Morgan Stanley received long-awaited approval from the Chinese government to sell its 34.3% stake in China International Capital Corp., clearing the way for the U.S. investment bank to pursue a new securities joint venture in China.

Morgan Stanley said Wednesday that its shares in the Chinese company will be sold to Kohlberg Kravis Roberts & Co., TPG Capital, sovereign-wealth fund Government of Singapore Investment Corp., or GIC, and Great Eastern Holdings Ltd., an insurer controlled by Oversea-Chinese Banking ...