The tourism regulator is working on details to further open the market to foreign operators by lowering capital requirements and allowing subsidiaries.

Foreign tour agencies will be treated on par with domestic counterparts when it comes to registered capital, a China National Tourism Administration (CNTA) official has said. Currently, they are required to have a minimum of 2.5 million yuan ($328,000) in registered capital, compared to 300,000 yuan (39,400) for domestic tours and 1.5 million yuan ($197,000) for outbound and inbound tours for Chinese counterparts.

The CNTA has also allowed foreign-funded travel agencies to set up subsidiaries in China starting July 1, four months ahead of the November 11 deadline set by the World Trade Organization (WTO ).

However, details of the two moves are yet to be released.

By May, there were 29 solely-funded or joint-venture foreign tour operators, according to CNTA figures.

But the tourism regulator has not taken any steps to allow foreign tour agencies to handle outbound business. Currently, they are allowed to operate only inbound and domestic travel.

Another CNTA official said outbound tourism - the most lucrative part of the market - will remain closed to foreign tour agencies for now, because "it is not part of China's promise to the WTO".

The World Tourism Organization estimates China will become the world's fourth-largest source of outbound tourists by 2015.

"It is the potential of the outbound market that has attracted so many foreign operators in the first place," said an industry insider, who left a large State-owned tourism company to join a Beijing-based joint-venture tour agency a few years ago.

"We are looking forward to the day when the outbound market opens," he said.

One positive signal is that the CNTA recently allowed Hong Kong and Macao-funded tour agencies to cater to mainland tourists in eight provinces and regions bound for the two special administrative regions.

Takashi Ota, president of Kinki Nippon Tourist Co Ltd, Japan's second-largest tourism company, suggested the CNTA consider allowing collaboration between foreign and Chinese tour operators in the outbound market as a start.

But some large domestic agencies said they prefer current policies that bar access to the outbound market for foreign firms.