China Adds Quota For Overseas Investment by Most Since 2021

China raised the cap on institutional investors’ overseas securities purchases by the most since 2021, aiming to advance financial opening and meet greater domestic demand for offshore investment.

The investment quotas for China’s Qualified Domestic Institutional Investor program, or QDII, climbed to $176.17 billion at the end of March, up from $170.87 billion a month ago, according to data released by the State Administration of Foreign Exchange on Friday. The $5.3 billion addition — the first hike since June last year — marks the largest increase since 2021, Bloomberg compiled data shows.

The QDII program allows local institutional investors who meet certain conditions to buy foreign assets within the prescribed limit. Relative stability in the Chinese yuan and local markets amid the Iran war is giving Beijing breathing room to loosen capital controls and expand the currency’s global role.

“The trend was largely expected as China has long been planning to further open up capital account by allowing greater flexibility for outbound investments,” said Becky Liu , head of China macro strategy at Standard Chartered Bank. “But the timing and scale is interesting. They are increasing outbound quota to allow more capital outflows when global market is facing huge uncertainty, and with quota even larger than the last allocation.”

The larger cap suggests China has not seen large capital-outflow pressure since the war began and may have even seen inflows, she said.