Shanghai Pudong Development Bank (SPDB) and Rivers Fund Management Co., Ltd. — the first public fund company headquartered in Hainan — have jointly completed one of the first cross-border asset management pilot transactions under the Hainan Free Trade Port (FTP) scheme. The move marks a practical step forward in expanding regulated channels for international investors to participate in China's domestic capital markets.

The pilot follows the Implementation Rules for the Cross-Border Asset Management Pilot in the Hainan Free Trade Port, jointly issued in July 2025 by the People's Bank of China (Hainan Branch), the National Financial Regulatory Administration (Hainan Bureau), the China Securities Regulatory Commission (Hainan Bureau), the Hainan Provincial Financial Supervision and Administration Bureau, and the State Administration of Foreign Exchange (Hainan Branch). The framework seeks to broaden cross-border financial product offerings and encourage asset management institutions from both China and abroad to establish operations in Hainan.

Under the pilot, foreign investors subscribed to asset management products issued by Rivers Fund. The funds were channeled through SPDB’s Haikou branch using the Free Trade Account (FTA) system, a mechanism that enables efficient, transparent, and risk-controlled cross-border capital circulation. The invested capital was ultimately deployed in China’s domestic markets.

This structure provides a regulated “closed loop” for inbound capital, balancing openness and prudential control. It complements existing frameworks such as QDII and QFII/RQFII, reflecting an incremental yet meaningful step toward diversified access to China's capital markets and the gradual advancement of renminbi internationalization.

The partnership draws on SPDB's comprehensive cross-border financial framework — the “6 + X” system — and its experience in serving global clients, combined with Rivers Fund’s asset allocation and investment management capabilities. Together, they offer international investors a broader range of portfolio options while aligning with regulatory expectations for cross-border fund management.

For foreign financial institutions, this pilot illustrates how partnerships with licensed Chinese entities can help structure compliant investment products under the Hainan FTP policy. It also demonstrates how the Free Trade Port can serve as a controlled testing ground for innovative capital flow models that align with international standards.

Hainan's pilot has implications beyond China's borders. It offers global asset managers, private funds, and financial service providers a practical route to engage with the Chinese market under a clearly defined regulatory framework. For jurisdictions exploring cross-border fund linkages with China — such as Singapore, Hong Kong, and Luxembourg — the model provides a reference for structured, renminbi-denominated investment participation.

Market observers note that the FTP's closed-loop mechanism could inform future financial liberalization pilots across other free trade zones, potentially laying groundwork for more interconnected capital markets in Asia.