CHINA is considering relaxing limits to allow individuals to invest overseas in stocks and property, the central bank said, which would potentially unleash a flood of money if the government loosens strict capital controls.

    The country keeps a tight grip on outflows of funds due to worries capital flight could disrupt the economy.

    The People’s Bank of China said it was studying letting “qualified” individuals invest abroad in industry, property and financial products through the Shanghai Free Trade Zone, according to a statement released Friday.

    “These policy initiatives are another important step toward complete capital account liberalization,” said Zhou Hao, a senior economist at Commerzbank in Singapore.

    The Shanghai Free Trade Zone was set up in 2013 with the promise of a range of financial reforms.

    Chinese citizens are now only allowed to convert the equivalent of US$50,000 from the domestic yuan currency under an annual quota, which creates a limit on overseas investment.

    Individuals are allowed to legally invest in stocks in Hong Kong through a special link with accounts on the Shanghai Stock Exchange. (SD-Agencies)