Securities regulators in the Chinese mainland and Hong Kong approved the first batch of cross-border mutual funds on Friday, marking further liberalization of the Chinese capital market.

Four mainland and three Hong Kong funds gained the regulatory green light to sell their investment products to investors in each other's markets, according to the China Securities Regulatory Commission.

Officials said the mutual recognition of funds between the mainland and Hong Kong will allow foreign investors to gain greater access to the Chinese stock and bond markets, while enabling foreign asset management firms to tap into the growing wealth held by mainland investors.

"The approval and registration of cross-border funds will become a regular, normal practice by regulators in the future," said Zhang Xiaojun, a CSRC spokesman.

The CSRC will cap the sales value of Hong Kong mutual funds in the mainland market at no more than 50 percent of the funds' total asset value, Zhang said.

Thirty mainland funds and 17 Hong Kong funds have so far applied to sell products under the mutual recognition scheme.

Beijing-based China Asset Management Co Ltd and Hang Seng Investment Management Ltd in Hong Kong were among the first seven to gain the regulatory approval.

Offshore investors will be not be taxed on their investment gains from the cross-border products. But share dividends and interest will be subject to the mainland's tax regime, said the Ministry of Finance.

Experts said they considered the initial number of funds to gain approval to be small, but said that was indicative of the cautious approach being taken by regulators as they open up the Chinese market.