BlackRock Inc. has become the first global asset manager licensed to start a wholly owned onshore mutual fund business in China, as the government opens up the country's $3.5 trillion mutual fund industry.

BlackRock, the world's biggest asset manager, on Friday said the China Securities Regulatory Commission (CSRC) had given its Chinese fund management unit approval to begin operations.

China scrapped foreign ownership caps in its mutual fund and securities sectors on April 1, 2020, under a Sino-U.S. trade deal.

"We are honored to be in a position in which we can support more Chinese investors access financial markets," BlackRock Chief Executive Officer Larry Fink said in a statement on Friday.

Several global asset managers, including Neuberger Berman, Schroders PLC and Fidelity International, have also applied to set up wholly owned mutual fund businesses in China.

But some others have balked at entering a market congested with roughly 150 players.

In March, U.S. money manager Vanguard Group dropped plans to obtain a mutual fund license in China, citing a "crowded" market.

Still, China's mutual fund market is likely to triple to 60 trillion yuan ($8.75 trillion) in a decade, forecast Shanghai-based fund consultancy Z-Ben Advisors.

"It now comes down to how these global groups actually roll out the businesses in the next several years," said Z-Ben Managing Director Peter Alexander.

BlackRock's announcement comes a month after it received a license to operate a majority-owned wealth management venture in China. The New York-headquartered firm also owns a minority stake in a mutual fund venture with Bank of China Ltd.

The firm, which managed $9 trillion worth of assets at the end of the first quarter of 2021, on Friday said the regulatory approvals position BlackRock to extend the breadth of its products and services to client across China.

"Our view at BlackRock has always been that we need to be immersed in local markets around the world, so we can respond to the unique needs and objectives of our clients in their home markets," said BlackRock Head of China Tony Tang.