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China Allows Six Foreign Hedge Funds To Set Up Shop

ValueWalk – China has given six foreign hedge funds the right to raise funds in yuan to invest overseas, a strong move towards opening the country’s economy and internationalizing its currency, writes Amy Li for The Wall Street Journal.

The funds will be small at first, limited to just $50 million worth of yuan; it’s not surprising that the ruling Communist Party would take a conservative approach. This program, called Qualified Domestic Limited Partner (QDLP), follows a similar change—introduction of the Qualified Domestic Institutional Investor (QDII)—by seven years, so clearly no one’s in a rush. The QDII, which allows Chinese companies to raise yuan to invest abroad, has a quota of more than $80 billion, but it has been underutilized due to poor performance.

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