China has nearly tripled the amount of money foreign institutions can invest in stocks, bonds and bank deposits to $80 billion as it seeks to boost its capital markets.
The China Securities Regulatory Commission (CSRC) announced late Tuesday that the limit, which applies to selected overseas institutions, would rise from the previous limit of $30 billion.
The move follows a dismal year for China's main stock index, which has been hit by fears of a slowdown in the world's second-largest economy as demand from key export markets in Europe and the United States shrinks.
In January, the CSRC said Beijing would encourage institutional investors -- including the national pension fund -- to increase their market holdings, after the main stock index slumped to a near three-year low.
China's economy grew 9.2 percent last year and 10.4 percent in 2010, but is expected to slow this year. The government has set a growth target of 7.5 percent for 2012.
Foreign individuals are barred from investing directly in China's markets, but the country allows certain institutions to buy shares under the so-called Qualified Foreign Institutional Investor scheme.
The initiative was introduced a decade ago to try to promote the internationalisation of China's currency, the yuan.