The Chinese government managed to persuade just one of its 287 “qualified” foreign institutional investors to put more money into the country’s stock market last month, according to figures released by the foreign exchange regulator. South Korea’s KB Asset Management Co added US$1 billion to its quota under the qualified foreign institutional investor scheme, the State Administration of Foreign Exchange (SAFE) said on Friday. The remaining 286 firms, which include Goldman Sachs, JPMorgan, HSBC and UBS, left their positions unaltered, and no new companies joined the scheme, the agency said. The extra funds from KB Asset took the total quota allocated under the scheme to US$100.46 billion. China’s central bank and the SAFE amended the rules for the QFII scheme – which provides a way for foreign institutional investors to trade in Chinese mainland-listed stocks and bonds – just two weeks ago in a bid to attract more foreign funds into the country. China makes it easier for foreign investors to get money out, but who wants to qualify for it? The heightened trade hostilities between China and the United States – US President Donald Trump is expected to impose 25 per cent of tariffs on US$34 billion worth of Chinese goods this week and Beijing has vowed to hit back – have ushered China’s stock market into bear territory. The benchmark Shanghai Stock Composite Index last week fell to a two-year low, while the value of the yuan against the US dollar has fallen by more than 3 per cent in the past two weeks. The latter sparked suggestions that the People’s Bank of China was allowing the Chinese currency to slide to offset any fallout from the trade dispute. Louis Kuijs, chief Asia economist at Oxford Economics, said that the weakening yuan and stock market slide were perceived as threats by investors, but added that the central bank might “take increasingly forceful steps to support the currency”. “Continued pressure on China’s foreign exchange and equity markets amid further worsening of sentiment constitutes a key risk for markets in China and elsewhere,” he wrote in a note. China is letting in foreign firms, but will the financial market really be open? Meanwhile, the development of alternative channels for foreign investors to access Chinese securities, including its stock and bond links with Hong Kong, have also dampened demand for the QFII scheme. The programme was introduced in 2002, just months after China joined the World Trade Organisation. As foreign investors jostled to get a foothold in the stock market of the world’s most populous country, it set high thresholds to limit access to what it deemed to be only the best investment institutions. Beijing welcomes Wall Street, but bans Hollywood, in ‘openness for business’ push amid trade row Although various rule amendments over the years have loosened the entry requirements, the process of becoming a QFII participant has remained arduous. Companies must first submit a long list of documents to the China Securities Regulatory Commission. Asset management firms must have securities under management of at least US$500 million, while banks must have at least US$5 billion. In the latest relaxation announced last month, Beijing made it slightly easier for QFII firms to move money out of the country, by lifting a remittance ceiling and three-month lock-up period.