世经所周宇研究员就QDII2问题接受Global Times采访

China's central bank has approved the launch of a new pilot program which will allow individual investors to engage in outbound investment, the official Shanghai Securities News (SSN) reported Tuesday, citing Wang Jingwu, president of the Guangzhou branch of the People's Bank of China (PBC).

Plans concerning the qualified domestic individual investors (QDII2) scheme have been submitted to the State Council for review, Wang was quoted as saying. According to the SSN, implementation rules covering the scheme are likely near completion and official testing could start as early as July 1.

The first two sites to trial the program will be Guangzhou and Shenzhen, two key cities in Guangdong Province which are included in the Pearl River Delta Financial Reform Experimentation Zone, the SSN reported. 

Wang's remarks on the progress of this investment protocol follow a series of steps by Chinese regulators and policymakers to liberalize the Chinese mainland's capital account. Under current capital control policies, individual investors in the mainland can only tap overseas financial markets through a limited number of fund products offered via the country's qualified domestic institutional investors (QDII) program.

Chinese authorities have been working quickly this year to get QDII2 testing off the ground. The PBC first announced the scheme in January, saying that it would actively prepare for trial implementation. In May, the State Council also announced that  the mainland would establish a program to facilitate individual outbound investment when it called for plans to support full convertibility of the yuan.

Aside from furthering long-term liberalization goals, the QDII2 program is also likely meant to bolster Hong Kong's status as a global financial center, Zhou Yu, director of the Research Center of International Finance at the Shanghai Academy of Social Sciences, told the Global Times.

"Considering the location of the first two trial cities, I think the launch of QDII2 is mainly intended to stabilize Hong Kong's financial market," Zhou said.

Hong Kong equities have underperformed over recent weeks, with the benchmark Hang Seng Index down some 10 percent for June as of Tuesday.

Yet current liquidity conditions in the mainland capital market mean that this may not be the best time to roll out QDII2 experimentation, Zhou speculated.

"I expect regulators will limit quotas under the QDII2 scheme to minimize capital drains which could impact investor confidence," Zhou said.

《QDII2 pilot plan moves forward: SSN》， Global Times，2013-6-25，By Qiu Chen