China will make its capital account basically convertible in the near future, the Shanghai Securities News said Wednesday, quoting a senior official with the State Administration of Foreign Exchange (SAFE).

Zou Lin, director of the Capital Account Department of the SAFE, told a conference of investors Tuesday that the government will encourage a greater outflow of capital while maintaining the balance of capital entry and exit.

However, he said, the total convertible Renminbi (yuan) amount still remains a long-term goal.

Relaxing control on capital outflow has recently become an option for the Chinese government, as it faces amounting pressure to allow yuan appreciation.

Moves considered by the government include further relaxing control on overseas direct investment by domestic institutions and gradually removing restrictions on investment in China by qualified international foreign investors, said Zou.

Others include allowing foreign institutions and businesses to raise funds from Chinese capital markets and allowing Chinese institutional investors to invest in overseas securities markets.

China abandoned its fixed exchange rate last July by delinking the yuan from the US dollar and placing it in a managed basket of currencies.

On Wednesday, the exchange rate between the yuan and dollar hit a new high of 8.0390 to 1 at the China Foreign Exchange Trading Center, representing an appreciation of 2.97 percent before the reform.

(Xinhua News Agency March 2, 2006)