China expands QDII overseas investment quota by $6.8 billion

China has increased its Qualified Domestic Institutional Investor (QDII) quota by approximately $6.8 billion, raising the total market capacity to $183 billion. The State Administration of Foreign Exchange approved these new allocations by the end of August to address rising demand for overseas asset diversification among Chinese investors.

The expansion was distributed among 89 institutions, including banks, securities firms, fund management companies, and insurers. Securities firms and fund managers were primary beneficiaries, receiving a combined $3.72 billion. Banks and insurers received $1.76 billion and $1.36 billion, respectively. Notably, trust companies were the only group that did not receive additional quotas.

Analysts suggest this move aims to ease the tight supply of cross-border investment products, such as those invested in US securities, and meet legal household demand for diversification following a decline in domestic property prices and fixed-income returns. The increase follows a crackdown on illegal offshore stock accounts, signaling a policy shift toward opening legitimate investment venues.