China will loosen restrictions on foreign investment of offshore yuan back into onshore capital markets.

The country's securities regulator, China Securities Regulatory Commission posted an announcement on its website on Wednesday, permitting investors to buy individual stocks and bonds, rather than restricting them to index funds. The move will give renminbi qualified foreign institutional investors more freedom to offer a wider range of onshore products such as individual stocks, mutual funds, interbank bonds, index futures, warrants, and any other products approved by the regulator.

The CSRC also expanded the types of institutions allowed to participate in the RQFII program to include Hong Kong subsidiaries of mainland commercial banks and insurers. Previously, only Hong Kong units of Chinese brokerages and fund managers were allowed to take part in the Renminbi Qualified Foreign Institutional Investor program.

RQFII expansion to get go-ahead

Access to capital market growing for foreign funds

China mulls over expanding RQFII quotas

Year-ender: China's stock market