Oct. 26 (Bloomberg) -- E Fund Management Co. received a $1 billion quota from the Chinese government to invest abroad under the qualified domestic institutional investor program as the nation sees less risk in investing overseas.

Guangzhou, southern China-based E Fund will use its QDII quota for an Asia-focused fund, spokeswoman Ai Liqun said by phone today. China Merchants Fund won a $500 million quota under the program, the Wall Street Journal said, citing unidentified people. Calls to China Merchants’ marketing department weren’t immediately answered.

China, which lets citizens buy overseas stocks and bonds only through QDII funds, is expanding the program’s scope for the first time in 17 months after domestic economic growth accelerated in the third quarter and Japan, France and Germany exited recession in the second quarter. The regulator may issue more than $4 billion of new quotas, Z-Ben Advisors estimates.

“The global economy has started picking up under various stimulus plans and so the government feels more comfortable with allowing investments abroad,” said Li Wei, a Beijing-based analyst at Galaxy Securities Co. “The approved quota is a small amount.”

U.S. Commerce Secretary Gary Locke, Trade Representative Ron Kirk and Agriculture Secretary Tom Vilsack will be in China this week for the highest-level trade discussions between the two nations since President Barack Obama took office this year. They will meet a delegation of Chinese officials led by Vice Premier Wang Qishan in the eastern city of Hangzhou on Oct. 27. The meeting precedes Obama’s visit to China next month.

“I won’t call it the opening of the floodgates but an opening of the window,” said Peter Alexander, Shanghai-based principal at Z-Ben Advisors, which provides research to fund management companies. “This move is very much in line with other recent policy initiatives, which clearly stepped up support for the globalization of Chinese businesses.”

Changsheng Fund Management Co., Bosera Asset Management Co., UBS SDIC Fund Management Co. and China Universal Asset Management Co. have passed their regulatory review meetings and are expected to be granted QDII quotas by the end of this year, according to Z-Ben.

To contact the Bloomberg News staff for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net; Yidi Zhao in Beijing at yzhao7@bloomberg.net

Last Updated: October 26, 2009 03:07 EDT