China has further loosened controls over investment of Qualified Foreign Institutional Investors (QFII) to further the opening of the domestic capital market.
China relaxed investment quotas for single institutions under QFII programs and allowed for more convenient capital flow, according a new policy released by the State Administration of Foreign Exchange (SAFE). The rules became effective on Wednesday.
The move aims to improve the convertibility of China's currency, the yuan, in the capital account and facilitate cross-border investment and financing, the SAFE said.
The yuan is convertible for trade purposes under the current account, while the capital account, which covers portfolio investment and borrowing, is still largely controlled by the state over concerns of abrupt capital flows in and out of the country.
To gradually open the capital account, the government introduced the QFII and RMB-denominated Qualified Foreign Institutional Investors (RQFII) programs in 2003 and 2011 respectively.
