China central bank signals resumption of RQDII outbound investment scheme

Published Thu, May 3, 2018 · 02:59 AM

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[BEIJING] China's central bank on Thursday signalled the resumption of an outbound investment scheme that allows qualified domestic financial institutions to buy yuan-denominated products in overseas markets, the latest move by Beijing to relax capital controls.

The People's Bank of China (PBOC) published a notice on its website updating the regulations around the so-called Renminbi Qualified Domestic Institutional Investors (RQDII) programme, which was suspended unofficially in late 2015, along with several other outbound schemes amid fears of capital flight and worries of rapid yuan depreciation.

The latest announcement suggests Beijing is gradually relaxing the outbound investment scheme.

The PBOC notice said the yuan must not be converted into foreign currencies under the scheme for overseas investment. In addition, RQDII investors must submit investment details to the central bank, and are subject to PBOC's macro prudent assessment.

The notice on RQDII, launched in 2014, came after China last month resumed the Qualified Domestic Institution Investor (QDII) scheme, which allows Chinese investors to convert yuan into foreign currencies to buy overseas securities.

China's forex regulator has also widened the quotas of two other outbound investment schemes in Shanghai and Shenzhen as part of the government's efforts to liberalise financial markets.

DECODING ASIA