China plans to trial individual QDII scheme in Shanghai

03 December 2013   Category: News, Asia, China, Global   By Asia Asset Management

The Chinese government has issued a document of proposed measures relating to the financial reforms taking place in the China (Shanghai) Pilot Free Trade Zone as part of its broader plan to facilitate the cross-border RMB business, including an individual qualified domestic institutional investor (QDII) scheme.  

By proposing the measures, which are highly likely to be implemented, the People’s Bank of China (PBOC) aims to offer greater financial support for cross-border investments and trade, and deepen financial reforms.

The document, which encompasses a total of 30 measures, will likely permit businesses and individuals to open offshore accounts in the free trade zone in order to promote cross-border investment in the pilot area. It would also encourage foreign enterprises to set up securities and futures trading entities, and deepen foreign exchange settlement and management. 

China has yet to fully open up its capital account, so only 114 eligible QDII institutions are currently allowed to invest abroad, with total quotas at around US$81 billion.

The document does not give a concrete timeframe for the implementation of the policies. The authorities tend to implement the measures in phases, favouring markets that have mature supplementary infrastructure in place.