The State Administration of Foreign Exchange (SAFE), China’s foreign exchange regulator, has provided new quotas for certain institutions to invest in non-domestic financial markets in an attempt to boost outbound investment to reduce pressure on the yuan’s ongoing appreciation, reports Caixin. SAFE has recently added $3.5 billion in fresh quotas for one bank and four fund managers to invest abroad under the Qualified Domestic Institutional Investor (QDII) program, official data show. It’s the seventh QDII quota increase this year, and comes after an earlier hike by November 25.
The total issued quota, now standing at $157.5 billion, has reached 87.5% of the $180 billion limit approved by the State Council, China’s cabinet.
Launched in 2006, the QDII program provides a major channel for domestic investors to invest in offshore assets through financial institutions including brokerages, fund managers, insurers, banks and trust companies. The program’s expansion was suspended from 2015 to April 2018 and from May 2019 to August 2020 due to concerns over capital flight. SAFE has been issuing new QDII quotas regularly since September 2020.