The Chinese government has cleared the country's nearly $75bn (€48bn) national social-security fund to invest more freely with local private-equity funds, according to people familiar with the situation, making it the biggest potential pool of capital for Chinese currency private-equity deals in the country.

The National Council for Social Security Fund has picked two new yuan-denominated funds being raised by a pair of China-focused private-equity firms, CDH Investments and Hony Capital, for its first investments since getting the approval from China's cabinet, the State Council, according to the people.