Under its qualified foreign institutional investor (QFII) program launched in 2003, the government has permitted foreign firms to invest US$10 billion in China's equity and debt markets.

Of that total, the State Administration of Foreign Exchange (SAFE) has allocated quotas totaling US$9.945 billion to 48 institutions, leaving just US$55 million to be invested.

A regulatory source said last week that, under a revised formula being discussed, the government could set a limit on foreign portfolio investment at 5 to 10 percent of the capitalization of the country's domestic A-share market, which is currently around 10 trillion yuan (US$1.3 trillion).

Asked whether policymakers might consider changing the way QFII quotas are calculated, SAFE head Hu Xiaolian said: "We're studying this and we haven't decided yet."

Hu, China's foreign exchange regulator, added: "Last year's quota was all used up, so when we arrange this year's quota there should be a change. But no final decision has been made."

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