EconomistatDevelopmentBankofSingapore

　　ChinarecentlyapprovedaplanforpilotfreetradezonesinGuangdong，TianjinandFujian.Guangdongfreetradezonecovers116.2squarekilometers，inlcudingNanshanewareainGuangzhou，QianhaiandShekouinShenzhenandHengqininZhuhai.ThefoundationofGuangdongfreetradezonewillplayakeyroleindeepeningtheeconomicintegrationofGuangdong，HongKongandMacao.

　　Tianjinfreetradezonecovers119.9squarekilometers，includingTianjinairport，BinhainewareaandTianjinport.

　　Fujianfreetradezonecovers118.04squarekilometers，includingpartsofPingtan，XiamenandFuzhou.Meanwhile，Shanghaifreetradezonewillexpandto120.72squarekilometersfromthecurrent28.78squarekilometers.

　　PushReformtomoreAreas

　　TheShanghaifreetradezonefoundedinSeptember2013isanimportantreformplanofthenewgovernment.Theexpansionoffreetradezonescantestthereformachievementsoftheminmoreareas.Meanwhile，italsopushesmeasuresofpilotreformationinShanghaitootherareasexpediently.Somemeasuresnotonlyprovidemoreconvenientwaysforprivatecapitalsenteringfreetradezones，butalsoopentheservicesectorfurther.Theformulationof"negativelist"isasignificantmilestoneinstreamlingtheapprovalprocedureforinvestmentinfreetradezones.AsofNovember2014，14，000newcompanieshadbeenestablished，amongwhich2114areoverseascompanies.

　　Sincetheprocedureofapplicationissimpleandfast，thedevelopmentofforeigninvestmentsinfreetradezonesgainstraction.Attheendof2014，therewere160overseasinvestmentprojectscompletedintotal.TheoverseasinvestmentbyChineseenterprisesreached3.8billionRMB.Asmentionedinpreviousstudyreports，theimplementationofthe"Goglobal"strategyofdomesticenterprisesisthekeypointforChinatorealizebalanceofinternationalpayments.Through"Goglobal"，Chineseenterprisesnotonlycanexpandbusinessscope，butalsocantransferexcessivecapacitytooverseas，whichisthemainpurposeofthe"OneBeltandOneRoad"initiative.

　　BankingBusinessesmainlyTurntoFee

　　Income

　　Chineseenterprisesgototheworldunceasingly;inaddition，theadmittanceofoverseascompaniesismoreflexible，whichwillbringasharpincreaseofcross-borderproductsandservicesofbanks.Forexample，thetwo-waycross-borderRMBcapitalpoolpilotprojectallowsenterprisestogetthroughtheformerseparatedcapitalpoolsinsideandoutsideChina，soenterprisescanenhanceinternalfinancingofcompaniesandreduceexternalborrowingcostsbymaximizingcashflow.Agaisntthebackdropofspeed-upofliberalizationofinterestrates，thiskindofcross-borderproductsandservicedevelopmentcanbenefitChinesebanksaswell.Withtheexpansionoffreetradezones，bankingbusinessesofenterprises，suchasmanagementofcross-bordercashpools，internationalsettlementsandotherfeeincomes，willhaveinfinitedevelopmentpotential.

　　GrowthofCross-BorderTransactions

　　Theotherfocusisthewidespreaduseoffreetradeaccount(FTA)system.FTAwasfoundedinmid-2014.ThissystemallowsrealizingRMBtradeofcashaccountinfreetradezones，directinvestmentofforeignmerchants，cross-borderlendingofregisteredcompaniesandsoon.Bynow，13banks(includetwoforeignones)havebeenapprovedtoprovideFTAforclients.

　　Officialdatashowthatcompaniesobtainedatotalof19.7billionRMBofcross-borderloansinfreetradezones，theinterestrateis4.2%，5.6%lowerthanthecorrespondingone-yeardomesticlendingrate.SinceFebruary2015，Chinahasfurthereasedrelatedfinancingconstraints.Themaximumloanamountofenterprisesisdoublecorporatecapital，andthelendingofregisteredbanksinfreetradezonesisfivetimesmorethanitstieronecapital.Meanwhile，FTAallowstheloancurrenciestobeRMBorforeigncurrencies.

　　ThenewlyfoundedGuangdong，FujianandTianjinfreetradezoneswilldefinitelypromotemoreoffshorefinancingactivities.Therelativelylowinterestrateprovidesmorechoicesforenterprisestosavecosts.Soitisexpectedthatmedium-sizedChineseenterpriseswhichhaven'tsetbranchofficeswillhavecertainneedforforeigncurrencyloan.However，thedevelopmentexistsuncertaintyforcross-borderRMBloan.

　　OffshoreRMBCapitalPoolNeedstoExpand

　　further

　　SincethelaunchofShanghai-HongKongStockConnectprogramme，ShanghaistockmarkethasshownmoreadvantagesoverHongKongstockmarket.Currently，109billionRMBflowstoShanghaifromHongKongcashpool.Itwas11%oftheRMBdepositofHongKonginJanuary2015.Otherinvestmentchannels，suchastheRMBQualifiedForeignInstitutionalInvestors(RQFII)，hasthecharacteristicsofcontractibility.Theinterestrateinoffshoremarketscontinuestobehigherthanthatofonshoremarketssinceh4of2014duetothesedevelopments.

　　Meanwhile，theexpectationofRMBdevaluationleadstoanallowanceofoffshorepricecomparedwithonshoreprice，andinfluencesthevelocityandscaleofflowingintooffshoremarketsofRMBthroughcurrentaccounts.

　　ToimprovethesupplyofRMBoffshoremarkets，weneedtoeasetheoverseasinvestmentsbyinlandresidents.Theallowanceoftakingpartinmarketsofonshorebanksforoffshorebanksisalsoafeasiblemeasure.TheHongKongMonetaryAuthoritycanpromotethecirculationofRMBfurtherbyexpandingcurrencyswapswiththecentralbank.