QUIDDITCH-WORLD-CUP.JPGAnother cryptic China announcement that may herald great change for western businesses — just dont hold your breath.

This one concerns China's qualified domestic institutional investors (QDII) scheme, which foreign financial firms see as the key to the development of a western-style wealth management industry.

According to an AFX wire story, China has decided to apply the same standards to both domestic and foreign banks seeking licences to operate under QDII.

The pronouncement levels the playing field and is the latest in a flurry of announcements in recent weeks that show China is apparently serious about opening its financial markets, albeit at a measured pace.

The QDII scheme, announced in April, allows individuals, banks and corporates in China to invest in overseas markets using foreign currency. QDII thus represents a partial lifting of China's long-standing restrictions on access to hard currency.

Western firms see a golden opportunity to tap into around $1,800bn in personal savings held by Chinese individuals in addition to state and corporate funds, which until now have had no easy way to access wealth management products.

Hong Kong, not surprisingly, hopes to become first port of call for this money. Jing Ulrich, managing director of China equities at JP Morgan, told the China Economic Review:

Initially, Hong Kong will be the market of choice as it's the most logical place to go. I expect the money will be invested in Chinese companies listed in Hong Kong, as well as in some fixed-income securities in Hong Kong and the US. The amount is likely to be modest to begin with but should escalate gradually.

Because of Beijing's concerns about capital flight, there are restrictions on the type of investments allowed. Banks and insurance companies, for example, are limited to fixed-interest and cash investments and not allowed to buy foreign equities. There are also quotas to ensure that outflows do not exceed inflows from foreign investors.

This year, these restrictions will limit outflows to a paltry $6bn according to JP Morgan. Of that, maybe $2bn will find its way into HK's stock market, which is less than an hour's worth of trading on the HKSE, as the Financial Times notes pointedly.

Quidditch is a polo game played on broomsticks that features in Harry Potter books. Like QDII, its rules are difficult to explain.