China’s Hunger for Capital Is Behind Market Opening
Authorities must improve the quality of financial statements and legal protections to revive confidence among foreign investors.
Foreign investors, can you spare a dime?
Photographer: VCG/Getty Images
Beijing is selling its relaxation of inward foreign investment limits as a natural opening of financial markets. The reality is that China needs the capital to keep the economy going, and the question is whether investors will buy the hype.
Authorities doubled to $300 billion the quota for stocks, bonds and other financial products under the Qualified Foreign Institutional Investor, or QFII, program, the State Administration of Foreign Exchange announced last month. China has resisted for years opening its financial markets, so the changes — combined with a broadening of the scope of the QFII program unveiled at the end of January — represent a significant step. The trouble is that China is no longer an attractive investment story.