China eases rules, widens US$222 billion inbound investment path, offering the renminbi as a safe haven against global volatility
- China will simplify approval procedures and allow investments in a wider array of yuan assets under the quota-free qualified foreign institutional investors (QFII) and the renminbi-QFII (R-QFII) programmes
- The appeal of local assets should increase with the yuan and stocks on a roll, analysts say; pitfalls exist in some corners of the market
The central bank and market regulators have streamlined approval procedures for its inbound investment schemes, known by their QFII and RQFII acronyms, from November 1. They will also let foreign investors access a wider array of assets such as over-the-counter stocks, financial and commodity futures, and hedge funds, among others.
First announced in September, authorities will adopt universal criteria for approving foreign investors who apply for local currency to invest in the onshore market. The same will apply to investors seeking to deploy offshore yuan into local assets. They also promised to shorten the review process to 10 days from as long as 60.
“That has lowered the entrance threshold and foreign inflows are expected to accelerate,” said Li Tianlu, an analyst at Capital Securities in Beijing. “It will increase the yuan’s appeal, and deepen market-oriented reforms in line with global practices.”