QDII expansion, but insurance coverage quotas are “meager”; insurers’ overseas channel urgently needs to be widened

Insurance funds’ overseas investments have received a certain “green light.” Recently, data disclosed by the State Administration of Foreign Exchange (SAFE) showed that as of the end of June 2026, across the entire market, 193 qualified domestic institutional investors (QDII) approved cumulative QDII额度 reached $176.17B. From newly added QDII额度 in the insurance sector, in the first half of this year, 17 insurance companies in total added $1.32 billion in QDII额度.

In a low-interest-rate environment and an “asset scarcity” backdrop, overseas allocation demand from insurance funds has continued to heat up, and QDII额度 expansion provides room for insurance funds to optimize global asset allocation and diversify investment risks. But compared with the surging overseas allocation demand of the insurance sector, the newly added额度 still falls far short. Taken together, the industry highly values precious QDII额度, and also looks forward to widening the overseas sailing lanes.

QDII额度 increases

According to data recently disclosed by the SAFE, in the first half of this year, a total of 17 insurance companies added $1.32 billion in QDII额度, releasing incremental space for insurers’ overseas investment.

Although QDII额度 has been expanded, compared with insurance companies’ overseas allocation demand, the newly added额度 still falls far short. A reporter from Beijing Business Today learned that for a long time, insurers’ overseas investments have been highly dependent on QDII. A set of industry communication data shows that in 2023 this model accounted for 58% of the total outbound funds of insurance companies. However, quota approval and total-volume controls create hard constraints; even if institutions have mature cross-border investment research and decision-making capabilities, they remain cautious regarding global allocation plans.

According to policy requirements, the upper limit for the proportion of overseas investment by insurance funds can be up to 15% of total assets; based on this, insurers have a huge potential compliant “go global” allocation space. But there is a large gap between policy dividends and actual implementation, meaning large amounts of long-term capital cannot participate in global market allocation.

Regulators have already noticed the pain points and have released a loosening signal. Recently, Zhu Hexin, vice governor of the People’s Bank of China and head of the SAFE, stated clearly at the 2026 Lujiazui Forum that they will issue a new batch of QDII额度.

Beyond QDII, insurers are also actively going overseas through other channels for allocation. Recently, insurers’ participation in Bond Connect’s “Southbound Connect” (“南向通”) was officially implemented, becoming another major channel for insurers to go overseas. Insurance asset management companies such as Taikang Asset, Ping An Asset Management, China Life Asset, and Taiping Asset are among the first batch of entrusted institutions to carry out “Southbound Connect” business, and have already completed their first investment transaction one after another.

For the two insurance “go global” models, Wang Zhaojiang, president of the investment research institute at Beishan Changcheng Fund, analyzed for a reporter from Beijing Business Today that Bond Connect “Southbound Connect,” with a market-oriented quota allocation model, can to a certain extent supplement the incremental gap in QDII for overseas asset allocation. However, the two cannot fully replace each other. “Southbound Connect” is limited to Hong Kong bond assets, while QDII can cover diversified assets such as global fixed income, equities, and alternatives. In the future, it is expected to form a complementary pattern of “Southbound Connect increasing bond allocation increments, while QDII performs global diversified allocation.”

Long-term risk-control systems should be improved

As of the end of Q1 2026, the balance of funds used by China’s insurance companies was about 39.44 trillion yuan, and the scale of bond allocation accounted for nearly half of the total investment proportion of insurers. But currently, domestic bond yields have been hovering at low levels; the equity market’s cyclical volatility has intensified; real estate investment space has shrunk; and the cost rigidity on the insurance liability side brings sustained pressure from ongoing spread losses. Compared with overseas markets, U.S. Treasuries and offshore USD bonds with high ratings offer stable coupon income. Hong Kong high-dividend equity targets and high-quality overseas technology equity assets can optimize the fluctuation of portfolio returns. Global diversified allocation is one of the paths for insurers to hedge risks from a single domestic market and stabilize long-term investment return rates.

Against this backdrop, moderately increasing cross-border diversification allocation and opening up inward-and-outward two-way investment channels has become a core breakthrough for the industry to break through return bottlenecks and smooth portfolio volatility. Wang Zhaojiang also said there are multiple spaces to expand overseas investment channels next: first, expanding the RQDII RMB overseas channel; second, optimizing the restrictions on the equity investment proportion under Stock Connect to Hong Kong; and third, implementing the cross-border investment facilitation policies for the “Belt and Road” special projects.

It must be acknowledged that loosening various cross-border investment channels requires an incremental process involving pilot implementation and gradual expansion, making it difficult to quickly match the industry’s explosive demand for allocation. Therefore, insurance institutions need to take multiple measures to revitalize existing quotas and explore alternative channels. China Life Asset mentioned in a relevant research report that insurance companies can plan from a medium-to-long-term perspective, reasonably use the counter-cyclical management rules of foreign exchange policies, seize opportunities during periods when exchange-rate policies loosen to apply for QDII quotas, increase the chances of successful approval, and make preparations for carrying out more investment practices afterward. In exploring the substitution effect of domestic asset portfolios for overseas investment, it is suggested to study a “go global advantage” strategy combination and explore the feasibility of indirectly allocating overseas equities through companies whose main businesses have a strong correlation with overseas economic cycles.

Overseas market conditions are complex and changeable, and cross-border investment rules differ significantly from those in China. Insurers’ overseas expansion still faces multiple real-world challenges. Wang Zhaojiang said that at this stage, the main shortcomings are concentrated in three areas: geopolitical country risk assessment, the reserve of globalized investment research talents, and insufficient capability to hedge medium-to-long-term exchange rate risks. It is necessary to establish a country-tiered approval mechanism, build a risk-control architecture with linkage between domestic and overseas operations, and improve a long-term risk-control system. China Life Asset also mentioned that it is advisable to determine the primary overseas investment platform reasonably according to medium-to-long-term development plans and build relevant capabilities accordingly. Explore strengthening the cultivation and evaluation mechanisms of overseas investment talent, gradually accumulate experience in global macro and capital market investment research, and build global large-class asset allocation capabilities covering a wider range of areas with stronger differentiation among strategies.

Beijing Business Today reporter Li Xiumei

(Editor: Qian Xiaorui)

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