There is the opinion that the authorities may have given too much attention to the QDII scheme because the quotas granted to QDIIs within months of its launch have already gone beyond what the QFIIs got in nearly four years.

This is not the case. As a transitional arrangement during the reform of an emerging market, schemes such as the QFII usually have a trial period of two to three years.

The authorities should take a prudent approach and gradually open up in this period as they make decisions on granting QFII status, investment quotas, the percentage of shares held by foreign investors and the limits on capital liquidity.

This is because the domestic capital market must have time to adapt to the inflow of foreign capital. And the limits must be loosened inch by inch as the domestic capital market gradually gets more mature.

The stock market in China is seeing a new phase of prosperity now that most of the listed companies have finished liquidizing their untradable shares.

Fundamental systems governing the securities market are being issued and improved, investor confidence in the market is being restored and a large number of blue-chip companies are going public.

With its basic pattern remarkably changed, the country's securities market will stand on a new starting block. Regulation of the QFII scheme will be further relaxed when its trial period comes to an end.

The positive impact of the QFII scheme on the capital market was highlighted when the CSRC, PBOC and SAFE jointly issued the Administrative Measures on Domestic Securities Investments by Qualified Foreign Institutional Investors, which came into effect on September 1.

Judging by the development of the securities market both in and out of the country, it is inevitable that regulation of the QFII scheme will be relaxed. It opens the channel between foreign capital and the A-share market, eases the need for capital and indicates an unprecedented boom in the domestic securities market.

During this time, the QFIIs will also change their business modes, their profit modes and their investment concepts in line with the development of the capital market and the Chinese economy.

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