China Said to Mull Investor Quota Change in Push to Open Markets

  • Government may also grant more flexibility to investors
  • Plan offers good chance to open onshore markets, analyst says

China’s regulators are considering allowing global investors freer access to the nation’s market.

Policy makers are looking at amending the quota system for a program that allows yuan raised offshore to be invested in onshore assets, according to people familiar with the matter. The government may also grant more flexibility to investors, they said, without giving details.

The plan comes after officials removed a quota system for the Qualified Foreign Institutional Investor program in February. China is opening its capital markets to overseas funds as the slowest economic growth in a quarter century spurs outflows. Freer access will also help the nation’s stocks and bonds gain entry to global benchmark indexes, bolstering appetite for the securities. JPMorgan Chase & Co. said on March 15 that it will review whether to give China a 10 percent weight in its widely tracked emerging-market debt index.

“This is a good window for China to further open its markets, and it shows there is no change in the top leadership’s push for internationalization,” said Cici Wang, a Beijing-based analyst at Citic Securities Co. “The Chinese economy is improving, capital outflows have eased, and global market volatility has also fallen - the environment is favorable for more policy relaxation.”

The Renminbi Qualified Foreign Institutional Investor program, started in late 2011, enables offshore yuan to be used to purchase stocks and bonds in China’s onshore markets, while QFII allows foreign-currency investments. The global outstanding RQFII quota is 471 billion yuan ($73 billion), according to data compiled by Bloomberg.

— With assistance by Amy Li, Heng Xie, and Helen Sun

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