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ARTICLE · 11 MARCH 2016

SAFE Relaxes Capital Control On QFIIs

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To encourage inflow of foreign funds into China's securities market, the State Administration of Foreign Exchange has relaxed its regulatory regime on qualified foreign institutional investors since 3 February 2016.

ChinaGovernment, Public Sector
Betty Tam
Betty Tam
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To encourage inflow of foreign funds into China's securities market, the State Administration of Foreign Exchange (SAFE) has relaxed its regulatory regime on qualified foreign institutional investors (QFIIs) since 3 February 2016. The new regime is lowering quota restrictions and providing greater flexibility for QFIIs' capital mobility.

Background

The QFII scheme is the primary channel for foreign institutional investors to invest in China's securities market. Under the previous regime, after obtaining a license from the China Securities Regulatory Commission (CSRC), each QFII had to apply to SAFE for approval for an investment quota. QFIIs' remittance of capital was also subject to stringent restrictions. These have been largely relaxed by the Foreign Exchange Administrative Measures on Investment in Domestic Securities by Qualified Foreign Institutional Investors （合格境外机构投资者境内证券投资外汇管理规定） (Revised Measures), which entered into effect on 3 February 2016.

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