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China expands access for foreign investors under combined scheme Release date: 2020-09-27    Source:CGTN

China moved to further ease foreign access to its capital markets on Friday, officially combining two major inbound investment schemes and broadening the scope for foreign institutional investment.

The finalized rules, published by The China Securities Regulatory Commission (CSRC), the central bank and the foreign exchange regulator, combine the Qualified Foreign Institutional Investor (QFII) scheme and its yuan-denominated sibling, RQFII. The schemes channel foreign capital into Chinese stocks and bonds.

The new rules, which will take effect on November 1, would also expand investment scope under the combined scheme.

The rule changes "will fundamentally relieve major bottlenecks for foreign institutional investors seeking to invest in China," said Thomas Fang, head of China Global Markets at UBS.

He said the move will encourage more medium- and long-term funds to enter the Chinese market directly, adding that the new rules will also broaden the investor base in using financial and hedging instruments in China.

The announcement coincides with FTSE's decision earlier in the day to include Chinese government bonds in its flagship World Government Bond Index. Goldman Sachs estimates China's inclusion could drive $140 billion into the mainland bonds over the inclusion period.