The approval, announced this week in the Shanghai Daily and confirmed Wednesday by the university, allows Yale's endowment investors to tap one of the world's fastest growing economies.

It also underscores the increasingly tight-knit relationship between China and the prestigious American university, a relationship marked by Chinese President Hu Jintao's scheduled visit to the school Friday.

China allows foreign investors to buy a limited number of stocks and bonds, called B-shares, that are quoted in U.S. and Hong Kong dollars. The much larger domestic stock exchange, which trades stocks known as A-shares, is restricted to Chinese investors and a select group of approved foreign institutions.

Yale's $15 billion (euro12.24 billion) endowment is one of the world's largest and has more than tripled in value in the past decade.

Institutions that win approval to buy A-shares are limited in how much they can invest and the size of Yale's stake was not immediately released.

This week, Hu said the Chinese economy grew 10.2 percent in the first three months of the year compared with the same quarter last year, well above previous estimates. The nation's economy has grown at an annual pace of about 10 percent for the past three years.

That rapid expansion hasn't translated to a booming stock exchange and China has been trying to breathe life into its markets, which have been among Asia's worst performers in recent years.

The government has slowly allowed foreign investors, hoping they will demand greater discipline and transparency from listed companies, which are largely state-owned.

Hu had dinner Tuesday at the home of Microsoft Corp. Chairman Bill Gates and planned to tour a Boeing commercial jet plant Wednesday. He is scheduled to meet with President George W. Bush on Thursday _ a meeting that the U.S. hopes will lead to China's help in nuclear standoffs with Iran and North Korea.

For the Chinese president, the visit offers an opportunity to burnish China's image at a time of mounting questions and concerns in the U.S. about that country's growing economic might.

Hu deliver a speech at Yale the following day.

Yale's relationship with China dates to 1854, when Yung Wing became the first Chinese citizen to graduate from an American university, the school said.

Yale President Richard Levin has dramatically expanded that relationship in recent years. Today, the university has more than 80 academic collaborations with Chinese institutions and offers 26 study sites in China.

More than 300 of Yale's 11,000 students are Chinese, making them the largest group of foreign students at the school.