Foreign banks to get China leeway
China's banking regulator said that foreign banks would be permitted to conduct yuan transactions in 25 cities including Harbin, Nanning and Ningbo.
Beijing has also said it will stop subsidising its own loss-making banks.
Foreign banks have been building their presence in China, where they are currently authorised to operate in 18 cities.
The capital threshold for foreign bank branches wanting to open in China is also set to be reduced from $62m (£53m) to $50m.
Beijing is keen to encourage new banking services in the west, north-east and central region of the country.
China is obliged to open its banking sector to foreign competition as part of its admission to the World Trade Organization.
"With the grace period provided by China's WTO agreement approaching the end, the CBRC has - with the fostering of a strategic global vision - been actively pushing forward the opening up of the Chinese banking sector," said Liu Mingkang, head of the China Banking Regulatory Commission (CBRC).
Mr Liu said the state would no longer prop up ailing domestic banks, a strategy used to make them attractive to foreign investors.
"The government will no longer pay for the losses made by commercial banks," he said.