BEIJING, June 7 -- China plans to let overseas firms' local investment arms purchase strategic stakes in the publicly traded companies as part of efforts to further leverage foreign interest in economic reform.

    Starting on July 1, overseas funded investment firms in China can apply to buy "strategic stakes" at Chinese mainland listed companies and should be regarded as foreign investors, the Ministry of Commerce said in a notice on its Website late on Monday.

    Strategic investment refers to buying at least 10 percent of a domestic public firm and abiding by a three-year lock-up period. No upper limit has been set by regulators.

    A local subsidiary of a foreign firm must have at least US$30 million in capital to be eligible to invest in mainland listed firms, according to the notice.

    Chinese authorities issued rules in November to allow overseas companies to own strategic shares in public firms as the country was striving to improve capital-market quality by making state-held shares fully tradable.

    Currently, only foreign companies with a minimum US$100 million of overseas assets, or at least US$500 million of overseas assets under management, qualify in the stock-purchase program.

    The deregulation has prompted foreigners to buy everything from cement makers to brewers in a rush to cash in on mounting consumer demand linked to a blistering economy.

    In March, Holcim Ltd, the world's second-biggest cement maker, became the first overseas investor to acquire a strategic stake in a Chinese listed company by paying about US$125 million for a 24.2 percent stake in Huaxin Cement Co.

    Mingly Corp, a unit of Hong Kong's Cha Group, is in talks to buy at least 50 percent of Shanghai-listed AJ Corp.

    (Source: Shanghai Daily)