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 ...

set up to allow

financial institutions A financial institution, sometimes called a banking institution, is a business entity that provides service as an intermediary for different types of financial monetary transactions. Broadly speaking, there are three major types of financial ins ...

to invest in offshore markets such as securities and bonds. Similar to QFII (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

People's Republic of China China, officially the People's Republic of China (PRC), is a country in East Asia. With population of China, a population exceeding 1.4 billion, it is the list of countries by population (United Nations), second-most populous country after ...

, 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 agency directly under the State Council of the People's Republic of China. It is the main regulator of the securities industry in China. History Indicative of the role of the C ...

("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 (Currency symbol, symbol: Dollar sign, $; ISO 4217, currency code: USD) is the official currency of the United States and International use of the U.S. dollar, several other countries. The Coinage Act of 1792 introdu ...

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 Stocks (also capital stock, or sometimes interchangeably, shares) consist of all the Share (finance), shares by which ownership of a corporation or company is divided. A single share of the stock means fractional ownership of the corporatio ...

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. In November 2007, Premier

Wen Jiabao Wen Jiabao ( zh, s=温家宝, p=Wēn Jiābǎo; born 15 September 1942) is a Chinese retired politician who served as the 6th premier of China from 2003 to 2013. In his capacity as head of government, Wen was regarded as the leading figure behin ...

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 The China Banking Regulatory Commission (CBRC) was an agency of the People's Republic of China (PRC) authorised by the State Council of the People's Republic of China, State Council to regulate the Chinese banking sector, banking sector of the P ...

and the

U.S. Securities and Exchange Commission The United States Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street crash of 1929. Its primary purpose is to enforce laws against market m ...

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 Wenzhou; Chinese postal romanization, historically known as Wenchow is a prefecture-level city in China's Zhejiang province. Wenzhou is located at the extreme southeast of Zhejiang, bordering Lishui, Zhejiang, Lishui to the west, Taizhou, Zheji ...

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 foreign currencies and, in the RQFII, offshore

renminbi The renminbi ( ; currency symbol, symbol: Yen and yuan sign, ¥; ISO 4217, ISO code: CNY; abbreviation: RMB), also known as the Chinese yuan, is the official currency of the China, People's Republic of China. The renminbi is issued by the Peop ...

. While the QFII announcement was seen as a potential threat to

Hong Kong Hong Kong)., Legally Hong Kong, China in international treaties and organizations. is a special administrative region of China. With 7.5 million residents in a territory, Hong Kong is the fourth most densely populated region in the wor ...

as a financial center, Hong Kong is considered likely one of the first investment destinations for Wenzhou investors. "Premier

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 remaine ...

'' reported.Huang, Cary
"Break the bank monopoly, Wen says"
April 04, 2012, ''South China Morning Post''. Retrieved 2012-04-11.

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

QDII in China

Wenzhou pilot program

See also

Notes

External links