China relaxes foreign investment rules

Foreign private equity can now join China’s QFII programme as 'asset management firms', permitting more freedom to invest in public markets.

Private equity firms have gained greater freedom to invest in the Chinese public markets, according to a statement from the China Securities Regulatory Commission (CSRC).

Under the “asset management firm” category, part of China's Qualified Foreign Institutional Investor (QFII) programme, GPs can now take up to a 30 percent stake in Chinese listed companies. Foreign GPs can now also buy the nation’s interbank bonds and debt issuances of small and mid-size companies.

Previously, brokerages, banks, mutual funds and insurers were the only participants in the QFII.  

Chinese regulators have also relaxed the programme’s entry requirements. Foreign firms with over $500 million in assets under management and a minimum two-year operational history can now participate. Previously a QFII license required five years of operations and $5 billion in assets under management.

The CSRC will expedite the QFII approval process to attract more foreign capital into the Chinese market, the statement said.