CHINA’S doors to foreign investors may be opening ever wider, but that’s not enough for many worried about finding an exit.

    Fourteen months after qualifying for official reserve currency status, and after a series of steps opening up domestic markets to overseas funds, the take-up remains below estimates.

    For all China’s attraction as the second-largest economy with large and expanding domestic capital markets, regulators’ efforts to tamp down on outflows of money have stoked concerns.

    “There’s no return lower than not getting your money back,” said Brad Holzberger, chief money manager of QSuper Ltd., an Australian pension fund that oversees the equivalent of US$47 billion. “We’re worried about understanding the transparency of decision-making — as well as property rights, rule of law, transmission of capital controls and those sorts of things.”

    It’s another case of China’s conflicting goals, alongside the leadership’s pursuit of both growth and leverage reduction across the economy. By taking increasingly aggressive steps to curtail domestic money from flowing abroad — such as more stringent vetting of cross-border transactions — regulators are effectively counteracting market-opening steps that have included allowing all types of medium to long-term investors into the interbank bond market.

    In a sign of how far China has to go to stoke appetite for its assets, Australia’s QSuper is happy to put money into Brazil — an emerging market with a turbulent financial past that’s featured bailouts from the International Monetary Fund — but not China.

    “There’s too much discretion by the policymakers, giving foreign investors a lack of a rule-based system,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong, who previously worked at the IMF and European Central Bank. “It’s not a very favorable signal” to implement curbs on money leaving the country, he said. But “for Chinese authorities, the priority is to prevent a financial crisis.”

    The State Administration of Foreign Exchange, or SAFE, actively protects the legitimate rights and interests of foreign enterprises, the agency said. Dividends and profits can be transferred without restriction, the SAFE said. Foreign invested groups can also transfer shares and withdrawals from banks, with the authentic and complete documents required, it said.

    Broader participation by foreign investors in Chinese markets could help balance its capital flows, offsetting moves by domestic funds and households to diversify some of their holdings overseas. That in turn could reduce longer term downward pressure on the yuan, which slid the most against the dollar last year in more than two decades.

    In a chicken-and-egg situation, more balanced flows would also give regulators space to follow through on the goal set in 2015 to make the yuan convertible by 2020.

    For now, while the inflow of foreign funds shows impressive growth rates, the data are flattered by low starting points. Relative to other big economies, foreign participation in China’s financial markets remains limited.

    Overseas holdings of Chinese shares rose 41 percent last year to 649 billion yuan (US$94 billion) — less than half of what Norway’s sovereign wealth fund alone holds in American equities as of September. China has expanded access for global funds to its onshore equities, launching two stock exchange links with Hong Kong since 2014.

    Bonds held by foreign investors climbed 12 percent to 853 billion yuan last year, central bank data show. That’s little more than India’s stockpile of Treasuries as of November, and less than one-eighth of what China officially owns in U.S. government debt. (SD-Agencies)