The new policy, which will take effect in March, also offers favorable terms to foreigners who wish to seek permanent residence in China, according to the ministry.

A pilot program will start in Beijing’s Zhongguancun Science Park. Special offices for permanent residence applications will be set up with streamlined approval procedures and more favorable terms for top-level intellectuals with doctorates, the Xinhua News Agency reported on Tuesday.

The new policy allows international students at Chinese universities to start a business after graduation, and allows students at overseas educational institutions to do internships at the Zhongguancun Science Park.

"China, with the world’s lowest proportion of foreigners, still has much to do in attracting international talent," Wang Huiyao, director of the Center for China and Globalization （CCG）, a Chinese think tank, told the Global Times.

On average, foreigners comprise 1.6 percent of developing countries’ population, while make up 10 percent in that of developed countries. In contract, foreigners only accoun for 0.06 percent in China behind India’s 0.4 percent, Wang said.

"China is short of international talent, especially high-level intellectuals and professionals, which are vital for a country’s innovation and future development," Wang added.