The People's Bank of China will merge the Renminbi Qualified Foreign Institutional Investors scheme (RQFII) with the Qualified Foreign Institutional Investor scheme (QFII) and scrap the investment quota policy, sending a loud and clear message that China will further opening up the capital account.

ANBOUND’s research team is of the view that this is an important measure to encourage the entrance of foreign investors into the domestic market, enhance the appeal of China’s capital market and strengthen the role of the stock market and debt market as the conduit to finance real economy directly.

However, in order to maintain a stable exchange rate, the restrictions on foreign capital outflows will not be lifted simultaneously.