Chinese regulators have agreed to allow up to 49% foreign ownership of Chinese airlines from 1 August after years of discussions.

The foreign shareholding limit of 35% will be relaxed to 49%, the Civil Aviation Administration of China (CAAC) confirms. Individual foreign shareholders will not be able to own more than 25% of an airline, however.

The liberalisation is in part designed to draw more overseas investment. While the CAAC has been studying the changes for some time, top government officials only warmed to an easing of restrictions last year, when China officially became a member of the World Trade Organisation.

The changes come as the country's airline sector is undergoing sweeping consolidation that will see majors Air China, China Eastern Airlines and China Southern Airlines acquiring seven other CAAC-controlled airlines. The CAAC will then give up direct ownership of the airlines and transfer control to other government agencies, leaving it to focus on regulating the industry.

China Eastern and China Southern are already publicly traded companies on overseas stock exchanges, while Air China has been seeking an international listing for years.

Hainan Airlines was the first Chinese carrier to be approved for foreign ownership. In 1995 an investment fund part-owned by US financier George Soros took a 25% shareholding, although this was diluted after the carrier sold shares through an initial public offering in Shanghai. Shandong Airlines also has limited foreign ownership and, like Hainan, a domestic stock exchange listing. Shanghai Airlines has been planning a domestic listing for some time.

Source: Flight International