Cash pooling in China: how it works and what the options are

Where a cash pool is largely a banking product in most European countries, in China it is also a regulatory arrangement. Cross border flows are subject to capital account controls, and lending between group companies is limited by quotas linked to each entity's balance sheet. A group therefore files its cash pool with the authorities, and the bank running the pool operates it within the approved limits.

This note sets out how such a pool is structured, what it can be used for and which options are available.