In 2021, the People's Bank of China, the China Securities Regulatory Commission and the State Administration of Foreign Exchange jointly issued the Opinions on Providing Financial Support for the Comprehensive Deepening of Reform and Opening-up in Hainan, which proposed a pilot cross-border asset-management scheme that would allow overseas investors to invest in a broad range of asset-management products issued by financial institutions located in the Hainan Free Trade Port (the "Hainan FTP"). 

On 21 July 2025, the Hainan branch of the People's Bank of China, together with the Hainan Regulatory Bureau of the State Financial Supervision and Administration, the Hainan Regulatory Bureau of the China Securities Regulatory Commission, the Hainan Provincial Local Financial Administration and the Hainan branch of the State Administration of Foreign Exchange, jointly released the Implementation Rules for the Pilot Cross-border Asset Management Business in the Hainan Free Trade Port (the "Pilot Program"). The rules will take effect on 21 August 2025.

Under the Pilot Program, eligible overseas institutional investors and overseas individual investors may invest directly in asset-management products issued by financial institutions located in the Hainan FTP, including among others, wealth-management products, private asset-management schemes offered by securities, fund and futures institutions, public securities investment funds, and insurance asset-management products. "Overseas institutional investors" refers to institutions incorporated outside the Chinese mainland, including those established in the Hong Kong Special Administrative Region, the Macao Special Administrative Region and Taiwan. "Overseas individual investors" comprise foreign nationals as well as residents of the Hong Kong Special Administrative Region, the Macao Special Administrative Region and Taiwan who currently study, work or reside in the Hainan FTP, or who meet the criteria stipulated in the Hainan FTP's foreign-talent policies.

Compared with certain existing cross-border asset-management schemes (such as QFII/RQFII, QFLP, CIBM Direct, Bond Connect, Stock Connect and the Cross-boundary Wealth Management Connect Pilot Scheme in the Guangdong-Hong Kong-Macao Greater Bay Area), the Pilot Program further opens China's asset-management market to overseas investors through the following investor-friendly measures:

• Lower entry barrier. The Pilot Program is a unilateral opening, which is not dependent on any bilateral mechanism, and does not impose any geographic restrictions. Eligible overseas institutions and individuals may subscribe to asset-management products directly from the sales agencies in Hainan FTP.
• Wide range of asset-management products. The Pilot Program has expanded the scope of asset-management products to cover public securities investment funds with risk rating of "R1" to "R4", private asset-management schemes with risk rating of "R1" to "R4", insurance asset-management products and any other products approved by the competent authorities.
• Expanded investor base. Participation is open not only to overseas institutions but also to individuals who study, work or reside in the Hainan FTP.
• Streamlined participation formalities.  Unlike requirements of entity set-up and/or pre-approval applicable to certain existing cross-border asset management programs, overseas investors may open an account (or use an existing account) directly with one of the designated pilot banks in the Hainan FTP. Funds for subscriptions and redemptions are subject to closed-loop management within these accounts.

• Who can participate?

The Pilot Program expects to allow all overseas institutional investors and overseas individuals, who study, work or reside in the Hainan FTP or who meet criteria stipulated in the Hainan FTP's foreign-talent policies, to subscribe to the asset-management products.

Implementation of the Pilot Program will be phased in stages. In the initial phase (from 21 August 2025 to 17 February 2026), eligible overseas institutional investors only include foreign-licensed financial institutions and overseas affiliates of Chinese enterprises. All other foreign investors using offshore fund are excluded during this phase.

• How to participate?

Overseas investors must open bank accounts with the designated pilot banks in the Hainan FTP (or use existing accounts with those banks) for subscription to and redemption of pilot asset-management products.

Overseas institutional investors may subscribe to the pilot products with either onshore or offshore funds. Overseas individual investors shall use onshore funds and need to provide proof evidencing source of such funds and evidence of having studied, worked, or resided in the Hainan FTP for at least one year.

• Is there an investment quota for the Pilot Program?

Yes. The Pilot Program starts with an initial quota of RMB 10 billion, which the Hainan branch of the People's Bank of China will adjust dynamically in light of Hainan FTP's economic and financial development, the balance-of-payments situation, and actual market demand.

• In addition to subscription to asset-management products via the Pilot Program, how could a foreign financial institution further explore opportunities in Hainan FTP? 

The target of Hainan FTP is to facilitate trade, investment, cross-border capital flow, personnel and transportation access in a free and convenient manner as well as safe and orderly flow of data. As one of the supporting measures for development of Hainan FTP, overseas financial institutions are encouraged to establish presence in Hainan FTP. 

Strategically positioned in the Hainan FTP with dual offices in Haikou and Sanya, KWM is at the forefront of the Hainan FTP's accelerated drive toward its landmark island-wide independent customs operation on 18 December 2025 - a pivotal milestone unlocking unprecedented market access and regulatory innovation. Leveraging real-time policy insights and in-depth knowledge in the China market, we empower global enterprises to seize investment opportunities, build compliant operational frameworks for the new customs regime, and secure first-mover advantage in Asia's most dynamic economic gateway, ultimately transforming Hainan FTP's regulatory innovation into your sustainable competitive advantage.