Lawyers attack China’s RQFII scheme

Author: | Published: 11 Jan 2012
Lawyers in Beijing have branded China’s pilot Renminbi qualified foreign institutional investors (RQFII) programme as unfair and ineffective.

In December, the China Securities Regulatory Commission (CSRC), the People’s Bank of China (PBOC), and the State Administration of Foreign Exchange (Safe) launched the RQFII scheme.

Under the programme authorised entities, with the approval of CSRC through a quota granted by Safe, are allowed to use RMB funds raised in Hong Kong to invest in the PRC securities market.

The scheme is effectively an RMB-settled version of the pre-existing QFII scheme, which is foreign-currency settled. It aims to diversify the investment channels for RMB in Hong Kong and bolster take-up for offshore RMB funds.

But one Beijing-based capital markets lawyer told IFLR the new rules were “only a gesture”. “Central government instigated the programme in a bid to tap Hong Kong’s...