More freedom will be given to foreign funds investing in the Chinese capital market and to domestic individuals buying overseas securities, as officials at a key meeting announced a plan to open the country's capital account.

Officials at an executive meeting of the State Council led by Premier Li Keqiang said on Monday that China would propose an operational program within the year to make the yuan more convertible in the capital account.

The move comes after Li promised in March to open the economy further to market forces and take away some power from government departments as part an effort to reshape the growth model.

No additional details were announced at Monday's meeting about the capital-account plan, but analysts believe the next step will be to focus on areas where there are more restrictions, such as foreign institutions' investments in the Chinese capital market, and direct investment by Chinese individuals in foreign markets.

About 80 percent of the capital-account items listed by the International Monetary Fund are convertible or partially convertible in China, according to Yi Gang, deputy governor of the People's Bank of China.

Although the governor of the central bank, Zhou Xiaochuan, said that the full convertibility of the capital account is only a vague concept and there is not yet an official roadmap, the goal is not that far away, observers said.

Chen Bingcai, a former official with China's foreign-exchange regulator, said changes might include raising or removing quotas on foreign investment in the nation's bond and stock markets and giving Chinese companies more freedom to borrow overseas.

"The general principle of the opening-up plan is to be gradual, starting from long-term investments to short-term capital flows and from a quota-management system to the free flow of money," said Chen, a researcher with the Chinese Academy of Governance.

Ding Zhijie, head of the School of Banking and Finance at the University of International Business and Economics, said the full capital-account convertibility would be a systemic foundation for China to be more involved in the global economy.

"The focus in the near future will be loosening restrictions on domestic institutions, companies and individuals holding foreign assets, to change the previous mode of wide-in and strict-out," Ding said.

He said the capital account convertibility could be in place as soon as the end of 2014.

Li Daxiao, head of the research department at Yingda Securities, said the capital account convertibility will push forward the internationalization of the domestic stock market.

"The capital account convertibility will subvert the closed-minded logic of China's capital market and lead to a major change in the economy," he said.

Officials at Monday's meeting also called for a mechanism to let individuals invest overseas, which echoed an announcement in January by the central bank, saying it would proactively prepare for a trial of its qualified domestic individual investor program, known as QDII2.

The program, which was started by the government in 2006, allows Chinese individuals to buy securities in overseas markets through asset managers and funds.

"It's a positive sign that the new government is trying to boost growth by reform instead of launching fiscal stimulus programs," said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd.

The goal of a feasible plan for capital-account convertibility shows that the "reform ideas promoted by Zhou Xiaochuan have been endorsed by the cabinet", he said.

Yuan positions at Chinese financial institutions stemming from foreign-exchange transactions - a gauge of cross-border capital flows - climbed 1.22 trillion yuan ($198 billion) during the first quarter, the third-biggest increase in data going back to 2000. Gains are a sign of inflows, and the largest advance was 1.41 trillion yuan in the first three months of 2008, according to data compiled by Bloomberg.

Meanwhile, Standard Chartered said on Tuesday that its Renminbi Globalization Index reached a new high of 892 in March, up 6.2 percent from a revised 839 level in February, or 65.6 percent year-on-year.

The main push behind the index's rise in March was trade settlement and other international payments across London, Singapore and Hong Kong.

Bloomberg and Wang Xiaotian contributed to this story.??