China plans to loosen restrictions on qualified
domestic institutional investor (QDII) investment targets so that they can
invest in new sectors, said Li Dongrong, vice director of the State
Administration of Foreign Exchange (SAFE) last Thursday.
Li made the remarks at the 2007 China Derivatives Summit. He said that
together with the China Banking Regulatory Commission and the China Insurance
Regulatory Commission, SAFE is mulling over the selection of potentially
profitable new sectors.
SAFE is also considering including securities companies in the QDII system.
QDIIs are currently allowed to invest only in fixed-return financial
China's QDII program is still in its infancy and the products are not selling
well because of the narrow investment scope, high risks, low profits and poor
accessibility, he said.
Furthermore, investors - both companies and individuals - would rather hold
renminbi than convert them into foreign currency because the yuan keeps on
China launched the QDII system in July 2006, allowing QDIIs to raise renminbi
funds from domestic individuals and institutions and buy foreign currency from
SAFE for overseas investment.
So far, 30 financial institutions - 11 domestic banks, seven foreign banks,
11 insurance companies and one mutual fund - have been granted QDII
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