, is a scheme relating to thecapital marketset up to allowfinancial institutionsto invest in offshore markets such as securities and bonds. Similar toQFII(Qualified Foreign Institutional Investor), it is a transitional arrangement which provides limited opportunities for domestic investors to access foreign markets at a stage where a country/territorys currency is not traded or floated completely freely and where capital is not able to move completely freely in and out of the country.
InPeoples Republic of China, QDII allows investors to invest in foreign securities markets via certain fund management institutions, insurance companies, securities companies and other assets management institutions which have been approved byChina Securities Regulatory Commission(CSRC).
On 13 April 2006, the Chinese government announced the QDII scheme, allowing Chinese institutions and residents to entrust Chinese commercial banks to invest in financial products overseas. But the investment was limited to fixed-income and money market products.
After granting 15 banks and funds a total quota ofUS$14.2 billion to invest overseas, the Chinese government announced on 11 May 2007 to widen the scope of the QDII investment. With certain restriction, banks can now offerstocksrelated products. The net value of a QDII product investing in stocks must not exceed 50%, with the net value represented by a single stock capped at 5%. The minimum commitment by each client is 300,000yuan. Also, the stocks invested or the fund linked must be listed on or approved by the area that have signedmemorandums of understandingwith theCSRC.
In November 2007, PremierWen Jiabaostated the need to further study the scheme for individual Mainland Chinese residents to invest in stocks in Hong Kong. SeeThrough train scheme to be discussed. See alsoPremier says caution necessary before opening floodgates to Hong Kong shares.
On April 8, 2008, an agreement between theChina Banking Regulatory Commissionand theU.S. Securities and Exchange Commissionmade it possible for Chinese individuals to invest in the US stock market.1
In April, 2012, it was announced that Beijings latest financial reform will allow local residents in the wealthy city ofWenzhouto make investments abroad. The pilot program was not explicitly linked to QDII but came at the same time as an expansion of the QFII quota, the latter which allows investment in Chinese public markets withoffshoreforeign currencies and, in the RQFII, offshorerenminbi. While the QFII announcement was seen as a potential threat toHong Kongas a financial center, Hong Kong is considered likely one of the first investment destinations for Wenzhou investors.2PremierWen Jiabaosays the central government is determined to break the mainlands banking monopoly, and if [the Wenzhou] pilot schemes in the special financial zone newly set up … prove successful they can be promoted and implemented nationwide, theSouth China Morning Postreported.3
Komaiko, Richard (April 10, stocks open to China savers. Asia Times Online
Stephen, Craig,Chinas welcome mat for foreign investors,
Huang, Cary,Break the bank monopoly, Wen says, April 04, 2012,
Qualified Foreign Institutional Investor(QFII)
State Administration of Foreign Exchange(SAFE)
China Securities Regulatory Commission website
Complete list of QDII institutions with quota
China Banknote Printing and Minting Corporation
Ministry of Industry and Information Technology
State Administration for Industry and Commerce
China Council for the Promotion of International Trade
All-China Federation of Industry and Commerce
Closer Economic Partnership Arrangements (Hong Kong)
Mainland and Macau Closer Economic Partnership Arrangement
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This page was last edited on 12 January 2017, at 09:40