The agreements, which were announced by the Chinese central bank, coincided with China and Australia signing a landmark free trade deal on Monday as President Xi Jinping began his state visit to Australia.

Under the Renminbi Qualified Foreign Institutional Investor, or RQFII scheme, Australian investors have been given the right to invest up to 50 billion yuan ($8.2 billion) in the capital market in mainland China.

Created to allow foreign investors a channel through which to use yuan to buy Chinese stocks, bonds and other money market instruments, the RQFII scheme was meant to be a way of slowly freeing China's capital markets.

"It's making it much easier for Australian fund managers to be able to access the domestic Chinese market," said Andrew Whitford, general manager and country head Greater China, Westpac Banking Corp.

As China's maturing economy slows, Beijing wants to find new growth drivers to reduce the nation's reliance on export-led manufacturing, and developing the domestic financial market has been identified as an area for change.

Encouraging greater use of the yuan globally is also key to the government's long-term plans of reforming its economy and reducing its vulnerabilities to the dollar, the world's reserve currency.

China owns the world's largest foreign exchange reserves at $3.9 trillion, about a third of which is invested in dollars.

To promote international usage of the yuan, China has signed a flurry of yuan clearing agreements with more than a dozen countries including Canada, Malaysia and Qatar to allow them to set up a yuan clearing bank within their borders.

A clearing bank can handle all parts of a currency transaction from the time a commitment is made until it is settled, thereby reducing the costs of and time taken for each deal.

But as China's central bank works on building a worldwide payments super highway that can clear yuan payments globally, some experts say yuan clearing centers will be obsolete once the payments system starts running.

(Reporting by Shao Xiaoyi and Koh Gui Qing; Additional reporting by Sue-Lin Wong in Sydney; Editing by Jacqueline Wong)