China plans to increase the amount of capital approved domestic investors can channel into overseas assets, signaling a significant loosening of its long-standing restrictions on cross-border capital flows. Authorities are preparing a new round of quotas under the qualified domestic institutional investor (QDII) program, which permits select mainland institutions to invest in foreign assets such as US Treasuries and overseas equities. The program’s quota was last raised in the summer, and the new expansion aims to better meet the cross-border investment needs of Chinese institutions.
Zhu Hexin, head of China’s top currency regulator, told the China Development Forum in Beijing on Monday that the move reflects Beijing’s broader strategy to advance capital account convertibility, or the freer flow of capital across borders. “In the next five years, China will continue to promote opening up of capital accounts and coordinate the course with financial reforms and yuan internationalization,” Zhu said, noting that more than 90% of capital-account items are now at least partially open.
The policy shift comes amid relative stability in cross-border capital flows despite recent volatility in global financial markets. Zhu emphasized that this balance has given Beijing room to ease controls and revive a long-term effort to expand the yuan’s international presence. The initiative also aligns with broader ambitions to reduce reliance on the US dollar in global trade and finance.
Speaking earlier at the forum, former People’s Bank of China Deputy Governor Zhu Min highlighted the gap between China’s status as the world’s second-largest economy and the limited global use of its currency. He argued that the dollar’s influence is declining as the US share of global output and trade shrinks, reinforcing the need for accelerating the internationalization of the yuan. “The US economy is no longer sufficient to support a single global currency,” Zhu said, noting that many countries are diversifying their reserves to hedge against risks from dollar-denominated holdings.
To bridge the gap, Zhu called for expanded use of the yuan in trade with the Global South and across industrial supply chains. He also urged building deeper securities and bond markets to attract foreign capital, while enhancing the CIPS payment system, which facilitates cross-border yuan transactions. Analysts say these steps could position the yuan as a more prominent currency in international trade and investment, potentially reshaping global financial dynamics over the next decade.
The QDII program, which has long capped institutional investments abroad, is expected to play a central role in this strategy. By raising quotas, China allows domestic investors greater flexibility in accessing foreign financial markets, supporting both portfolio diversification and yuan internationalization. The regulator indicated that the move would be gradual, balancing the benefits of increased overseas investment with the need to maintain domestic financial stability.
Bloomberg analysts noted that the policy signals Beijing’s confidence in its ability to manage capital outflows while advancing its economic and geopolitical goals. As global investors watch for changes to the QDII program, the broader strategy underscores China’s ambition to reshape the international monetary system, reduce dollar dependence, and expand the yuan’s footprint across trade, finance, and industrial supply chains.
While the world’s markets continue to adapt to fluctuations in US and European monetary policy, China’s steps to internationalize the yuan reflect both a long-term economic vision and a strategic push to leverage its growing global economic weight. Observers suggest that sustained policy support, coupled with broader financial reforms, could enhance the yuan’s appeal to foreign investors and trading partners alike.
