China removes quotas for foreign institutional investors under the QFII and RQFII schemes

• Author: Jiang Zhihui and Jonathan Grant (Partners),Kong Xiangyun (Associate),Tom Harrison (Senior Foreign Legal Consultant)
• Published date: 16 September 2019
• Date: 16 September 2019
• Subject Matter: Banking & Finance

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China removes quotas for foreign institutional investors under the QFII and RQFII schemes

This article was written by

Jiang Zhihui

and

Jonathan Grant

(Partners), Tom Harrison (Senior

Foreign Legal Consultant) and Kong Xiangyun (Associate).

In a further effort to attract foreign institutional investors to allocate offshore funds into China’s

deep equity and debt capital markets, the State Administration of Foreign Exchange (“

SAFE

”) this

past week announced that the Chinese Government will end the system of quotas for both the

Qualified Foreign Institutional Investor (“

QFII

”) and the RMB Qualified Foreign Institutional

Investor (“

RQFII

”) schemes. As next steps, this reform will be formally implemented by SAFE

immediately revising its relevant regulations and applying to the PRC State Council to cancel

related approval requirements (timing for this step has not been announced).

The QFII and RQFII schemes are an attractive option among the various channels available for

foreign investors seeking exposure to Chinese capital markets, with over 400 approved global

investors to date, particularly as these schemes enable broad access to China’s entire A-share

market in addition to bond markets and other asset classes. The removal of quotas should further

streamline the process for institutional investors to access the QFII and RQFII investment

gateways, and increase their overall China capital markets exposure over time.

SAFE’s announcement continues a clear trend during 2019 of the Chinese Government seeking

to attract additional foreign capital through investor-friendly reforms, including approval of the

16 September 2019

China removes quotas for

foreign institutional investors

under the QFII and RQFII

schemes