Shanghai, China (June 19, 2024) — China is set to simplify and improve fund management for its dollar-denominated Qualified Foreign Institutional Investor (QFII) scheme and its yuan-denominated sibling, the Renminbi Qualified Foreign Institutional Investor (RQFII) program.
This move aims to facilitate overseas investment in China’s domestic capital markets, according to Zhu Hexin, deputy governor of the People’s Bank of China.
Speaking at the ongoing Lujiazui Forum in Shanghai, Zhu, who also heads the State Administration of Foreign Exchange, announced the revision of relevant fund management regulations to enhance the participation of foreign investors in domestic securities. “We are revising relevant fund management regulations,” Zhu stated. He emphasized the need for efforts to promote financial market connectivity and facilitate foreign investment in domestic securities.
The QFII and RQFII programs are crucial channels that allow overseas investors to invest in China’s domestic capital markets. These reforms are expected to make it easier for foreign investors to access and engage with China’s burgeoning financial markets.
Zhu also highlighted China’s support for domestic institutions making cross-border investments. To cater to the growing demand of domestic residents for overseas investments, China recently allocated quotas totaling $2.27 billion to 53 institutions under the Qualified Domestic Institutional Investor (QDII) program. This initiative allows Chinese investors to invest in foreign assets, thereby fostering a more globally integrated financial market.
Moreover, Zhu called for supporting multinationals in establishing global or regional fund management centers in Shanghai. He advocated for promoting the cross-border investment business of equity investment funds and enhancing the financial infrastructure services of the China Foreign Exchange Trade System. Zhu underscored the importance of Shanghai in building a high-level international financial assets trading platform.
Shanghai, a financial hub, boasts the highest concentration of foreign financial institutions in China. Zhu noted that China has supported 163 multinationals in establishing fund pools in the city. Leveraging Shanghai’s leading role in promoting financial opening-up is seen as a pivotal strategy for boosting China’s financial market.
Efforts are underway to replicate and promote Shanghai’s high-level opening-up policies across the Yangtze River Delta and the entire country. This strategy aims to achieve significant breakthroughs in the integrated development of the Yangtze River Delta, forging new advantages for a higher-level open economy.
Zhu’s announcements at the Lujiazui Forum reflect China’s ongoing commitment to financial reform and opening up, signaling a more accessible and globally integrated financial market. These measures are expected to enhance China’s appeal to foreign investors and strengthen its position as a major player in the global financial system.