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Chongqing Pilots QDLP in SW China to Further Open-up in Financial Markets

By JAMES ALEXANDERICHONGQING|Jul 08,2021

Chongqing-  A pilot program for overseas investment in Southwestern China’s Chongqing Municipality has implemented lower entry barriers, a broader scope of investments, flexible quota management, and a diversified range of currencies, local officials said Monday.

The Information Office of Chongqing Municipal People’s Government held a press conference on July 5th, 2021, to explain the policies entailed within the interim measures for outbound investment in the Qualified Domestic Limited Partner (QDLP) pilot program of Chongqing Municipality.

The QDLP refers to projects where domestic institutions convert RMB into foreign currencies within an approved limit for investment into overseas equity funds. Advance procedures include a review of eligibility, limit approval, and regulatory supervision.

Yu Rong

Yu Rong, a member of the Party Leadership Group of the Chongqing Local Financial Supervision and Administration Bureau, clarifies the latest policies in the Interim Measures for Outbound Investment in the QDLP Pilot Program of Chongqing Municipality.

Pilot QDLP qualifications have been approved for Chongqing and the Hainan Free Trade Port with equal quotas of US$5 billion. This makes Chongqing the first city in central and western China to implement this pilot program, serving the two-way opening up of financial markets.

Yu Rong, a member of the Party Leadership Group of the Chongqing Local Financial Supervision and Administration Bureau, explained that the policy has clarified administrative responsibilities and pilot subjects, standardized the application process, and has put forward operational requirements.

Wu Haosheng, deputy director of the Chongqing Operations Office of the People’s Bank of China and deputy director of the Chongqing Foreign Exchange Management Department, explained that the Chongqing QDLP pilot has four main characteristics.

Wu Haosheng

Wu Haosheng, deputy director of the Chongqing Operations Office of the People’s Bank of China, explained the main characteristics of the QDLA pilot in Chongqing.

  • Low entry barriers – Requirements for establishing pilot fund management enterprises and the minimum investment limit for single domestic limited partners have been further relaxed. For example, a pilot fund management company’s registered capital shall not be less than RMB 5 million or equivalent in foreign currency. Pilot funds have no minimum capital contribution limits, and the minimum investment threshold for domestic limited partners in a single fund is RMB 1 million or equivalent in foreign currency.
  • Wide investment scope – External investment by pilot funds includes the stocks and bonds of overseas non-listed companies, those issued and traded by overseas listed companies, overseas securities markets (including financial instruments traded in overseas securities markets), overseas equity investment funds and securities, and overseas bulk commodities and financial derivatives. Primary and secondary markets have been delineated, and the overall direction of capital investment has been further expanded.
  • Flexible quota management – Pilot fund management companies can flexibly adjust individual foreign investment quotas amongst their portfolio. The sum must not exceed approved quotas and are subject to balance management.
  • Diversified investment currencies – Cross-border RMB has been incorporated into the pilot category, so that pilot funds may use QDLP quotas to invest directly overseas according to traditional practices.
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