Fourteen trial provinces or regions would be allowed to approve overseas investments of up to $3.0 million, versus a previous ceiling of $1.0 million, the State Administration of Foreign Exchange (SAFE) said on its Web site.

"Provincial foreign exchange administrations can approve proposals for foreign exchange capital of overseas investment projects with a limit of $3.0 million," it said in a statement on www.safe.gov.cn. The measures will take effect on November 1.

In other moves this year to ease upward pressure on the yuan, China has cut export incentives, tightened rules on lending to property investors and restricted quotas for foreign banks investing in Chinese stocks and bonds.

The announcement comes hours after a much-anticipated report from U.S. Treasury Secretary John Snow ducked local lawmakers' call for more strident action to punish Chinese exporters.

"There are two games going on," JP Morgan's Singapore-based currency strategist James Malcolm said of the U.S. stance.

"One is the domestic political game in terms of people trying to pressure the Bush administration, and then there is the diplomatic game in terms of how do you convince the Chinese that it is in their interest to move a little bit sooner than they were planning on doing and a little bit more aggressively."

The report said China had not violated U.S. law by keeping its currency fixed to the dollar, but vowed to keep up pressure on China to let market forces set the value for the yuan.

Malcolm said China's moves, such as the easing of investment restrictions, were not that significant individually, but there had been a series of changes and diplomatic deals that were quietly adding up toward a more liberalized yuan.

"There's some sort of material progress. We're definitely not there yet, but there's a little bit more to show than most people thought there would be," he said.