China needs to further open its capital markets and financial industry to avoid being globally isolated, a senior foreign exchange regulator said on Saturday. China will conform to international rules to promote further integration of its capital markets and continue interest rate and exchange rate reforms steadily and prudently, Lu Lei, deputy director of the State Administration of Foreign Exchange (SAFE), said during an industry forum in Shanghai. “China should use a higher level of opening to counter the risks of blockade and containment,and actively embrace,and integrate into the global financial system,” Lu said. Beijing is accelerating financial market deregulation as intensifying Sino-U.S tensions raise concerns about the risks that China decouples economically and technologically with the rest of the world. To boost cross-border private equity investment, China is looking to revise rules for its private equity and overseas investment schemes, Lu said on Friday. The Qualified Foreign Limited Partner, or QFLP, allows qualified foreign institutions to make private equity investments in China while the Qualified Domestic Limited Partnership, or QDLP, allows foreign fund managers with awarded quotas to raise money in China for overseas investments. Lu also vowed to increase exchange rate flexibility to cushion against volatility in the economy and balance of international payments. China on Friday moved to further ease foreign access to its capital markets, officially combining two major inbound investment schemes and broadening the scope for foreign institutional investment.