Chinese government has relaxed its grip on outbound direct investment (ODI) as domestic enterprises begin to invest heavily abroad.

The State Council, China's cabinet, released on Tuesday a much shorter list of ODI projects needing government approval to encourage enterprises to enter the international market.

Gu Dawei, of the National Development and Reform Commission, estimated that around 99 percent of investment projects included on the previous list are now free from long government procedures, and will only need to go through a registration system.

The one percent remaining concern investment in restricted industries or in countries that are at war, under sanctions or without diplomatic relations with China.

Long Guoqiang of the State Council's Development Research Center said the new ODI system eliminated barriers and will help China absorb foreign technology.

Chinese enterprises have been keen on investing overseas during the last decade with robust mergers and acquisitions in manufacturing, infrastructure, energy, minerals, agriculture and culture.

China's ODI by non-financial firms rose 17.8 percent from a year ago in the first ten months to 81.9 billion U.S. dollars, while foreign direct investment (FDI) in the Chinese mainland dropped 1.2 percent year on year to 95.9 billion U.S. dollars, the commerce ministry said on Tuesday.

"China will soon become a net capital exporter with ODI growth over 10 percent for the next five years," said assistant minister of commerce Zhang Xiangchen.

China is currently the world's third largest investor after the United States and Japan. Last year's ODI amounted to nearly 40 times that in 2002.