CHINA will take further steps this year to encourage domestic firms and residents to invest overseas, a senior foreign exchange official said Friday.

Li Dongrong, a deputy director with the State Administration of Foreign Exchange (SAFE), did not provide details on what the policies would be, but he said they would be part of a range of efforts to balance the country’s international payments.

“We will continue to support qualified firms to go abroad to expand their overseas investment channels,” Li was quoted as saying in a statement on the regulator’s Web site.

The foreign exchange regulator has said recently that one of its main tasks for 2007 is to encourage more capital outflows so as to offset the upward pressure on the yuan generated by the country’s large trade surplus and inflows of investment.

Li said the agency would also step up its supervision over short-term foreign debt to curb speculative capital inflows.

He added that two parallel schemes for allowing foreign institutional investors to invest in China and domestic institutions to invest in capital markets overseas would both be improved this year.

That echoed a report by the central bank issued Friday that said China would encourage greater two-way capital flows.

(SD-Agencies)