HONG KONG - China will relax conditions for mainland firms, especially small and medium sized enterprises, to list in Hong Kong, the country's securities regulator said in Hong Kong on Saturday.

It also said China would increase quotas on the Renminbi Qualified Foreign Institutional Investor (RQFII) scheme, which allows foreign investors to buy into Chinese mutual funds using offshore yuan.

The news came on the eve of Hong Kong's 15th anniversary of its return to China and after a raft of announcements on co-operation between the mainland and Hong Kong, aimed in part to strengthen Hong Kong's role as an offshore yuan centre.

President Hu Jintao is in Hong Kong this weekend to oversee the swearing in of a new chief executive on Sunday.