China mulls loosening overseas investment rules for private investors

China's central bank chief yesterday said China may loosen overseas investment rules for private investors less than a week after the government approved a trial of financial overhauls in Wenzhou.

The State Council, or cabinet last week said it would study direct investment overseas by residents, in the city of Wenzhou as part of a ''general financial reform zone'' experiment.

According to the central bank governor Zhou Xiaochuan, who was speaking at the 2012 Boao Forum for Asia on Hainan Island, China encouraged capital outflows, which would help reduce imbalances caused by net capital inflows.

''There may be further deregulation to allow Chinese enterprises and residents more convenience in overseas investment,'' Zhou said. He stopped short of spelling out whether the changes would be limited to Wenzhou or would be extended to other areas.

He also warned that the global economy could slip back into recession, and reiterated that China would use a combination of monetary tools to tackle inflation and steer toward a soft landing.

''We are still in the global financial crisis period. There are new elements that may bring the global economy back to recession,'' he said.