QDII (qualified domestic institutional investor) allows mainland investors to invest in overseas capital markets when the capital account is not fully open. QDII means that mainland residents will be allowed to invest in overseas capital markets with foreign exchange, and QDII will be implemented through institutions recognized by the China government. QDII was first proposed by the government departments of the Hong Kong Special Administrative Region. Like China, Depositary Receipts and overseas institutional investors, QDII will be an expedient measure to open the mainland capital market to the outside world under foreign exchange control. Moreover, because RMB is not freely convertible, the mechanism of domestic, depositary receipts and foreign institutional investors is quite difficult in technology. Comparatively speaking, the institutional obstacles of QDII are much smaller. Once implemented, it will be good news for the Hong Kong stock market, especially for Chinese concept stocks.

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This method/step is conducive to supporting Hong Kong's economic development, establishing a QDII mechanism, and enabling China mainland residents to buy and sell Hong Kong stocks, thus enhancing the confidence of Hong Kong investors. In the case that RMB capital is not freely convertible, it is a relatively safe and effective policy arrangement for the mainland to stimulate the Hong Kong stock market.

It is conducive to promoting mainland brokers and investment banks to enter the international market in a roundabout way. Through the operation of these projects and businesses, we can learn and be familiar with the overseas capital market in the process of serving our relatively familiar customers, understand and then win over overseas customers, so as to continuously expand the business scope, effectively avoid the business risks caused by inexperience, and gradually become bigger and stronger. Promote the mainland financial industry to become bigger and stronger.

It is conducive to guiding domestic residents to participate in overseas securities investment through normal channels, reducing the pressure of illegal capital flight, and making capital outflow in a monitorable state. The establishment of QDII mechanism legalizes the demand of domestic residents to invest in Hong Kong stock market, which can not only effectively divert the savings of some domestic residents, but also guide domestic capital that needs to invest in overseas stock markets to go out through normal channels, and control the flow of domestic funds through clear channels, which is helpful to control financial risks.

It is conducive to enhancing the image of China enterprises in the international capital market and restoring and enhancing the ability of domestic enterprises to raise funds in the international capital market. Through QDII mechanism, domestic investors can be guided to invest in overseas stocks of China enterprises, such as H shares and red chips in Hong Kong, which will inevitably greatly stimulate their trading, thus attracting other hot money outside the market and promoting the return of H shares and red chips to reasonable prices. Then the refinancing function of these enterprises will be restored, and the financing plan for new mainland enterprises to issue new shares in Hong Kong will also go smoothly.

Note: Most trust and investment companies have rich experience in securities investment. After the fifth rectification, their assets are in good condition and their risk control systems are gradually improved. Therefore, trust companies can be entrusted by mainland residents to invest in state-owned enterprises, red chips and blue chips in Hong Kong's securities market as QDII, which can not only guide domestic residents to participate in overseas securities investment through normal channels, but also attract mainland funds to be active in Hong Kong's securities market and revitalize Hong Kong's economy.