Definition of QFII

The qualified foreign institutional investor (QFII) programme started in 2002 and allowed licensed foreign institutional investors a quota to buy Chinese-listed A-shares (previously only available to domestic investors). The scheme attracted criticism for allowing only very few foreign entities to participate. There were complaints about the length of time they had to wait between applying for a quota and being granted one. 

 

QFII in the news

In April 2012 the net quota for QFII investment was raised from $30bn to $80bn.

In December 2012, China raised foreign investment limits under the QFII scheme. The overall net quota for the QFII programme was to remain at its current $80bn, but institutions could now apply to invest over $1bn if they chose.

The new regulations also relax restrictions on the ability of funds to remit principal and income from investments, but made no further clarifications as to how China will tax QFII profits, an area of enduring uncertainty for QFII investors.

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