Shanghai Pilot Free Trade Zone will provide direct financing for Chinese companies with projects in Belt and Road countries, the zone officials said recently.

Last year, FTZ-registered companies filed 492 overseas investment projects, involving US$19.59 billion of investment from China.

“Belt and Road development projects require a massive amount of long-term funds. But companies only get indirect financing or bank loans for their projects,” said Zhang Danian, chief Shanghai representative of Baker & Mckenzie’s.

He said Shanghai needs to open up more funding channels to support the Belt and Road Initiative, such as issuing Panda bonds and D-shares.

Zhang noted that the world’s second-largest aluminum producer in Russia, UC Rusal, registered its prospectus for Panda bond issuance on the Shanghai Stock Exchange on March 16, offering 1 billion yuan (US$14.57million) of bonds with a tenor of seven years. It is the first Belt and Road company to issue Panda bonds in China.

China’s UnionPay is upgrading its clearing system and technology standards to better integrate with markets in Belt and Road countries. Shanghai supports cross-border yuan payment to guarantee trade settlement in yuan.

Lujiazui Financial District which has financial institutions and service companies from around the world will also provide support to the Belt and Road Initiative and encourages banks to take innovative measures to satisfy the demand for funds from companies in Belt and Road countries.

Source:china-shftz.gov.cn