China will allow outside investment including foreign investors in its defence sector, state media reported Tuesday, as it seeks to invigorate the long-protected industry.

Firms producing less-sensitive military equipment and products for broader civil and consumer markets will be allowed to solicit domestic and foreign investors as part of broad plans for shareholding reform in the sector, the Beijing News said.

The paper cited guidelines issued last month.

Defence-related companies will also be encouraged to raise funds on both domestic and overseas capital markets, the report said, citing Sun Qin, vice minister of the Commission of Science, Technology, and Industry for National Defence, the sector's regulator.

Shareholding reform in the industry is expected to be completed within "several years", according to the guidelines.

The official Xinhua news agency reported earlier that the reform plans were aimed at helping weapons makers become more market-oriented while increasing innovation and the competitiveness of the defense industry.

However, key military enterprises which design and produce strategic and other major weapons that involve core state secrets or that have a direct impact on national security should remain solely owned by the state.