(Yicai Global) April 22 -- There is still much potential for overseas investors to increase their holdings of Chinese assets, according to a deputy head of the country's currency regulator.

Global markets have been fluctuating, but China’s cross-border capital flows remain reasonable and balanced, with those for securities normal and controllable, Lu Lei, a deputy administrator at the State Administration of Foreign Exchange, said at the Boao Forum for Asia yesterday.

The trend will remain the same in the future, he said, citing three reasons. First, China has formed a solid foundation for economic resilience, residents’ consumption capacity, and capital formation after years of reform and opening-up. Both the securities and foreign exchange markets are worth investing in.

Second, yuan-denominated assets have had relatively independent returns globally in recent years, which can help foreign investors diversify their risks, Yi said. And thirdly, there is room to grow as foreign funds make up just 3 percent of investment in China’s stock market, and 4.5 percent of its bond market, he said.

Foreign direct investment into China jumped CNY1.6 trillion (USD247.3 billion) from 2010 to CNY3.6 trillion last year, while outbound investment climbed CNY1.5 trillion to CNY2.6 trillion, an important source of capital for the country’s economic development, Lu noted.

“Opening up in any form is risky,” Lu said. China must be very cautious when opening up as the external environment is complicated, he added. 

Editor: Emmi Laine, Xiao Yi