Related rules will be improved, the China Banking Regulatory Commission said in a report on opening up of the country's banking industry.

Till the end of December, up to 29 overseas institutions have bought into 21 Chinese banks, with an investment of US$19 billion, said the report.

Foreign participation not only boosted local banks' capital, but also improved corporate governance, introduced expertise, enhanced risk management and financial innovation, thus sharpening their overall competitive edge, according to the report.

The overseas institutions also benefit from the purchases as they have enlarged their exposure to the Chinese market and gained a better position for further penetration, noted the report.

The report also encouraged foreign banks to set up locally incorporated entities which enjoy the equal treatment with domestic banks.

Earlier this week, China approved the locally incorporated entities of four foreign banks to offer unrestricted local-currency services to Chinese customers.

By the end of 2006, there were 14 foreign banks, including Sino-foreign joint ventures, incorporated locally in China, said the report.

The assets of foreign banks in China totaled US$103.3 billion at the end of 2006, accounting for 1.8% of assets in the country's banking and financial sector.