China allows more foreign investment in onshore financial market

BEIJING - China's foreign exchange regulator has approved a bigger amount of foreign investment in the country's onshore financial market, official data showed on Monday.

As of Feb 27, 278 Qualified Foreign Institutional Investors (QFII) have received quotas amounting $89.21 billion, up from $87.31 billion registered at the end of January, according to the State Administration of Foreign Exchange (SAFE).

In total, 181 overseas institutions have received quotas amounting to 541.13 billion yuan ($80.75 billion) under the RMB Qualified Foreign Institutional Investors (RQFII) program. It was 529.63 billion yuan a month earlier.

China's currency, the yuan, is convertible for trade purposes under the current account, while the capital account, which covers portfolio investment and borrowing, is largely run by the state in an effort to control capital flow.

To gradually liberalize the capital account, the government introduced the QFII and RQFII programs in 2003 and 2011, respectively, part of China's strategy to promote yuan's use overseas.

The QFII program represents China's effort to allow licensed foreign investors to invest in China's yuan denominated capital market.

The RQFII program allows institutional investors with offshore renminbi deposits to invest in China's onshore market.

The RQFII program is currently open to 18 countries and regions, including Britain, Singapore, France, the Republic of Korea, Germany, Qatar, Canada, Australia and Luxembourg as well as China's Hong Kong Special Administrative Region.