|Rail Transport Waybills for Export Financing|
On March 19, according to the Financial Office of Jinyi New Urban Area, the Jinhua Branch of the Zhejiang Commercial Bank made a loan of $100,000 USD to the companies that export goods by the Jinhua platform of the CRE (China Railway Express). With this, Jinhua has acquired the first commercial letters of credit for trade financing by rail transport in the province.
The business of international trade finance has traditionally been conducted by sea. Compared with transport by sea, whose bill of lading clarifies the property rights with the standard process, trade financing by rail transport has rarely been carried out historically due to the fact that rail transport waybills cannot be used as a document of title and it is not highly informatized, and the cargo is difficult to track.
As a departure place of the CRE, Chongqing’s Yuxin CRE has taken the lead nationwide in recent years. To solve the problems of traditional financing of railway transport relying on mortgage guarantees, the Chongqing Free Trade Zone has taken the lead by launching a pilot project of financing the settlement of rail transport waybills nationwide. It has adopted the innovative model of “railway + combined transport documents,”promoting the use of combined transport documents without changing the current regulations. The combined transport documents can be exchanged for rail transport waybills, so as to achieve the control of property rights and use the waybill as a letter of credit for the negotiation of bills.
As the Jinhua platform of the CRE develops rapidly in 2020, it has jumped to fourth in the country for number of trains operating, and Jinhua’s companies involved in the Belt and Road also have an increasing demand for trade financing through rail transport. In international business practices, whether the rail transport waybill can be used as the basis for cargo rights is still controversial, and it is more difficult to perform trade financing by rail transport.
Since the establishment of the Jinyi area of the Zhejiang Free Trade Zone, Jinyi has vigorously promoted financial reforms and given full play to the important role of finance in supporting the real economy of the Free Trade Zone. Under the guidance of the Municipal Finance Office, the Municipal People’s Bank, and the Municipal Banking and Insurance Regulatory Bureau, the Jinhua Branch of the Zhejiang Commercial Bank has innovated the application of platform-based business scenarios, gained a deeper understanding of the actual financing needs of the companies involved in the B&R, and created “asset pool + commercial invoice for export financing by rail transport,” a business plan tailored to the companies’ needs.
Presently, the financial department of Jinhua is collaborating with the CRE’s Jinhua platform to encourage financial institutions to carry out rail transport waybill letter of credit financing and settlement by learning from other CRE cities’ experience, so that foreign trade companies can follow the international trade practice used in ocean transport, achieve equal trade with overseas trading partners, and use financial instruments to expand their trade. (By Xu Zhaohui, translated by Zhang Jiajia, edited by Kendra Fiddler)