Beijing may open its domestic A-share market to foreign investors by early next month, according to Salomon Smith Barney.
The investment bank said a qualified foreign institutional investor (QFII) system was likely to be introduced before the 16th Party Congress next month, earlier than expected.
A QFII scheme had been expected to be in place by about the end of the year.
Salomon made the remarks based on recent accelerating reforms and sweeping changes in the country's financial system, including the opening up of the domestic capital markets and establishment of a unified interbank market for foreign exchange.
Other recent efforts have also been made to open foreign exchange accounts for current account transactions for domestic companies, as well as to tighten controls on foreign exchange for overseas-listed mainland companies.
'[The measures] are clearly preparing for the eventual liberalisation of the foreign exchange policy . . . the introduction of the long-awaited QFII system could be the next breakthrough,' the report said.
The QFII scheme was first suggested in 2000 by China Securities Regulatory Commission chief adviser Anthony Neoh as a way for foreign investors to make inroads into the mainland's A-share market, which is reserved for domestic investors. It models a similar system adopted in Taiwan in 1991.