Cross Border Financing Scheme Design under the RMB Currency Swap Framework

During current economic downturn, China has rolled out stimulus plans to facilitate domestic demand development, adjusting her export trade policy. This has affected many Hong Kong invested enterprises in pearl river delta (PRD), facing difficulties to transform and upgrade, with new opportunities as well to develop China´s domestic market. Among them, domestic market intelligence and financial resources are the top two concerns for these enterprises. The paper describes cross border financing scheme development towards overcoming border barriers to provide financing services to Hong Kong invested processing trade enterprises (PTE) in PRD. The RMB currency swap framework undertaken by the central bank is introduced. Various available financing schemes in Hong Kong and China are reviewed. The need for developing cross border financing schemes is identified. Design approach is then introduced with risk analysis. Potential adoption analysis is also conducted.