HONG KONG (MarketWatch) -- China banking and securities regulators signed an agreement with their U.S. counterparts Monday that will help to lay the groundwork to enable Chinese investors to buy and sell U.S. stocks and mutual funds.

The agreement signed between the Securities and Exchange Commission and the China Banking Regulatory Commission marks a further expansion of QDII -- the qualified domestic institutional investor program -- and brings the U.S. in line with similar agreements signed between Beijing and regulators in Singapore, Hong Kong, Japan and the U.K.

According to data from the U.S. Treasury Department from last June, China held $922 billion in U.S. securities -- but only $29 billion of that in U.S. stocks. Most of the rest is held in U.S. government bonds.

"What we've seen over the last six to 12 months, China has a lot of capital and is looking for ways to make that capital work harder and more efficiently," said Charlie Awdry, a fund manager for Gartmore's China Opportunities Fund. "This is illustrative of the broader engagement between China and the rest of the world."

Analysts said Chinese banks may not be in much of a rush to invest in the U.S., however.

"It's significant in the sense that, in the long run, Chinese money will invest in the U.S., but this is just part of the ongoing process," said Lan Xue, Citigroup's head of China research in Hong Kong.

"The actual implementation will be long and slow," said Gartmore's Awdry.

Glenn Maguire, head of Asian economic research for Societe Generale in Hong Kong, pointed out that investors bid up Hong Kong-listed stocks on a similar announcement, but the money from the mainland largely didn't materialize.

"Any type of change to capital outflows is evolutionary rather than revolutionary," he said.

Because of the appreciation in the yuan, stress in the U.S. financial sector and the upcoming U.S. presidential election, Chinese banks might not exhibit such a great appetite for U.S. equities, he said.

So far, China's institutions and sovereign wealth funds have suffered from investing in financial-services stocks like Blackstone Group BX, +0.09% , Merrill Lynch & Co. MER, +27.69% and the U.K.'s Barclays BCS, -0.60% .

Still, Shanghai-listed stocks have done ever worse than their U.S. counterparts this year. The Shanghai Composite is down over 30%, compared to the 6.7% fall for the S&P 500.