Authorities Looking to Loosen Rules for Foreign Investment in Chinese Assets

What’s new: The State Administration of Foreign Exchange (SAFE) is considering loosening some restrictions on cross-border investment under its Qualified Foreign Limited Partnership (QFLP) program, a deputy SAFE head told a briefing (link in Chinese) in Beijing on Friday.

Wang Chunying said that the forex regulator is studying a pilot reform plan for the QFLP program to cut red tape, expand the range of investment open to foreign investors and explore a model for private equity funds’ cross-border financing and investment activities.

What’s the background: The QFLP program allows foreign institutional and individual investors to invest in Chinese assets through fund managers, while the Qualified Domestic Limited Partnership (QDLP) program gives domestic investors access to foreign investment opportunities.

The QFLP program was first piloted in Shanghai in 2011, followed by cities including Beijing, Tianjin, Chongqing, Shenzhen, Zhuhai, Guangzhou, Qingdao and Guiyang.

In June, the Beijing municipal government and other state bodies issued a guideline (link in Chinese), which allows qualified foreign institutions in Beijing to test the QDLP program and raise money from domestic investors for investment overseas. The guideline also supports a trial of foreign institutions becoming involved in the cross-border transfer of banks’ bad assets.

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Contact reporter Timmy Shen (hongmingshen@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)

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