China has agreed to let U.S. firms enter its securities industry, U.S. Treasury Secretary Henry Paulson said in Washington Wednesday.

Under an agreement worked out during a "strategic economic dialogue" led by Paulson and Chinese Vice Premier Wu Yi, China says that starting in July firms such as Merrill Lynch & Co. and Citigroup Inc. will be allowed to invest in Chinese securities firms, and establish joint ventures with them.

This will create opportunities for U.S. firms and provide new competition and expertise in the Chinese securities industry, Paulson said.

China refused, however, to lift its ceiling on foreign ownership of Chinese banks from 25 percent.

China did agree to let qualified foreign institutional investors buy up to $30 billion in stocks usually reserved for domestic buyers, Paulson said. The limit currently is $10 billion.

In addition, China agrees to immediately let foreign-invested banks offer yuan-denominated credit and debit cards in China. This will let U.S. banks compete with Chinese banks that offer these services, Paulson said.

During the talks, Paulson repeated his call for greater appreciation in the yuan. U.S. manufacturers believe China is undervaluing its currency, making Chinese goods cheaper in the United States and U.S. goods more expensive in China.