China To Re-Launch RQDII Scheme.

 

22 May, 2018

 

 

In May 2018, the People’s Bank of China (PBOC) announced it will resume the once-suspended Renminbi Qualified Domestic Institutional Investor (RQDII) regime. The announcement came one month after China resumed the Qualified Domestic Institution Investor (QDII) scheme, which has been on hold since 2015. 

 

The RQDII regime, first launched in 2014, permits qualified RQDIIs to invest in overseas RMB denominated products using their own RMB funds or RMB funds raised from the PRC institutional or individual investors.

 

Unlike the QDII regime, RQDIIs are generally not subject to approval from the State Administration of Foreign Exchange (SAFE) for obtaining any foreign exchange quota. Qualified RQDIIs may invest as much RMB funds as they are able to raise from domestic investors, provided that the amount of funds are within the maximum amount reported to or approved by the regulatory authorities.

 

It was believed that, in light of the pressure of capital outflow and a disguised investment into foreign currency denominated assets by RQDII, the PBOC suspended the RQDII regime in December 2015.

 

From past market practice, the RQDII regime largely followed the existing QDII regime in most aspects. 

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