Three key developments to know about China’s asset management industry

1. Since the legislative opening-up of China’s asset management industry from 2020, foreign asset managers have consistently shown a strong interest in opportunities relating to the Chinese market

Between 2020 and 2022, China progressively removed foreign ownership limitations in a number of categories of financial institutions in the asset management industry, including securities companies, mutual fund management companies, insurance asset management companies, and futures companies. Following these reforms, many leading global asset managers have expanded their operations in China by undertaking acquisitions or establishing foreign-controlled or wholly foreign-owned subsidiaries. To date, there have been five wholly foreign-owned securities firms, nine wholly foreign-owned mutual fund management companies, two foreign wholly-owned futures companies, and one foreign wholly-owned insurance asset management company in the Chinese market. 

Meanwhile, in responding to the growing appetite of Chinese high net worth individuals to invest globally, numerous well-known international asset managers have set up their qualified entities in China through the Qualified Domestic Limited Partner (QDLP) regime, which is a quota-based special arrangement enabling foreign or domestic asset managers to raise funds from qualified Chinese investors for overseas investments. To date, over 50 global asset managers have set up their qualified entities in different cities in China.

2. China has continuously issued policies to optimize and streamline foreign asset managers’ investment and operation in China, from both central and regional levels

Upgraded GBA Wealth Management Connect regime. On February 26, 2024, revised rules governing the Cross-boundary Wealth Management Connect Pilot Scheme in the Guangdong-Hong Kong-Macao Greater Bay Area (the GBA Wealth Management Connect) came into effect. Accordingly, (i) qualification requirements imposed on investors who are permitted to invest via the GBA Wealth Management Connect have been further relaxed, (ii) the total investment quota granted to any single investor has been increased fr]om RMB 1 million to RMB 3 million, and (iii) investors can now trade through qualified securities companies (in addition to qualified banks), and can invest in a wider scope of products than before.

Broader participation in the bond market. On February 28, 2024, the State Council issued an action plan to further open China’s financial sector and attract foreign investment. The action plan permits a wider scope of qualified foreign-invested financial institutions to participate in bond underwriting and allows a broader scope of qualified foreign-invested banks to participate in the pilot program of treasury bond futures trading.

Expanded Stock Connect regime. On April 19, 2024, the China Securities Regulatory Commission (CSRC), China’s securities regulator, issued several measures to expand and optimize the Shanghai-Shenzhen-Hong Kong Stock Connect regime, which were later further implemented by the Shanghai Stock Exchange and Shenzhen Stock Exchange respectively. Such liberalization measures have expanded the scope of stock exchange-traded funds which can be traded under both the Southbound and Northbound Stock Connect regimes and included eligible real estate investment trusts as a type of product that can be traded under the Stock Connect regimes.

Streamlined strategic foreign investment in listed companies. On December 2, 2024, the revised measures on foreign investors’ strategic investment in listed companies of China (the Strategic Foreign Investment) came into effect. The measures permit foreign natural persons to make a Strategic Foreign Investment (that is, no longer limited to foreign institutional investors only), reduce capital requirements on foreign investors who will not become a controlling shareholder of a listed company, allow for broader use of non-cash consideration for a Strategic Foreign Investment, relax minimum shareholding thresholds, and shorten lock-up periods of a foreign investor.

Optimized Mutual Fund Recognition regime. On December 17, 2024, the CSRC revised the rules governing the Mutual Fund Recognition regime. These revised rules have (i) increased the total scale of Hong Kong-recognized funds permitted to be distributed to mainland Chinese investors from 50 percent to 80 percent (among the overall scale distributed to all investors), and (ii) permitted an existing fund manager of a Hong Kong-recognized fund to sub-delegate its investment management function to its affiliate within the same group which is an overseas asset manager.

Financial opening-up in designated pilot free trade zones. On January 16, 2025, the People’s Bank of China (PBOC) and four other major regulators in China jointly issued an opinion introducing 20 new policies to promote high-level financial openness in China’s designated pilot free trade zones. These new policies aim to (i) allow foreign-invested financial institutions to offer “new financial services” (that is, those that have not been available within China but are already offered and regulated in other countries or regions) under conditions equivalent to those applying to domestic peers, (ii) widen the range of overseas financial products/services accessible to Chinese consumers, and (iii) ease cross-border financial data transfers and fund remittances.

Otimized QDLP regime in Shanghai. On March 25, 2025, the PBOC and three other governmental authorities jointly released an action plan aimed at enhancing cross-border financial services offered by Shanghai as an international financial center. This plan would permit QDLPs registered in Shanghai to invest in, in addition to the existing overseas financial markets, a broader range of cash management products both inside and outside of China (which is deemed as a breakthrough), remit funds raised in China to overseas markets in tranches subject to actual needs of the offshore main fund, and raise foreign currency fund in China.

3. China continues to reinforce its oversight of private investment funds and their managers

In recent years, with the rapid development of the asset management and private investment fund industries in China, Chinese financial regulators have issued multiple regulations, rules and consultation papers from different legislative hierarchies to standardize the private investment fund sector, including:

• The Regulations on the Supervision and Administration of Private Investment Funds issued by the State Council, which came into effect on September 1, 2023 and are the highest level of legislation governing the private investment funds. Please refer to our previous publication “A New Era for Private Investment Funds and their Managers in China” for more insights;
• The draft Measures for the Supervision and Administration of Private Investments Funds issued by the CSRC on December 8, 2023, which, however, is still in its draft version and it is unclear when it will be formally issued. Please refer to our previous publication “Draft CSRC Private Investment Funds Measures for Public Consultation” for more insights; and
• The various guidelines issued by the Asset Management Association of China (AMAC), a lower-level association authorized by CSRC to supervise private investment funds and their managers, including the Measures for the Registration and Record-Filing of Private Investment Funds which came into effect on May 1, 2023, and the Guidelines for the Operation of Private Securities Investment Funds, which came into effect on August 1, 2024.

From the disciplinary action perspective, regulators in China have further demonstrated a robust commitment to improving the quality of the private fund sector and protecting investors’ interests. Consequently, according to the latest public information, in 2024, AMAC deregistered around 1,500 private fund managers and issued over 500 disciplinary decisions – both figures significantly higher than those for the previous year.