On China QFII System

This article is mainly aimed at introducing the basic principles of QFII system and experience of relevant districts and countries, and analyzing the different aspects of China's QFII system. It is hoped to provide comprehensive introduction and analysis of QFII system. The first legal issue QFII system concerns is for the supervisor to design the concrete rules and control the pace of deregulation in accordance with characteristics of native market and system on the basis of judging the potential effects and risks arising out of introducing QFII system. The second is protection of rights of foreign investors in China, including the qualified investors themselves and the investors thereafter. This issue confronts not only the rising countries and areas which have implemented QFII system but also all other countries in the process of financial globalization, including developed countries. The last issue is on other relevant international investment legal systems which are related to QFII system, for example the law of M&A by foreign investors.This article is divided into four chapters, except for the preface and conclusion.Chapter one summarizes the development of QFII System, functions and risks thereof and history of China QFII system.Chapter two analyses the basic legal structure of China QFII system, including requirements of QFII, licensing procedures, investment administration, foreign exchange administration, administration of funds and securities account, custody system, etc. These are systems directly related to QFII investments.Chapter three deals with the issue of protection of cross-boarder intermediated security holder's rights. After introducing securities held with an intermediary, the relevant approaches of domestic law and conflict of laws rules are introduced.Chapter four analyses issues such as coordination of QFII systems with international investment law, especially issues of coordination of QFII system with China foreign investment law and relevant issues on foreign investment law.QFII system itself may produce benefits or harms, and the key issue is for the government to design the concrete rules in accordance with condition of its country, improve its regulation regime, take advantage of its merits and avoid its demerits. China has basically reached the expected aim in the first stage of implementing QFII system, but the negative affects has also be noticed. Relevant systems still need improvement. The aim of achieving the goal of macro-economic policy and perfecting internal capital market while utilizing foreign investments can not be achieved by opening until the several regimes, especially the regime safeguarding the state's financial security are optimized.The innovation of this article is that it not only analyses China's QFII system, but also examines coordination of relevant systems with international investment law. Some of the issues have not been solved, and will need to be solved even after completely opening of China capital market.