China’s decision to recognise Australia as an approved destination under the Qualified Domestic Institutional Investor (QDII) scheme is good news for local financial services companies, according to Federal Treasurer Wayne Swan.

Last week Mr Swan announced that Chinese financial institutions regulated by the China Banking Regulatory Commission (CBRC) will now be able to invest in the Australian financial services market.

“This initiative will add liquidity to the Australian capital market and open the way for broader investment choices for Chinese investors,” Mr Swan said.

Investment and Financial Services Association (IFSA) CEO Richard Gilbert says this is a landmark announcement, making companies such as Axa, AMP and Tower more attractive to overseas investors.

He told insuranceNEWS.com.au the decision also paves the way for a similar deal to be made with the China Insurance Regulatory Commission (CIRC).

“This puts [the financial services industry] on the radar,” Mr Gilbert said.

Another IFSA spokesman says the QDII changes are particularly significant as previously there were only six other countries on the list.

He says if the CIRC follows the lead of its banking counterpart, Chinese insurers could appoint Australian fund managers to manage their funds.

“A decision is still to be made about Chinese insurance companies but the industry now anticipates this,” he said. “Discussions will now begin with the CIRC.”