Taiwan's pension funds could consider investing in mainland stocks for higher returns as China is further opening up its markets, according to a senior Taiwanese government official. As with Hong Kong residents, Taiwanese can invest in Chinese B shares only. They will be allowed to invest in the local A-share market after the yuan is fully convertible, probably in the next few years. However, mainland fund managers said they did not expect a flood of Taiwanese funds rushing into China in the near future with the present restrictions. Government funds such as the labour insurance, civil service pension, labour pension, and annuity schemes can consider investing in mainland shares, the island's udnnews.com quoted the Council for Economic Planning and Development's Lee Kao-chao as saying. Mr Lee did not elaborate but said it was a trend for pension funds in advanced countries to invest in the stock markets in less advanced areas which provided a high return on investment. But he said China's easing of B-share market regulation would not drain Taiwan's liquidity, according to the report. Anne Jiang, vice-president of Shenzhen Venture Capital, said the relaxation allowing mainland investors to trade B shares would not result in any major capital outflows from Taiwan. Prior to the recent relaxation, Ms Jiang said Taiwanese invested in B shares via their Hong Kong-incorporated units. They would invest in the market via domestic accounts opened by mainlanders in the future but would not be a big-scale investment, she said. Ms Jiang said large-scale investment by Taiwan investment funds would not be seen until the introduction of the Sino-foreign investment fund law which would take time to formulate.