April 5, China will more than double the total quota for its Qualified Foreign Institutional Investor (QFII) scheme to 80 billion U.S. dollars from 30 billion U.S. dollars previously, as the current programme approaches its ceiling.
The Renminbi Qualified Foreign Institutional Investor scheme (RQFII), which licenses investors to buy mainland securities using offshore yuan, will also be increased, from 20 billion yuan previously to 50 billion yuan, the China Securities Regulatory Commission (CSRC) announced in a statement on its website on Tuesday.
According to the regulator, the new RQFII quota can be used by investors to issue yuan-denominated, A-share exchange-trade fund products, which will be listed in Hong Kong.
The expansion of the QFII quota is viewed as a move to further facilitate inward investment and attract more long-term overseas funds to China’s domestic capital market, the CSRC said in the statement.
Some experts cast doubt on how much of a boost the move would be to the domestic market. Ye Tan, a well known economics commentator, said that the market would be decided by the performance of listed companies and that it is not clear that investors would immediately use the increased quota.
Chinahas pledged to gradually open up its strictly controlled capital account and speed up its liberalization.
On Tuesday, the chairman of China’s National Council for Social Security Fund said at the Boao Forum that China should relax capital controls more quickly to pave the way for the country’s currency to play a bigger role in the global monetary system.