First, while encouraging two-way FDI, we will also support two-way balanced portfolio investment. Intermediaries and exchanges at home and abroad can cooperate in creative ways. Our goal is to make it easier for non-residents to issue or trade securities in our market. We will further increase the investment quota, reduce the investment restrictions, and lower the investment threshold for QFII and RQFII schemes. Yesterday evening, we had a working dinner with some local institutions and they proposed to develop the Qualified Foreign Individual Investor scheme (the so-called QFII2) and RMB QFII2 (the so-called RQFII2). It is worth studying the feasibility of such proposal. Reforms in the B-share market will be stepped up, to help B-share companies operate and develop in a better manner. Overseas investors will be welcomed to participate in the development of the crude oil futures, metal futures and financial futures markets.
Second, allowing residents to issue or purchase wider range of financial instruments outside China. To a large extend, the Chinese residents now participate in overseas equities, futures and real-estate market, by sidestepping our regulations. On the one hand, we will support Hong Kong in developing an offshore RMB centre; on the other hand, we will gradually expand channels for residents to directly enter overseas market. In this way, individual residents’ capital account transactions can be more convenient and better regulated. For example, we will improve the QDII scheme, launch pilot program on Qualified Domestic Individual Investor(or the so-called QDII2)scheme, ease the rules for domestic companies to list overseas, and support qualified domestic enterprises to raise funds abroad.
Third, intermediaries should provide better services to cross-border investment. Both domestic and overseas financial institutions, especially securities companies, need to improve their services to cross-border investment by residents and non-residents. More innovative products and services should be launched to meet their clients’ demand. Foreign investors are allowed to hold up to 49% of shares in joint venture securities companies and futures firms. In the future, more foreign stakes will be allowed to invest in domestic securities and futures industry, and more businesses will be open to the joint ventures. Meanwhile, domestic intermediaries are encouraged to develop overseas business. Futures brokerage firms are able to develop overseas brokerage business in a pilot program.
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