China’s opening-up to foreign hedge funds is largely symbolic, at least for now


China will allow its citizens to invest some $300 million worth in yuan in six foreign hedge funds, reports the 21st Century Business Herald (link in Chinese), a leading financial newspaper. The six funds—Man Group, Winton Capital Management, Oak Tree, Citadel, Och-Ziff and Canyon Partners—have received quotas of $50 million apiece to set up shop in Shanghai on a “trial basis,” though the pilot hasn’t had the final green light, a source told the Financial Times (paywall).

Some might hail this as a sign that China’s opening up its closed capital account. Specifically, by allowing foreign funds to gather money from certain Chinese money managers and (probably) wealthy individuals, the government is taking a bold new step in letting money flow freely in and out of China. The current rigid limits on capital flows leave most Chinese households with few and generally crummy savings options.

But the pilot will be too tightly controlled…

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