China will expand the scale of overseas issuers of yuan-denominated bonds, and study how to allow qualified international financial organizations to directly invest yuan in the capital market, a statement from the State Council said on Friday.

This is a signal that the authorities are taking steps to accelerate the opening-up of the financial sector, analysts said.

Policies to permit overseas financial institutions to issue shares and bonds and raise funds in China are being studied, in an effort to broaden the investment channels for Chinese investors, according to the statement.

The reform of China's financial sector depends on a further opening of the capital account and a completely convertible currency.

"The country will improve yuan-denominated settlement in international trade, cross-border financing and overseas labor services."

Based on yuan settlement, the government will also support bilateral currency swap trading and encourage other economies to use the yuan as a reserve currency, the State Council said.

Meanwhile, in order to improve the internationalization of Chinese financial institutions, the government will help expand their overseas business through launching more branches, as well as mergers and acquisitions and improving their risk control capacity.

"Companies in the insurance and securities industries will be guided to develop global business, and the country will welcome high-quality foreign institutional investors to participate in the strategic reorganization of Chinese financial companies."