The State Administration of Foreign Exchange (SAFE), the regulator governing China’s forex activities, is planning to change the cross-border investment management rules involving private equity funds.

Reuters quoted SAFE as saying that it would “steadily expand two-way opening and interconnectivity of financial markets.”

The regulator plans to expand pilot schemes to support forex settlements in free trade zones.

At the same time, it aims to combat financial risks in cross-border capital flows and criminal activities like cross-border gambling.

The country’s foreign-currency holdings were $3.112trn in July, up from $3.102trn in the prior month, reported Bloomberg.

The regulator also intends to maintain forex reserves at more $3trn.

China has been liberalising its financial sector even as trade tensions with the US escalate.

Last month, the country enabled foreign banks’ local branches in China to gain access to fund custody business.

The new rules allow the local branches to apply for a fund custody licence, albeit with some eligibility criteria including sound internal control mechanisms, as well as profit and market share for the past three years.

This May, the country removed quota cap for its US dollar-denominated qualified foreign institutional investor (QFII) scheme and its yuan-denominated sibling RQFII.

China has already eliminated foreign ownership restrictions in the fund management and securities businesses from this April.

In 2018, UBS became the first foreign bank to get clearance for a majority stake in its China JV.

JPMorgan, Credit Suisse, Goldman Sachs, and Morgan Stanley also secured the nod for the same.