Offshore

Jersey Welcomes China’s Lifting Of Investment Quotas

Tom Burroughes, Group Editor, 20 September 2019

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Chinese authorities have been relaxing some of the investment quota regimes that had applied to foreign organisations in the past.

China’s recent lifting of investment quotas for foreign institutions has drawn praise from organisations such as the body promoting financial services in Jersey, the international financial centre near the UK. 

A few days ago, State Administration of Foreign Exchange cancelled the investment quota restrictions for qualified foreign institutional investors (QFII) and RMB qualified foreign institutional investors (RQFII). Those two systems were introduced in 2002 and 2011, respectively. Authorities in China want to open up the country’s capital markets.

"The QFII and RQFII programmes allowed overseas institutional investors to move a restricted amount of money into China's capital account for investment. These restrictions are now completely abolished after being in place for more than two decades, and there's no doubt that this represents a major step by the State Administration of Foreign Exchange to deepen the reform and opening up of China's financial market,” Richard Nunn, regional head of Eastern markets at Jersey Finance, said. 

"The investment demand of foreign investors in China's financial market has been on the rise, with China's stocks and bonds being included increasingly in main international indexes, such as MSCI, FTSE Russell, S&P Dow Jones and Bloomberg-Barclays index, and the weights being steadily increased,” Nunn continued. 

"Despite the ending of QFII and RQFII quotas, SAFE made no moves last week to ease restrictions on outbound investments yet, but this policy change heralds a new round of financial liberalisation. This is a step in the right direction, as it may only be a matter of time before the outbound investment restrictions will also be relaxed."

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