Global Times | China's capital market set to accelerate institutional opening-up in coming five years: economist
The institutional opening-up of China's capital market will gain pace during the 15th Five-Year Plan period (2026-30), with progress expected in two-way capital flows, market inclusiveness, close international rule alignment and improved global resource allocation capacity, Tian Xuan, president of the National Institute of Financial Research at Tsinghua University, told the Global Times in an interview on Thursday.
"Foreign institutional investors and long-term capital will gain easier access to China's stock markets more conveniently, along with the continuous improvement of the QFII [Qualified Foreign Institutional Investor] and RQFII [RMB Qualified Foreign Institutional Investor] mechanisms, and the expansion of cross-border connectivity to cover a broader range of assets," Tian said.
Meanwhile, Chinese institutions and tech firms are expected to ramp up overseas market expansion via cross-border listings and issuing global depositary receipts (GDRs), promoting yuan-denominated assets to be included in more international indices, according to Tian.
There will be more diversified and convenient channels for foreign investors to participate in China's capital market during the 15th Five-Year Plan period, as Shanghai-London Stock Connect upgrades and the Guangdong-Hong Kong-Macao Greater Bay Area cross-border wealth management connectivity expands, the professor said.
China has unveiled the most comprehensive upgrade of its QFII programs since 2020, underscoring its commitment to attracting foreign investors, particularly allocation-based, long-term ones, to participate in its capital market with greater intensity.
According to a work plan released on Monday by the China Securities Regulatory Commission (CSRC), the country's top securities regulator, the QFII system will be refined to address foreign investors' concerns, including improving market access, facilitating investment operations, broadening investment scope, and clarifying policy expectations.
Wu Qing, chairman of the CSRC, said in a speech at the Annual Conference of Financial Street Forum 2025 in Beijing on Monday that the commission will expand high-level institutional opening-up steadily, enhance the protection of investor rights, and seek to improve the inclusivity, adaptability, attractiveness and competitiveness of China's capital market.
As of end-August, there were at least 907 QFIIs, holding Chinese shares worth 949.3 billion yuan ($133.6 billion), according to Xinhua.
According to newly released second-quarter 2025 data, the total market value of northbound funds reached 2.29 trillion yuan, rising 2 percent from the previous quarter.
"The greatest advantage of China's capital market in attracting long-term overseas capital currently lies in the structural opportunities and market potential brought about by the country's economic transformation and upgrade," Tian said.
On one hand, China's long-term upward economic fundamentals provide solid support. The country possesses the world's most complete industrial chain system, with strong innovation capacity in science and technology and a steady increase in the proportion of strategic emerging industries, creating broad investment room and stable yield expectations for foreign investors, the expert said.
On the other hand, China's continuous institutional opening-up has enhanced the alignment of market rules with international standards, offering overseas capital a more transparent, standardized, and predictable institutional environment. Yuan-denominated assets exhibit lower correlations with assets in other major economies, while China's equity market hosts a group of high-growth and profitable enterprises with risk diversification value, he said.
To meet the new opening-up goals under the 15th Five-Year Plan, efforts should be made to revise and refine existing laws, regulations, and supervisory policies in aspects including cross-border investment, cross-border finance and international trade to enhance regulatory certainty and transparency, Tian said.
Moreover, efforts are needed to improve macro-prudential management framework for cross-border capital flows, improve cross-border data-sharing mechanism, and enhance real-time monitoring and early warning for possible risks such as cross-border investment and financing and derivative transactions. The application of regulatory technology should be accelerated to improve the intelligent identification and resolution of cross-border risks, while stress testing and scenario analysis should also be strengthened in cross-border capital flow management, the professor said.
He said the country should actively participate in reforming the global economic governance system, advancing the improvement of international financial regulatory rules, global trade rules, and mechanisms for global industrial and supply chain cooperation, thereby enhancing China's influence in global risk governance and its voice in international discourse.