Domestic investors pour billions into offshore stocks through mutual market access

The Rise of Offshore Equity Demands

Chinese investors have long operated behind a formidable wall of capital controls, designed to keep domestic wealth within the nation’s borders. Yet, in 2025, a quiet flow of mainland money bypassed these historical barriers, pouring 188.1 billion USD into offshore stocks and investment fund shares through two primary mutual market access channels.

This flow was not a result of clandestine capital flight or regulatory loopholes, but rather the deliberate expansion of state-sanctioned financial bridges. In total, China’s outbound portfolio investment reached 360.6 billion USD in 2025 as domestic savers sought higher returns and asset diversification in global markets.

The appetite of mainland investors for foreign assets has shifted significantly from fixed income to equities. In 2025, outbound equity securities investment surged to 208.1 billion USD, representing a 67% increase from the previous year and accounting for 58% of China’s total outbound portfolio investment. The State Administration of Foreign Exchange attributes this growth to the steady opening of domestic financial markets, the widening of outbound channels, and rising yields in overseas stock and bond markets.

The Mechanics of Southbound Flow

The principal conduit for this outward march is the Southbound Stock Connect, alongside the Mutual Recognition of Funds scheme. These mutual market access programs allowed mainland buyers to net purchase 188.1 billion USD of offshore equities and fund shares in 2025 alone, representing the largest share of China’s outbound stock purchases. By using these channels, domestic investors can trade Hong Kong-listed shares directly through their local brokerages, eliminating the need to physically move currency across borders.

The Traditional Institutional Routes

While mutual market access has dominated recent flows, traditional institutional quotas continue to play a supporting role. The Qualified Domestic Institutional Investor (QDII) program, and its Renminbi equivalent (RQDII), saw a net increase of 5.4 billion USD in purchases of non-resident stocks and bonds in 2025. Although far smaller than the Stock Connect volumes, the State Administration of Foreign Exchange maintains these quotas to enable institutional investors to access a broader array of global assets beyond Hong Kong.

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Source institutions：State Administration of Foreign Exchange

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