Citic Bank, is interested in buying a substantial stake in the Bear Stearns, according to Jiang Dingzhi, vice-chairman of the China Banking Regulatory Commission.
The interest was exposed when Mr Dingzhi listed the Chinese banks' acquisitions and investments in overseas financial institutions.
Speaking at a financial forum during the five-yearly Congress of the ruling Communist Party, Mr Dingzhi, said: "The foreign M&A of our banks is entering a new era and the pace of internationalization is accelerating."
Citic's investment is thought to be a 20 per cent stake in the bank and at a value of $3.5 billion it would be China's largest investment in the West, according to City AM.
Bear Stearns has been heavily hit by the credit crisis resulting from the sub-prime mortgage problems in the US.
There have been rumours that the bank needs a cash injection after its shares have fallen by more than 10 per cent since the crash.