Qualified Domestic Institutional Investor
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Qualified Domestic Institutional Investor (), also known as QDII, is a scheme relating to the
capital market A capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold, in contrast to a money market where short-term debt is bought and sold. Capital markets channel the wealth of savers t ...
set up to allow financial institutions to invest in offshore markets such as securities and bonds. Similar to
QFII The Qualified Foreign Institutional Investor () program, one of the first efforts to internationalize the RMB, represents China's effort to allow, on a selective basis, global institutional investors to invest in its RMB denominated capital market ...
(Qualified Foreign Institutional Investor), it is a transitional arrangement which provides limited opportunities for domestic investors to access foreign markets at a stage where a country/territory's currency is not traded or floated completely freely and where capital is not able to move completely freely in and out of the country.


QDII in China

In People's Republic of China, QDII allows investors to invest in foreign securities markets via certain fund management institutions, insurance companies, securities companies and other assets management institutions which have been approved by
China Securities Regulatory Commission The China Securities Regulatory Commission (CSRC) is a government ministry of the State Council of the People's Republic of China (PRC). It is the main regulator of the securities industry in China. History China's first Securities Law was ...
("CSRC"). On 13 April 2006, the Chinese government announced the QDII scheme, allowing Chinese institutions and residents to entrust Chinese commercial banks to invest in financial products overseas. But the investment was limited to fixed-income and money market products. After granting 15 banks and funds a total quota of
US$ The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
14.2 billion to invest overseas, the Chinese government announced on 11 May 2007 to widen the scope of the QDII investment. With certain restriction, banks can now offer
stock In finance, stock (also capital stock) consists of all the shares by which ownership of a corporation or company is divided.Longman Business English Dictionary: "stock - ''especially AmE'' one of the shares into which ownership of a company ...
s related products. The net value of a QDII product investing in stocks must not exceed 50%, with the net value represented by a single stock capped at 5%. The minimum commitment by each client is 300,000 yuan. Also, the stocks invested or the fund linked must be listed on or approved by the area that have signed memorandums of understanding with the
CSRC The China Securities Regulatory Commission (CSRC) is a government ministry of the State Council of the People's Republic of China (PRC). It is the main regulator of the securities industry in China. History China's first Securities Law wa ...
. In November 2007, Premier
Wen Jiabao Wen Jiabao (born 15 September 1942) is a retired Chinese politician who served as the Premier of the State Council from 2003 to 2013. In his capacity as head of government, Wen was regarded as the leading figure behind China's economic policy ...
stated the need to further study the scheme for individual Mainland Chinese residents to invest in stocks in Hong Kong. On April 8, 2008, an agreement between the China Banking Regulatory Commission and the U.S. Securities and Exchange Commission made it possible for Chinese individuals to invest in the US stock market.


Wenzhou pilot program

In April, 2012, it was announced that "Beijing’s latest financial reform will allow local residents in the wealthy city of Wenzhou to make investments abroad". The pilot program was not explicitly linked to QDII but came at the same time as an expansion of the QFII quota, the latter which allows investment in Chinese public markets with
offshore Offshore may refer to: Science and technology * Offshore (hydrocarbons) * Offshore construction, construction out at sea * Offshore drilling, discovery and development of oil and gas resources which lie underwater through drilling a well * Off ...
foreign currencies and, in the RQFII, offshore
renminbi The renminbi (; symbol: ¥; ISO code: CNY; abbreviation: RMB) is the official currency of the People's Republic of China and one of the world's most traded currencies, ranking as the fifth most traded currency in the world as of April 2022. ...
. While the QFII announcement was seen as a potential threat to Hong Kong as a financial center, Hong Kong is considered likely one of the first investment destinations for Wenzhou investors. "Premier
Wen Jiabao Wen Jiabao (born 15 September 1942) is a retired Chinese politician who served as the Premier of the State Council from 2003 to 2013. In his capacity as head of government, Wen was regarded as the leading figure behind China's economic policy ...
says the central government is determined to break the mainland's banking monopoly, and if he Wenzhoupilot schemes in the special financial zone newly set up ... prove successful they can be promoted and implemented nationwide", the ''
South China Morning Post The ''South China Morning Post'' (''SCMP''), with its Sunday edition, the ''Sunday Morning Post'', is a Hong Kong-based English-language newspaper owned by Alibaba Group. Founded in 1903 by Tse Tsan-tai and Alfred Cunningham, it has remained ...
'' reported.Huang, Cary
"Break the bank monopoly, Wen says"
April 04, 2012, ''South China Morning Post''. Retrieved 2012-04-11.


See also

*
Qualified Foreign Institutional Investor The Qualified Foreign Institutional Investor () program, one of the first efforts to internationalize the RMB, represents China's effort to allow, on a selective basis, global institutional investors to invest in its RMB denominated capital market ...
(QFII) *
China Securities Regulatory Commission The China Securities Regulatory Commission (CSRC) is a government ministry of the State Council of the People's Republic of China (PRC). It is the main regulator of the securities industry in China. History China's first Securities Law was ...
*
State Administration of Foreign Exchange The State Administration of Foreign Exchange (SAFE) of the People's Republic of China is an administrative agency under the State Council tasked with drafting rules and regulations governing foreign exchange market activities, and managing the s ...
(SAFE) *
Economy of China The China, People's Republic of China has an upper middle income Developing country, developing Mixed economy, mixed socialist market economy that incorporates economic planning through Industrial policy, industrial policies and strategic Five- ...
* Chinese financial system * Banking in China


Notes


External links


Aurei China Investment Consultants Ltd

China Securities Regulatory Commission 中国证券监督管理委员会 website

Complete list of QDII institutions with quota
{{Economy of China Institutional investors Investment in China