The new rules on qualified foreign institutional investors (QFII) aim to attract long-term overseas investments in order to stabilize the Chinese stock markets, said sources with the China Securities Regulatory Commission on Wednesday.

China announced the revised version of the 2002 provisional rules last August, lowering the threshold for foreign institutions that stress long-term investments.

The new rules reduce the required minimum securities assets from 10billion to 5 billion U.S. dollars for QFII applicants. To qualify, insurance companies must have a history of at least five years, much shorter than the 30 years previously stipulated.

The new rules also allow QFIIs to open separate securities accounts for all their long-term capital.

The government would expand the QFII program, by allowing more overseas investors to invest in the country's capital market and with the priority of encouraging long-term investments, said the securities watchdog.

Since 2003 when China began to allow overseas institutional investors to enter the capital market as QFIIs, the country has awarded investment quotas totaling 7.84 billion U.S. dollars to 48 QFIIs.

By the end of August, the QFIIs had invested a total of 55.4 billion yuan (6.93 billion U,S. dollars) in China while their combined assets had risen to 75.5 billion yuan (9.44 billion U.S. dollar), 88 percent of which were securities assets.

Source: Xinhua