China expands QDII quotas as outbound investment demand grows

BEIJING, June 3 (Xinhua) -- China's foreign exchange regulator Wednesday night expanded quotas under an outbound investment scheme to meet the growing demand of domestic investors.

A total of 10.3 billion U.S. dollars in quotas was granted to 17 institutions under the Qualified Domestic Institutional Investor (QDII) program, a scheme for outbound investment, according to the State Administration of Foreign Exchange (SAFE).

Among these institutions were fund companies, securities firms, insurers, and banks, said the regulator, adding that the move brought China's total QDII quota to 147.32 billion U.S. dollars.

The quotas approved Wednesday were the largest since the country implemented the QDII scheme in 2006.

Over the years, China has gradually normalized and accelerated the issuance of QDII quotas. Since September 2020, the SAFE has granted seven rounds of quotas to 173 institutions through the QDII scheme, official data showed.

Under the QDII program, the country's cross-border capital flows have been maintained systematically, satisfying the rising demand for outbound investment at home, the SAFE said.

The faster pace of quota issuance could help diversify overseas asset allocations while building up the investment capabilities of domestic institutions, said Guan Tao, an economist with BOC International.

It also indicated that the authorities had adopted a combination of foreign exchange policies that aimed to increase the flexibility of exchange rates and expand the two-way opening up of the financial market in an orderly manner, Guan added.

Amid efforts to further open up the financial market, China last year scrapped quotas on the dollar-denominated qualified foreign institutional investor (QFII) scheme and its yuan-denominated sibling, RQFII. It thereby further streamlined the procedures for foreign institutional investors.

Looking forward, Guan expected the central bank and the SAFE to roll out more opening-up measures for stocks, bonds, foreign exchange markets, and other areas as the country deepens the high-level opening-up of capital accounts and financial markets.