China to cut fees on $4.9 trln mutual fund industry to promote investment

China to cut fees on $4.9 trln mutual fund industry to promote investment

China has announced plans to slash subscription and sales-related fees in its $4.9 trillion mutual fund industry, aiming to reduce costs for investors and encourage long-term investment. The draft rules, published by the China Securities Regulatory Commission (CSRC) late on Friday, are the final leg of a three-stage fund fee reform. These measures are expected to save investors 30 billion yuan ($4 billion) annually [1].

The new rules will cap subscription fees for equity funds at 0.8% of the invested amount, down from 1.2% previously, and halve sales service fees for exchange-traded funds and bond funds. Additionally, investors holding funds for more than a year will no longer be charged sales service fees. The rules also offer incentives for distribution channels to promote equity funds [2].

The CSRC stated that these measures will "further reduce fund investors' costs, better regulate the fund sales market, and protect investors." In previous stages, regulators cut fund management fees and trading commissions. The regulator will solicit public opinions on the draft rules until October 5 [1].

The announcement comes as China's stock market has been experiencing a significant rally, with major indexes gaining more than 20% since April. However, regulators are concerned about the speed of this rally and are considering cooling measures to foster steady gains. These measures include the removal of short selling curbs and options to rein in speculative trading [3].

China’s financial regulators are also investigating the illicit use of credit funds in stocks and have ordered banks and brokerages to refrain from aggressively touting their services. Social media platforms have been alerted not to overly publicize content that could stir up novice investors. Over 400 mutual fund products have either announced a halt or cap in subscriptions in August [3].

The measures are part of China's broader efforts to stabilize its capital markets and promote long-term, value, and rational investing. The regulator aims to ensure that the stock market's positive momentum is sustained while preventing a sharp reversal that could inflict heavy losses on retail investors [3].

References:
[1] Reuters. (2025, September 6). China to cut fees on $4.9 trillion mutual fund industry to promote investment. Retrieved from https://www.reuters.com/sustainability/boards-policy-regulation/china-cut-fees-49-trln-mutual-fund-industry-promote-investment-2025-09-06/
[2] TradingView. (2025, September 6). China to cut fees on $4.9 trillion mutual fund industry to promote investment. Retrieved from https://www.tradingview.com/news/reuters.com,2025:newsml_L6N3UT00S:0-china-to-cut-fees-on-4-9-trln-mutual-fund-industry-to-promote-investment/
[3] Bloomberg. (2025, September 4). China Weighs Curbs on Stock Speculation to Foster Steady Gains. Retrieved from https://www.bloomberg.com/news/articles/2025-09-04/china-weighs-curbs-on-stock-speculation-to-foster-steady-gains