The reforms should take place over the next five to 10 years and give foreigners more freedom to buy Chinese property, stocks and bonds at the same time as allowing direct access by Chinese nationals to overseas property and asset markets, it said. The report, although not a policy announcement, provides one of the most detailed roadmaps yet of capital account reform from a government institution, underlining the high level debate underway in Beijing. China should take advantage of what the report called "a period of strategic opportunity" for opening up its capital markets, giving Chinese firms the chance to buy Western companies at bargain prices with stock valuations in many cases depressed by successive international financial crises. The report argued that China should free-up the capital account in three stages, the first in one to three years allowing more outbound investment. The second step, in three to five years, would see Chinese banks lending yuan to overseas borrowers with overseas yuan holders also able to lend yuan in the mainland market. The opening of housing, bond and stock investments is the third step, after which derivatives and other asset markets could be opened. But it advocated that China permanently keep control of some items, including short-term foreign debt. Chinese government officials, including the head of China's foreign exchange watchdog, have repeatedly said there is no timetable to make the yuan convertible under the capital account, though analysts expect most controls to go by 2020. SWIFT ACTION URGED The central bank's research team argues for a swifter move. "If we want to see a free interest rate system, a free exchange rate regime, and an international yuan before opening up the capital account, we may never find the right timing," the report said. "We must be cautious in opening up the capital account, but that does not mean we must wait endlessly," it added. Beijing has been wary of giving too much freedom to private investments abroad. The local government of Wenzhou, a cradle of private enterprise in China, decided in early 2011 to let local residents make direct investment abroad, but the central government intervened swiftly to call an end to it. China has also maintained tight control over capital flows, only permitting portfolio flows under a quota system dubbed the Qualified Foreign Institutional Investor (QFII) scheme for inflows and outflows under a programme called the Qualified Domestic Institutional Investor (QDII) scheme. Those controls have helped shield China from some of the impact of global financial turmoil, but they also constrict the flow of capital to where it is needed, even as the country has amassed the world's biggest store foreign exchange reserves. China has about $3.2 trillion in foreign exchange reserves. In 2011, it chalked up a current account surplus of $201.1 billion, the State Administration of Foreign Exchange (SAFE) said earlier this month. Liberalising controls would promote the shift from labour-intensive to more value-added industries, and encourage domestic consumption by giving households more avenues to invest and accumulate wealth, said the PBOC study.