The online payment website Paypal, the largest in the world of its kind, will soon be extending its reach to China, in a move that experts are saying could propel eBay to new levels of e-commerce.

Authorities in China have already put a cap of $50,000 on how much foreign currency can be converted into local currency annually. Paypal feels that this will hinder local entrepreneurs, and plans to provide a service to allow easy access to an export license.

Dickson Seow, from Paypal Asia Pacific, had this to say: “The Chongqing government will be working with the relevant local authorities, like the Safe Administration of Foreign Exchange, to get the necessary regulatory approvals.”

Paypal plans to have the service fully tested and ready to launch to all of China’s 440 million internet users by the middle of 2011.

Paypal’s parent company, eBay, has attempted to push into the Chinese e-commerce market for years now, but has been shoved back each time by the online trade company Alibaba, which has dominated the Asian e-commerce markets for years.

There may be some trouble on the horizon for Paypal as China undergoes plans to further regulate third-party payment services within the country, and by September all such service providers will be required to apply for a license.