China is allocating fresh quotas for qualified institutional investors' overseas investments, the country's foreign exchange regulator said on Friday, following a recent crackdown on illegal cross-border capital flows.
Xiao Sheng, head of the Capital Account Management Department of the State Administration of Foreign Exchange said the regulator plans to allocate Qualified Domestic Institutional Investor quotas on a regular basis, with a greater emphasis on mutual fund products.
"Moving forward, SAFE will better balance developments and security, steadily and orderly advance the two-way opening of financial markets," Xiao said.
The FX regulator will "regularly issue QDII quotas to support institutions with strong investment management capabilities, highly recognised products and high standards of compliance and management, enabling them to play a more effective role in QDII operations."
The QDII scheme allows qualified domestic investors to invest in overseas equity and bond markets, making it one of the key channels for outbound flows.
Xiao's remarks come on the heels of Beijing's crackdown in late May on "illegal" cross-border stock trading, facilitated by online brokers that moved money into foreign markets.
They also followed remarks by SAFE head Zhu Hexin in June, saying the organisation planned to issue fresh QDII quotas to better facilitate domestic firms' global asset allocations.
"We view these moves less as a crackdown on outflows and more as part of a broader governance framework to manage cross-border flows across capital, technology, data, and talent," analysts at J.P. Morgan said in a note earlier this month.
"Key watchpoints are the follow-on implementation rules that will define the practical boundaries, and whether Beijing expands compliant channels, via more approved routes, higher quotas, or both, to keep the framework aligned with RMB internationalization objectives."
Reuters
