Beijing doubles limit of foreign investment

SHANGHAI • China doubled the limit of one of the main foreign investment channels into the world’s second- biggest economy, continuing to open up its financial system even as the country’s trade war with the US jolts financial markets.

The quota for the Qualified Foreign Institutional Investor programme was increased to US$300 billion (RM1.23 trillion), the State Administration of Foreign Exchange said in a statement yesterday.

It’s the first expansion since July 2013, when the ceiling was raised to US$150 billion from US$80 billion. About US$101 billion of the quota is in use by overseas institutions, according to data compiled by Bloomberg.

Authorities have been stressing that they plan to further open China’s financial system, building on earlier promises that they would better integrate the more than US$40 trillion sector into the global economy.

Policymakers have been keen to show that the dispute with America won’t derail the effort — last Friday, the banking regulator said it would study more financial-opening measures this year.

An injection of foreign cash would help boost the country’s struggling capital markets. Foreign institutions and individuals held US$189 billion of domestic Chinese stocks as of September, accounting for roughly 3% of the total market value, according to data compiled by Bloomberg.

Wang Yifeng, a Beijing-based researcher at China Minsheng Banking Corp, said China doubled the quota even though the current limit hasn’t been used up because MSCI Inc may raise foreign investors’ required allocation to Chinese stocks. Moves to open the national bond market in the past year also mean more room will be needed once the currency stabilises, he said. — Bloomberg