A Shanghai city financial regulator has announced plans of a new scheme allowing Chinese individuals to invest in financial markets overseas. It is likely the scheme will be launched this year at the Shanghai free trade zone,
Also under the program, authorities will raise the annual foreign exchange quota for Chinese residents, which is currently capped at US$50,000.
“We are working with state-level regulators on measures to facilitate foreign exchange for individuals, and raise the cap gradually to US$200,000 to US$300,000 a year,” said Zheng Yang, director of the Shanghai Financial Services Office.
The scope of cross-border investment allowed under the new program for residents within the Shanghai FTZ will include securities, real estate and other business ventures, Zheng said.
Details of who will be eligible are yet to be finalized, but a draft suggests that to qualify individuals must have been employed within the Shanghai FTZ for a year, and have a legitimate tax and social security record.
There are also plans to use the free trade account to allow foreigners working in the zone to invest in Shanghai’s financial markets, but nothing has been made public.
Offshore investors can now trade gold in Yuan after an exchange was opened in September within the Shanghai FTZ. Bullion trading at the exchange has reached 1,026 tons, or 224.3 billion Yuan, as of March this year.
So far, only banks in Shanghai can open free trade accounts for their FTZ clients. The authorities have repeatedly said they will allow brokerages and insurance companies to open such accounts in the future for investment purposes.
