Cross-Border Investment Boost: China Issues Second Round of QDII Quotas This Year, Largest Increase Since June 2021

The channel for domestic funds to invest overseas in a compliant manner has been expanded once again.

On August 28, the State Administration of Foreign Exchange (SAFE) updated its approval schedule for Qualified Domestic Institutional Investor (QDII) investment quotas. As of the end of August, banks, securities and fund firms, insurers and trust companies had received cumulative quotas of $183.09 billion, an increase of $6.84 billion from end-July — the largest single-batch increase since June 2021.

This is the second concentrated quota issuance of the year. In March, 78 institutions received a combined $5.3 billion in new quotas. Together, the two batches added $12.14 billion — roughly 3.9 times the $3.08 billion increase for all of 2025 — signaling a markedly faster pace of QDII quota issuance.

89 Institutions Receive Quota Increases; Securities and Fund Firms Account for Over Half

This batch covers 89 institutions, including three first-time recipients, with securities and fund firms contributing the largest increase, banks and insurers also expanding, and trust company quotas unchanged.

Among them, securities and fund firms received $3.72 billion of new quotas, accounting for 54.4% of the batch, lifting their cumulative total from $97.28 billion to $101 billion — the first time it has surpassed the $100 billion mark. Banks added $1.76 billion, reaching $30.99 billion in cumulative quotas; insurers added $1.36 billion, reaching $42.003 billion; trust companies remained at $9.016 billion.

Public funds were the main recipients of the securities and fund category increase. Eighteen firms, including HuaAn Fund, China Asset Management, JPMorgan Funds, E Fund, Bosera Fund, GF Fund and Fullgoal Fund, each received $100 million in additional quotas; nine firms, including China Southern Asset Management, Yinhua Fund and Penghua Fund, each received $80 million; and several other institutions received between $20 million and $60 million. Notably, Xinyuan Fund obtained a QDII quota of $100 million for the first time. According to the CSRC website, Xinyuan Fund's application for QDII business qualification was approved in June 2026, meaning it will become a new QDII fund manager within this year.

Among securities firms and their asset management units, Huatai Securities AM, CITIC Securities AM and Dongxing Securities each received $100 million, Caitong Securities AM received $80 million, and CSC Financial received $60 million. In the banking category, East West Bank (China) and CITIC Bank International (China) were newly added, each receiving their first $100 million quota.

Larger Batch Size, but Allocation Continues the Normalized Issuance Approach

In aggregate terms, this batch is significantly larger than the first of the year: new quotas exceeded March's by $1.54 billion, an increase of about 29%, and the number of institutions rose from 78 to 89. Measured against cumulative quotas at end-July, this round represents an expansion of roughly 3.9%. It is the largest batch in more than five years, following the $10.3 billion issued in June 2021.

However, individual allocations remain modest, ranging mostly from $20 million to $100 million — more a “broad top-up” for existing institutions than concentrated allocations to a few names. At a State Council Information Office press conference on July 17, Xiao Sheng, director of SAFE's Capital Account Management Department, said SAFE would steadily and orderly promote two-way opening of financial markets, issue QDII quotas on a normalized basis, and tilt further toward public fund products to improve the inclusiveness of the QDII business.

In terms of allocation, this policy round features a large total volume and broad coverage, but restrained per-institution increases, consistent with SAFE's previously defined approach of normalized QDII quota issuance.

In June, SAFE Administrator Zhu Hexin said at the Lujiazui Forum that the administration would actively respond to market demand and issue a new batch of QDII quotas. The latest allocation delivers on that earlier commitment and further broadens the compliant channel for domestic institutions and residents to allocate assets globally.

QDII Fund Purchase Limits Expected to Ease

For public funds, the most direct effect of the new quotas is to open fresh subscription capacity for QDII products constrained by quota limits. After the March issuance, more than 20 QDII products resumed subscriptions or raised purchase caps; but as money kept flowing in, many products tightened subscription limits again since June, with some daily caps falling to very low levels and several cross-border ETFs repeatedly warning of secondary-market premium risks.

A fund advisory professional in North China told Dahe Caijing that his firm's advisory portfolios have long allocated to overseas assets across several major markets. This year, because QDII fund subscription quotas were adjusted frequently, the firm upgraded its portfolio allocation system to enable one-click allocation to all eligible overseas funds.

He said the portfolio's daily subscription capacity stood at about 8,000 yuan at the start of the year; as some funds kept tightening purchase limits, the portfolio gradually trimmed index funds with low quotas and added actively managed overseas funds with relatively higher subscription caps. Even so, daily capacity quickly fell to just over 2,000 yuan between June and July. “Some clients have been worn out by the constantly changing purchase limits,” he said, adding that some investors even chose to pay high premiums and switched to exchange-traded cross-border ETFs.

Li Yiming, senior analyst at Morningstar China's Fund Research Center, told Dahe Caijing that high QDII premiums essentially result from scarce quotas combined with strong market enthusiasm. Investors are effectively paying an “emotion tax” in advance and borrowing from future gains; once premiums retreat or sentiment shifts, they may face principal losses even if the underlying asset prices remain unchanged.

This batch raised securities and fund quotas by $3.72 billion, of which public fund managers received about $3.1 billion in total, likely helping some products resume or loosen subscriptions and leaving room for new product launches. Still, an approved quota is merely the ceiling for an institution's overseas investment, not a commitment that funds of the same size will be remitted immediately. Institutions will decide the actual pace of utilization based on existing quota usage, product subscription demand, overseas market valuations and risk-control arrangements.

Going forward, the key question is whether the new quotas can be converted quickly into subscribable capacity for public fund products and whether purchase limits and on-exchange premiums will ease accordingly. For investors, the quota expansion adds a compliant allocation channel but does not change the risks of overseas market volatility, currency fluctuations and cross-border ETF premiums.