"We are currently drafting provisional rules on the use of foreign exchange by insurance companies to invest abroad," he told a news conference.

"We have been working closely with the foreign exchange regulator recently...we hope the new rules can help (insurance firms) to expand investments on the markets," he said.

Beijing said earlier this year that insurance firms could apply to the foreign exchange regulator to purchase overseas currencies that they could to invest abroad.

But insurers have said the government needs to issue detailed rules to allow them to actually invest overseas.

So far, no Chinese insurer has invested in overseas capital markets, with the exception of a handful of government-backed deals through which China Life and others have participated in the overseas listings of major Chinese banks.

Li did not give any details on the new regulations, which will also allow the regulator to strengthen investment risk controls.

The Chinese government is encouraging two-way flow of capital between the mainland and overseas securities markets through institutional investor schemes, as it tries to control foreign currency inflows while developing its fledgling capital markets.

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