Caixin
Jan 19, 2021 06:12 AM
FINANCE

China Awards $9.02 Billion of New Foreign Investment Quotas

As of Jan. 13, China has allocated a total of $125.7 billion of overseas investment quotas to financial institutions under the QDII program.
As of Jan. 13, China has allocated a total of $125.7 billion of overseas investment quotas to financial institutions under the QDII program.

China’s foreign exchange regulator allocated an additional $9.02 billion of foreign investment quotas to qualified domestic investors to encourage more investment abroad.

According to the State Administration of Foreign Exchange (SAFE), 90% of the newly issued quotas, or $8.15 billion, were granted to mutual fund companies. As of Jan. 13, China has allocated a total of $125.7 billion of overseas investment quotas to financial institutions under the Qualified Domestic Institutional Investors (QDII) program, SAFE said.

The QDII program was launched in 2006 to allow qualified domestic institutions to invest in overseas capital markets. These include commercial banks, insurance companies, securities firms and fund managers. They act as conduits for channeling funds into offshore investments.

The latest move was the fourth QDII quota allocation since September 2020, when China resumed quota issuance after a suspension of nearly 18 months. Since then, SAFE has issued $21.7 billion of new quotas in four tranches.

Under the QDII policy framework, a total quota is set by the State Council. The China Banking and Insurance Regulatory Commission (CBIRC) and the China Securities Regulatory Commission (CSRC) are responsible for examining QDII qualifications, and SAFE grants the quotas and supervises inbound and outbound fund remittances.

The State Council has approved a total of $180 billion of quotas for QDII, meaning there are still $54.3 billion of quotas waiting to be allocated.

Fourteen mutual fund companies along with several banks and insurers shared the latest quotas of $9.02 billion. They include China Southern Asset Management Co. Ltd., E Fund Management Co. Ltd., Bosera Asset Management Co. Ltd., Harvest Fund Management Co., Ltd., China Merchants Bank and Taikang Life Insurance.

With $500 million of new quota, Harvest Fund Management currently holds the most QDII quotas among fund companies with $4.1 billion.

No trust company got new quotas this year. SAFE previously allocated more than $9 billion of QDII quotas to 24 trust companies, among which five received a quota for the first time.

Denise Jia contributed to the story

Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bobsimison@caixin.com).

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