BEIJING - China's securities watchdog loosened restrictions on the country's fund industry on Tuesday to allow more players to sell fund products while domestic mutual funds are struggling to issue new shares in a sluggish market.

Companies with limited or unlimited partnerships that have registered capital of 200 million yuan ($30.93 million) and at least 10 fund professionals will be allowed to sell fund products, according to the China Securities Regulatory Commission (CSRC).

Fund sales in China used to be restricted to fund companies, commercial banks, and securities brokerages. Independent fund sales companies have long been barred from the market.

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Under the new rules, foreign banks can also apply for a license to sell domestic fund products. Individuals who have at least 10 years professional experience in the fund or the securities industries will be allowed to own shares in a fund sales company. This will open the 2.4 trillion yuan China Securities Regulatory Commission fund industry to the country's massive private capital.

"The move is aimed at encouraging competition in the fund industry and raising the overall quality of professional asset management services," a CSRC official said at a news briefing.

There has been little difference in the sales rates of domestic funds because of the lack of competition in the industry. Fund companies and banks have little incentive to offer value-added services to investors as they cannot charge higher fees.

"The rules include a section on fees for value-added services to encourage fund companies and commercial banks to offer better asset-management services to investors," the CSRC official said.

There were 136 financial institutions licensed to sell fund products in December. The regulator declined to reveal how many companies are applying for the license under the new rules.

The domestic fund companies are having difficulty selling their products amid a bearish stock market. The benchmark Shanghai Composite Index has declined 13 percent over the past two months.

The weak market and the poor performance of domestic mutual funds have lead to another wave of fund managers leaving the industry.

"The mutual-fund industry is loosing appeal to investors because it fails to offer most of them attractive returns," said Yan Hong, a fund analyst at Changjiang Securities.

A total of 88 new funds have been set up this year, raising 153.6 billion yuan, even lower than the amount in 2008, when the stock market slumped to the historic low of 1664 points.