The Chinese central bank has banned RMB qualified domestic institutional investors (QDII) from dispatching domestic currency abroad for the purpose of making foreign exchange purchases.
The People’s Bank of China (PBOC) has just issued its “Notice on Further Clarifying Matters in Relation to Regulation of Overseas Securities Investments by RMB Qualified Domestic Institutional Investors” (进一步明确人民币合格境内机构投资者境外证券投资管理有关事项的通知) (Circular 81 ).
According to the Notice RMB qualified investors who undertake overseas investment shall submit their RMB qualified investor information to the Shanghai branch of PBOC, as well as other information including their entrusted bank, sources and scale of funds, investment plan, remittances to and from China, and overseas holdings.
PBOC also said that it will implement macro-prudential management of the overseas investments of RMB qualified investors on the basis of factors including liquidity in the offshore RMB market, as well as the development situation of RMB financial products.
The move by PBOC arrives just after China’s State Administration of Foreign Exchange lifted the quota for outbound foreign investment trials involving qualified institutions in Shanghai and Shenzhen.
SAFE announced on 14 April that it will raise the outbound foreign investment quotas for qualified domestic limited partnerships (QDLP) and qualified domestic investment enterprises (QDI) situated in Shanghai and Shenzhen to USD$5 billion respectively, for a total quota of $10 billion.