China Ditches Quota Limits on QFII and RQFII Programs

Posted on 05/09/2020

China’s State Administration of Foreign Exchange (SAFE) officially removed quota restrictions on two major inbound investment systems and simplified procedures for outbound remittances. In September 2019, government officials decided to lift quota limits for the Qualified Foreign Institutional Investor (QFII) program and the other program, the RMB Qualified Foreign Institutional Investor (RQFII) program. SAFE and the People’s Bank of China in a joint statement are now permitting qualified foreign investors to need only to go through a registration process to wire money into and out of the country.

The Chinese government introduced the QFII in 2002 and the RQFII in 2011 to lure foreign investor participation in its financial markets. Interestingly, since the rollout of the Shanghai-Hong Kong Stock Connect in 2014 and the Shenzhen-Hong Kong Stock Connect and Bond Connect programs in 2016, the quota program seemed to be less necessary.