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

AuthorJiang Zhihui and Jonathan Grant (Partners),Tom Harrison (Senior Foreign Legal Consultant),Kong Xiangyun (Associate)
Published date16/09/2019
Citationjd0005
Date16 September 2019
Subject MatterBanking & 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
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

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