China Liberalization of Outbound Portfolio Investment: Precursor to QDII

July 02, 2006 | BY

clpstaff &clp articles

China is one step closer to the qualified domestic institutional investor (QDII) programme, allowing banks, fund management firms, insurers and securities institutions to convert Chinese clients' renminbi into foreign currency and invest it overseas.

By Neal A. Stender, Orrick, Herrington & Sutcliffe, Hong Kong;
Xiaowei (Sherry) Yin and Nicholas Sheets,
Coudert Brothers LLP, Beijing and Shanghai

With its latest round of foreign exchange capital account reforms, the People's Republic of China (PRC) has taken a key step towards introducing its long-anticipated QDII programme. As outlined in the April 13 2006 People's Bank of China, Announcement [2006] No.51 (PBOC Announcement), qualified commercial banks, mutual funds, securities institutions and insurers will be given greater freedom to invest clients' money in overseas financial products.

The PBOC Announcement lays the groundwork for allowing qualified domestic institutions to engage in the following activities:

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