U.S. private equity firm Blackstone Group is in talks to buy a $400 million stake in China National BlueStar Group, a state-owned chemical company, the Asia Wall Street Journal reported on Tuesday.

Blackstone, in which a Chinese state investment agency owns a $3 billion stake, aims to buy between 20 and 40 percent of BlueStar, the Journal reported, citing unnamed private equity fund managers.

Market watchers believe Blackstone, which raised $4.1 billion in a New York listing late last month, will have an easier path to making acquisitions in China since the government agency invested in the firm.

Beijing has been wary of private equity investments, and foreign firms have been frustrated at their inability to buy control or stakes in many state-backed assets.