China's state council issued a circular on November 23 which demonstrates ambition to boost international usage of renminbi through further opening up, a development coming amid the ongoing Sino-US trade war. This circular includes 53 new rules in 12 free trade zones (FTZs).

Noticeably, 12 out of 53 rules are related to the financial industry. Banks in FTZs are now allowed to provide renminbi derivatives to offshore entities. Banks outside these free trade zones are also able to conduct renminbi derivative business if they meet certain regulatory requirements.

In addition, banks in FTZs are encouraged to provide cross-border renminbi services, such as renminbi loans to offshore institutions or offshore projects based on the needs of real trade (as opposed to any fictitious trade). A detailed know-your-client process is required for banks in FTZs when granting cross-border renminbi loans.

Specifically, banks in the Fujian FTZ are allowed to clear renminbi and New Taiwanese dollar directly and make inter-bank renminbi short term loans to banks in Taiwan. In the Zhejiang FTZ, state council encourages commodity trades to be settled and denominated in renminbi, especially from Belt and Road and crude oil exporting countries.

Since the first FTZ was set up in Shanghai in 2013, a number of new initiatives has been launched across 12 FTZs. Each with a different strategic focus, these FTZs aim to explore new cross-border business opportunities, including trade and financial services on a pilot basis.

For instance, Fujian FTZ has more relaxed regulations on Taiwan business, whereas the Guangdong FTZ allows more flexibility with regards to Hong Kong business.

"China will support and deepen the reforms and innovations in FTZs with different positions," said President Xi Jinping during a speech at the China International Import Expo in early November.