China Opens Regulated Channels for Overseas Investment Amid Savings Surge

Chinese households are increasingly putting their money into approved funds that hold U.S. stocks, gold, and Treasuries. This shift comes as deposit rates at the country's biggest banks have dropped below 1 percent for a one-year term following a property market bust.

Fund Inflows

One prominent example is the Pictet Strategic Income fund. Its assets have grown to 5.1 billion dollars from 1.6 billion dollars at the start of the year. Roughly 60 percent of its assets now come from mainland Chinese retail investors through the Mainland-Hong Kong Mutual Recognition of Funds program. In the first half of the year, this fund brought in 2.1 billion dollars in net mainland inflows. Its top holdings include U.S. Treasuries, gold, Amazon, Alphabet, and Nvidia, and the fund returned 17 percent through August.

Regulatory Shift

At the same time, Beijing is cracking down on unlicensed offshore trading. In May, eight Chinese agencies launched a two-year campaign against illegal cross-border securities and fund activity, targeting brokers like Tiger Brokers, Futu, and Longbridge. However, regulators clarified that the goal is to guide investors toward legal channels rather than stop overseas investing entirely. Regulators also expanded the mutual-recognition program, raising the maximum share of a Hong Kong fund that can be sold to mainland investors to 80 percent of assets from 50 percent starting in January 2025.

Context

This trend reflects a broader effort by authorities to manage capital flows while satisfying consumer demand for diversified investments. Beijing permits foreign exposure only through controlled channels to prevent unauthorized capital flight. While household savings remain largely in traditional bank deposits, the expanding access to approved global funds gives savers new options.