Cross-Border Goods Payment Business Lands in the Hainan FTP

Under the support and guidance of the Hainan branch of the State Administration of Foreign Exchange (SAFE), the local branch of Bank of Communications has handled the first instance in the Hainan FTP of cross-border payments for an enterprise purchasing goods from a third country. With regards to the island province meeting the needs of market entities by developing a new form of off-shore international trade, this is of extremely positive significance.

The “new form of off-shore international trade” referred to here involves trade between Chinese residents and non-residents where the goods neither enter nor leave China's customs territory and are not included in China's customs statistics. This includes offshore reselling, consigned overseas processing, and goods purchased from a third country (i.e. the purchase of equipment or materials from a foreign country for project construction by an overseas contracting enterprise in a different foreign country or region wherein the relevant equipment and materials are directly shipped to the site of the overseas project without entering China but the purchase price of the equipment or material is paid from within China).

In this instance, the Hainan branch of Bank of Communications learned that an enterprise located in the province needed to prepay a Zambian supplier for the procurement of engineering materials to be used in the construction of an overseas contracted project in the Democratic Republic of Congo with the relevant materials purchased to be directly transported from Zambia to the project site in the Congo without ever entering China. Since its inception, this is the Hainan FTP’s first overseas contract project and, now that the Hainan branch of Bank of Communications has successfully handled such a transaction involving "goods purchased from a third country", it can be projected that—in the future—more business of this type will be a valuable part of the island’s offshore international trade business.