March 10, 2012 / 4:05 AM / 6 years ago

China approves more foreign funds as economy slows

BEIJING (Reuters) - China has approved 23 foreign institutions to invest a combined $2.9 billion in the country’s capital markets so far this year, the country’s foreign exchange regulator said on Friday, picking up the pace of approvals as the economy shows signs of easing.

China has now approved a combined quota of $24.6 billion in investment by 129 foreign investors under its Qualified Foreign Institutional Investor (QFII) system, the regulator said. China introduced the QFII system in 2003.

Beijing has been easing its controls on inbound investment recently as foreign capital inflows slow, in line with broader efforts to liberalize its capital markets.

“With the improvement in our international balance of payments and in order to further support capital market reforms, the State Administration of Foreign Exchange has moderately quickened the pace of approvals for QFII quotas,” the regulator said in a statement on its website (www.safe.gov.cn).

But the regulator also said it had cancelled QFII quotas for two foreign institutions and gave no further details.

Domestic media reported in January that China may soon finalize rules governing capital gains taxes on QFII and was soliciting opinions on a draft.

China controls capital flowing in and out of the country to protect it against financial turbulence, although Beijing has repeatedly pledged to speed up its liberalization.

(In this March 9 story regulator corrected figure for combined 2012 quota)

Reporting by Langi Chiang and Kevin Yao

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