China has agreed to let "qualified" foreign companies float their shares on the mainland, according to a joint statement issued after the China-US Strategic Economic Dialogue concluded in Beijing on Thursday.

"China agrees to allow, in accordance with relevant prudential regulations, qualified foreign-invested companies, including banks, to issue yuan denominated stocks; qualified listed companies to issue yuan denominated corporate bonds; and qualified incorporated foreign banks to issue yuan denominated financial bonds," said the statement.

The move will pave the way for HSBC Holdings Plc and others to tap the world's fastest growing equity market.

Vincent Cheng, chairman of the Hongkong and Shanghai Banking Corp, said yesterday in Hubei Province that HSBC is considering trading HSBC shares in Shanghai in the future.

"We are not going to sell shares of HSBC China but the shares of the HSBC group," he said.

Cheng added they had contacted regulators and the Shanghai Stock Exchange about the possible move. No further details have been released.

Earlier this year, the Shanghai Stock Exchange said in a market-quality report that China should steadily increase the internationalization of its share markets and step up efforts to lure overseas investors.

Authorities should allow overseas companies to go public domestically when the time is ripe and establish international boards in domestic stock exchange, the report said.

HSBC is the first overseas company to respond to the Shanghai bourse's plan to start an "international board" where shares of overseas companies will be listed.

The move will still need regulatory approval.

China's booming stock market has seen soaring sales and indexes and it has offered more diversified products.

The benchmark Shanghai Composite Index has risen about 80 percent after soaring 130 percent last year.

Companies are seeking more financing options from the stock market while investors are looking for more investment options with qualified blue chips.

The joint statement also said China's Securities Regulatory Commission will conduct a careful assessment on foreign participation in China's securities firms and will make a policy recommendation about adjusting foreign equity participation in China's securities firms.

The China Banking Regulatory Commission is set to complete a scientific study of foreign participation in China's banking sector on December 31, 2008, the statement said.