China establishes foreign-exchange rules regulating fund-management firms investing in overseas capital markets, as part of efforts to further liberalize the country's capital account, The Wall Street Journal reported. The rules define the procedure for applications by fund-management companies for overseas investment and placed restrictions on the use of foreign exchange by local residents and institutions to buy fund products, to try to limit potential financial risks, said the paper. China issued guidelines in April to allow qualified fund-management companies to raise foreign-exchange funds from domestic institutions and individuals to invest in overseas-traded securities, including stocks. Some commercial banks are also allowed to invest in overseas capital markets, but they are required to raise yuan-denominated funds from domestic clients and are limited to investing in fixed-income products.