The Australian central bank plans to invest about 5% of its foreign reserves in Chinese government bonds to help diversify investments and deepen economic ties with China.

Philip Lowe, deputy governor of the Reserve Bank of Australia, says the decision was an “important” step towards increasing financial ties and reflects the broader economic relationship between the two Asia-Pacific nations.

“It provides greater diversification of our investments and will help with our understanding of the Chinese financial markets,” Lowe said in a speech on Wednesday in Shanghai.

Australia will join a small but growing band of central banks that have looked to China to diversify their foreign reserves, reports the Financial Times.

Earlier this month, Australia become the third country, after the US and Japan, to establish a direct currency trading link with China. The two countries’ central banks also set up a currency swap facility in March 2012. The RBA had around 38.2 Australian billion dollars ($39 billion) in foreign reserves at the end of March, FT reports.

China has also sought to broaden investment channels for renminbi holders as part of its effort to internationalize its currency.