administrative department + commercial banks + offshore trade implementation enterprises.

In 2024, the Tianjin Free Trade Pilot Zone contributed 38% of the city's import and export volume with 1% of Tianjin's land, and the actual use of foreign capital exceeded 40% of the city.

In order to more effectively promote financial opening, attract foreign investment and promote foreign trade, the Tianjin Free Trade Pilot Zone has been striving to connect with high-standard international economic and trade rules.

November, with the co-managed accounts of Shengye Commercial Factoring Co., Ltd. and Tianjin Huatu Automobile Logistics Co., Ltd. receiving US$80,000 from the Azerbaijan buyer, China's first cross-border foreign currency international commercial factoring business "integrated co-managed account + priority compensation right" has achieved a closed loop. "This is the wisdom of Tianjin Free Trade Pilot Zone to empower financial openness with institutional innovation!" Shi Yunsheng, general manager of Huatu Automobile Company, sighed.

In the past, China's foreign exchange management had the principle of "whoever exported, he who collects foreign exchange". Although commercial factoring companies could pay funds first based on accounts receivable notes, they were not exporters and could not directly collect foreign exchange collections.

According to Liu Xuan, senior manager of the risk management department of Shengye Factoring Company, according to the needs they and exporters, the Innovation and Development Bureau of the Tianjin Free Trade Pilot Zone actively connects with customs, foreign exchange and other departments and holds many meetings to study solutions.

"After repeated discussions and communication with relevant departments, we innovate methods, and exporters and factoring agents open special accounts and jointly supervise them in the name of cross-border trade enterprises. This not only follows foreign exchange management rules, but also solves the problem of collection of payments by factoring companies." Qu Bin, director of the Financial Development Center of the Innovation Development Bureau of the Tianjin Free Trade Pilot Zone, said that the Tianjin Free Trade Pilot Zone has issued the document "Guiding Opinions on Supporting the High-Quality Development of International Commercial Factoring" for this reform measure.

Liang Yiming, full-time deputy director of the Tianjin Free Trade Pilot Zone Management Committee, said that under the policy cultivation, Tianjin's commercial factoring enterprises have total assets exceeding 300 billion yuan, ranking first in China.

Now, the central business area of ​​Tianjin Free Trade Pilot Zone has become the first pilot area for commercial factoring in China, forming more than 20 national first cases, including China's first factoring accounting standards and the first commercial factoring business rules.

He Nan, deputy director of the Free Trade Bureau of the Central Business Area, said that at present, the total assets of the factoring company in the area exceed 150 billion yuan, accounting for one-fifth of China, and has become an important source of innovation, model output and institutional gathering place for China's commercial factoring industry.

In the Dongjiang area of ​​Tianjin Free Trade Pilot Zone, in the past 10 years, inspired by dozens of innovative pilot policies such as financial leasing export tax rebates and capital willingness to settle foreign exchange, the scale of aircraft leasing in the area has grown from more than 400 in 2015 to more than 2,300 today, rising to the world aircraft leasing highland second only to Ireland.

Shi Yunsheng, who registered the company in the Dongjiang area, told reporters that the free trade (FT) account also brought them great convenience.

"In the past, companies had to open US dollar accounts if they had US dollar revenue and expenditure, and had to open euro accounts if they had euro revenue and expenditure. If they had business dealings with many countries, they had to open many accounts with different foreign currencies. And FT accounts can achieve the integration of domestic and foreign currencies, which is more conducive to our 'going overseas'." Shi Yunsheng said that in 2021, the export value of Huatu Automobile was only US$4.27 million, and this number soared to nearly US$100 million in 2024.

As the only area in the north that allows opening FT accounts, the Tianjin Free Trade Pilot Zone has opened more than 3,000, with a scale of more than 1.15 trillion yuan. Sun Yong, deputy president of the Tianjin Branch of Bank of China, said that FT account users can flexibly choose offshore onshore exchange rate and settlement time to increase returns. Foreign companies can also open FT accounts to effectively serve national strategies such as coordinated development of Beijing, Tianjin and Hebei.

"Tianjin Free Trade Pilot Zone is relying on its policy advantages to produce a number of typical cross-border financial and offshore financial products and service cases, building a more open and competitive cross-border investment and financing ecosystem, injecting continuous impetus into the sustainable development of the local economy." Wang Yagang, deputy director of the Tianjin Municipal Bureau of Commerce, said.