Three Measures Introduced to Support the QDLP Pilot Program in Shanghai

I. Introduction of Three Measures

China’s central financial regulatory authorities recently released a coordinated action scheme, including eighteen different actions, aimed at enhancing the accessibility and efficiency of cross-border financial services. The initiative is designed to bolster Shanghai’s status as an international financial center. Notably, one of the eighteen actions regards three specific measures related to the QDLP (Qualified Domestic Limited Partnership) pilot program in Shanghai and stands out as a meaningful proposal to QDLP pilot program participants.

On January 31, 2019, with the approval of the State Council, the People’s Bank of China led a joint effort involving seven ministries, commissions and bureaus and released the Action Plan for Building Shanghai into an International Financial Center (2018-2020) (“Action Plan”). The Action Plan proposed further advancing the QDLP pilot program in Shanghai. Over the past six years, the QDLP pilot program in Shanghai has made significant progress and attracted participation from many internationally renowned asset managers. On March 25, 2025, the People’s Bank of China, the National Financial Regulatory Administration, the State Administration of Foreign Exchange, and the Shanghai Municipal Government jointly issued the Action Scheme for Further Enhancing the Accessibility and Efficiency of Cross-border Financial Services in Developing Shanghai into an International Financial Center (“Action Scheme”).

The Action Scheme outlines three specific measures related to the QDLP pilot program in Shanghai aimed at enhancing the accessibility and efficiency of global asset management services and global asset allocation capabilities, better leveraging the role of Shanghai as an international financial center. The details are as follows:

(1) It supports enhancing efficiency of fund utilization for QDLP pilot enterprises under compliance with the regulations, allowing QDLP fund’s subscriptions to low-risk (R2 and below) domestic short-term cash management products such as money market funds, cash management-type wealth management products, and time deposits. Overseas cash management products can also be subscribed based on the characteristics of offshore master funds. We have observed that Shanghai QDLP fund managers have repeatedly called for further facilitation at the policy level, and the Action Scheme responds to this by addressing the reasonable cash management and asset allocation needs of QDLP funds. This measure will contribute to the long-term stable development of the QDLP pilot program.

(2) It supports QDLP pilot enterprises in making foreign exchange purchases for capital repatriation in tranches, based on the actual needs of offshore master funds after completing onshore fund raising and product launches. Foreign exchange management policies have also considered the reasonable needs of QDLP fund managers in this area, providing a level of convenience.

(3) It supports expanding the sources of QDLP fundraising by evaluating the feasibility of raising both RMB and foreign currency-denominated funds. While the current focus remains on evaluating the feasibility of raising foreign currency-denominated funds, the potential pilot implementation may be introduced in the future. This initiative will contribute to diversifying the sources of funding for QDLP funds.

Pursuant to the Action Scheme, the People’s Bank of China and the Shanghai Municipal Government will collaborate with the relevant departments to implement these three measures.

Overview and Outlook for the Shanghai QDLP Pilot Program

The QDLP program aims to allow qualified global asset managers to apply for QDLP pilot qualifications in cities with approved foreign exchange quotas, initiating the establishment of QDLP funds to invest in overseas master funds. A QDLP fund usually serves as a feeder fund, primarily investing in an oversea master fund managed by a foreign asset manager who obtains QDLP qualification and quota approval or its overseas affiliates, thereby indirectly investing in offshore underlying assets through such overseas master fund. 

Since Shanghai took the lead in launching the QDLP pilot program in 2012, it has undergone a significant development. As the first city to initiate the QDLP pilot program, Shanghai has cultivated the most mature QDLP pilot program and was the first to achieve the normalization of this. The QDLP pilot program in Shanghai has now become one of the primary channels for domestic high-net-worth individuals to allocate assets overseas.

The QDLP pilot program is of significant importance to global asset management firms, as it provides them with a gateway to establish a presence and raise funds in China. Global asset management firms can raise funds within China and issue QDLP funds through a QDLP private fund manager that is set up domestically, while subjecting themselves to the scrutiny of the local market regarding their capabilities and recognition.

Over the past three years, the Shanghai Financial Bureau has approved several wholly foreign owned enterprise securities-type private fund managers (WFOE PFMs), to carry out QDLP businesses in addition to their existing RMB securities-type private investment fund businesses. According to our understanding of the current QDLP fund manager registration policy of the Asset Management Association of China, global fund managers intending to issue QDLP products must register either as PE-type or securities-type private fund manager based on the nature of the underlying investments. If registered as a securities-type manager, they must register as a WFOE PFM, which means that in order to be qualified to issue QDLP securities-type products, they must also issue an RMB private investment fund that invests in the Chinese securities and futures markets. In contrast, PE-type managers are not required to issue an RMB PE-type private investment fund that invests in the Chinese PE markets in order to be qualified to issue QDLP PE-type products.

Our Observations

In the short term, the QDLP pilot program may be affected by regulatory policy changes incurred from time to time, such as changes to foreign exchange policies, new requirements relating to private fund manager registrations or fund filings, or new rules on private fund distribution. Certain policy shifts by the regulatory authorities can have a substantially negative impact on these niche businesses, leading to significant frustration among global asset managers. The limited availability of foreign exchange quotas in the short term further necessitates participants to make advance preparations and exercise greater patience as they await the release of these quotas. 

However, in the medium to long term, the QDLP pilot program is competitive in attracting global asset managers to establish a presence and conduct business in China, thereby enhancing the global asset allocation capabilities of the Chinese private wealth management market. Ultimately, this can create a synergistic effect that supports Shanghai’s overarching goal of becoming an international financial center. 

From a medium to long-term strategic perspective, we believe the QDLP pilot program is likely to remain a focal area of interest for global asset managers.