MNI POLICY: China Eases Restrictions On Foreign Capital

     BEIJING(MNI) - China will lift key quota restrictions on the inflow of

foreign capital in a bid to attract overseas institutional investors, the State

Administration of Foreign Exchange said on Tuesday.

     Both the Qualified Foreign Institutional Investor (QFII) and the RMB

Qualified Foreign Institutional Investor (RQFII) programs will be removed,

meaning that licensed global institutional investors will be able to invest in

mainland bond and stock markets without quota limits, SAFE said in a statement

on its website.

     This will permit qualified foreign institutions to invest in the

RMB-denominated bond and stock markets through their custodian banks after

registering with the authorities, SAFE said.

     The move will meet the demand of foreign investors after the country's

stock and bond markets were included in major international indexes, such as the

MSCI, FTSE Russell and Bloomberg Barclays series, said Wang Chunying,

spokeswoman and chief economist at SAFE.

     China will also remove restrictions on some countries and regions under

RQFII.

     The SAFE will further deepen reforms of forex management, and take measures

to facilitate cross-border investment and financing, but the regulator will also

act to deak with any risks from the resulting capital flows, according to the

statement.

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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