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China Increases Market Access To Foreign Managers - Report

Editorial Staff, 2 November 2020

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The country's authorities are continuing to open up its capital markets to foreign investors, a sign of how it is also attempting to build the renminbi, aka yuan, as a global reserve currency.

The market for renminbi-denominated assets will be boosted in November as Beijing gives foreign asset managers more access to capital markets, highlighting China’s steps to make its currency a global force.

A report by the South China Morning Post said that China’s central bank and market regulators have streamlined approvals for its inbound investment schemes, known via QFII and RQFII acronyms, from 1 November. Regulators will also let foreign investors use more assets and financial instruments.

The report went to note that, as first announced in September, authorities will adopt universal criteria for approving foreign investors who apply for local currency to invest in the onshore market. The same will apply to investors seeking to deploy offshore yuan into local assets. 

China established the Qualified Foreign Institutional Investor (QFII) programme in 2002, which allows traders to convert foreign currencies into yuan to buy local stocks and bonds. The renminbi version or RQFII, came into force in 2011 to enable the use of yuan outside the country to invest at home.

As reported in May on WealthBriefingAsia and other places, Chinese authorities have scrapped investment quotas on qualified foreign institutions. The restrictions were removed by People’s Bank of China and the State Administration of Foreign Exchange. Qualified Investors no longer need to apply for any investment quota from the State Administration of Foreign Exchange, aka SAFE. Qualified investors may choose currencies and the timing of inward remittance on their own decisions.

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