MNI China Press Digest July 1: QDII, PMI, Foreign Tax

Highlights from Chinese press reports on Tuesday:

• China has approved additional Qualified Domestic Institutional Investor (QDII) quotas, taking the total to USD170 billion by the end of June 2025, up USD3 billion month-on-month, Securities Times reported. The measure follows comments from Zhu Hexin, deputy governor at the People’s Bank of China and director at the State Administration of Foreign Exchange, that authorities would soon issue new allowances to meet the reasonable needs of domestic entities for overseas investment. Regarding future plans, a SAFE official said the government would seek to balance financial openness and security, and continue issuing QDII quotas in a measured manner.
• China’s June Purchasing Managers Index reached 49.7 in June, up 0.2 percentage points from the previous month, which demonstrated the effects of incremental policies, said Zhang Liqun, analyst at the China Federation of Logistics and Purchasing. However, the PMI remained below the 50.0 expansion threshold, indicating a growing proportion of firms facing insufficient demand, Zhang added. Authorities need to intensify policies that expand domestic demand, especially by increasing investment in public goods, Zhang noted.
• China will grant foreign investors a 10% corporate income tax credit on direct domestic investments funded by dividends from Chinese resident companies, Xinhua News Agency reported. The measure, which takes effect from January 1 2025 through December 31, 2028, allows qualified firms to carry forward unused credits and apply lower rates under existing tax treaties. Eligible investors may reinvest dividends in equity capital, establishing new resident enterprises, or buying resident firms’ shares from non-affiliated parties, the newspaper said.