| The establishment of China(shanghai) Pilot Free Trade Zone(“CSPFTZ” or “FTZ”) is, undoubtedly, a major action for our central government. CSPFTZ is a pilot zone for China to deepen reform, to expedite the functional transformation of the government, to adapt to the economical globalization, to create a fair competing environment for domestic and overseas equity investment, as well as to accumulate repeatable experience on achieving a more open economy.With the basic principles “precession foretaste, controlled risk, push in steps and consummate step by step” and the innovative management mode “Frontier opening, second-tier effective and efficient control”, People’s Bank of China issued its comments and relative bylaws on financial support to the development of CSPFTZ, putting forward the creative measure to build up the Free Trade Accounting Unit(“FTU”), which may play a significant role on risks resistance.FTU, an unattached accounting system for financing, is an efficient mechanism to resist risks, which, generally speaking, by establishing a new and complete operational process of Free Trade Accounts(“FTAs”) to guarantee the fully and truly reflection and efficient supervision of financing. The founding of FTU is a key content of financial reform in FTZ. It is an important arrangement for financing, opening financial market and risks resistance.FTU, a systematic program, links tightly to other financial policies in FTZ. This unit separates the ledger accounts, namely FTAs, apart from offshore accounts and NRAs, providing a free channel for fund circulation between FTZ and overseas, and a relatively limited financial access between FTZ and traditional domestic accounts. FTU is viewing to the freedom and the convenience for investment, financing exchanging and risk resistance. FTU, which was founded in accordance with the demand of financial development and risks resistance, is the general basic and practical carrier for the financial reform and for other innovative measures in FTZ.With the assistance of FTU, which offers great advantage for companies to develop foreign operation, our domestic enterprises get rid of the controlling of foreign exchange. Under this circumstance, enterprises in FTZ are able to take advantages of different market policies in China or abroad, and adopt better financing project for their profit.The thesis, firstly, legally defines concepts related to FTU, and summarizes its characteristic, namely ledger accounting, usage of different identification, absolute freedom for offshore trade, and limited penetration for fund circulation between domestic accounts and FTAs. Secondly, discusses the practical operational theory and the realistic value of the creative Unit at issue. Thirdly, by using three typical cases, namely Raccoon(Shanghai) International Trading, Shanghai Wai Gaoqiao Group and Delphi(China), the writer illustrates the significant role of FTU to be the base of relative financial innovation, and greatly helps FTZ to develop offshore as well as mainland business operation. Last but not least, the writer legally hackles the practical problems, namely the ambiguity of bounds in convertibility of RMB and financial circulation, low degree of individual participation of capital market, oppugn of extending value of this system, and risks(hot money, money laundering, terror financing and other potential risks) existing in current regulation system of FTU, and provides feasible suggestions to solute problems and resist risks. To make it concrete, rigorous enforcing regulations and bylaws shall be formulated by multiple subjects in and outside the FTZ, and more effective supervision on accounts funding circulation shall be taken by financial institutions and relative government departments. |
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