More specifics of the regulation change (via press release in Chinese):

- Banks are allowed to pool Renminbi deposits from individuals and businesses to invest in fixed income products in foreign markets, up to certain limit.

- Fund management firms are allowed to pool deposits in foreign currencies from individuals and businesses to invest in portfolios with exposure on foreign equity investments, up to certain limit.

- Insurance companies are allowed to invest certain percentage of assets in fiex income and money market products in foreign markets.

Now this will certainly attract more people to convert Renminbi to US dollars, which will actually make the appreciation of Renminbi slower.

China said it will let companies and individuals make investments overseas for the first time, a policy shift that could temporarily ease immediate U.S. pressure on Beijing to revalue its currency, the yuan.

The news comes ahead of Chinese President Hu Jintao's planned April 20 visit to the White House. While the moves fall short of an outright increase in the value of the yuan -- which the U.S. has called for -- the technical changes could affect China's currency exchange-rate system and may strengthen the yuan's value anyway.

The new investment rules from the State Administration of Foreign Exchange allow professionals to buy overseas stocks and make investments outside of China. The rules also let Chinese individuals buy at least $20,000 in foreign currency each year, while companies will be able to hold more in foreign currencies than currently allowed. The changes take effect May 1.

The Treasury Department, the lead U.S. agency on currency issues, greeted the announcement as a small step in the right direction. "What we're seeing is constant, incremental reform," said Tim Adams, undersecretary of the Treasury for international affairs. But, he added, the Chinese "still have a long way to go, and we would urge them to speed up the pace."

China's move may be an effort to deflect U.S. criticism without a deliberate move to strengthen the yuan. Currently, the Chinese central bank bolsters the value of the dollar -- and keeps the yuan weak -- by buying up dollars and selling yuan, putting far more yuan in circulation.