国际英语新闻:Measures to boost financial markets

BEIJING, Jan. 10 (Xinhuanet) -- Financial markets will be developed and the securities industry opened further to foreign participants in a bid to diversify risk in the banking sector, a leading financial official said.

China should be "highly cautious" about systemic risk in the banking sector and needs to substantially boost the scale of direct financing, such as stocks, to diversify the risk, Guo Shuqing, chairman of the China Securities Regulatory Commission (CSRC), said.

The regulator plans to launch several new products, including high-yield corporate, municipal and government agency bonds, in order to boost direct financing. The regulator will also reduce administrative procedures regarding the issuing of bonds, he added.

Three of the world's top 10 banks, judged by assets, are Chinese. However, cash-strapped small businesses are still experiencing difficulty in raising capital.

"Some of the firms may be more suitable for stock or bond financing but they can't get sufficient financial support because direct financing remains small-scale," he said. "This structural problem can damage the economy seriously."

Guo made the remarks at the regulator's annual work conference which concluded on Monday.

The total assets of China's securities industry stood at 4.7 trillion yuan (744 billion U.S. dollars) by the end of 2011, according to the regulator. This accounts for only 3.9 percent of the total assets of the country's financial industry. The banking sector accounts for more than 90 percent.

Analysts said a vibrant bond market could help diversify risks and reduce over-reliance on the fast-expanding banking sector. But a healthy credit rating system and a mature credit culture are vital to expanding the bond market, they said.

"The development of the bond market is a key part in reducing over-reliance on the banking system," Ivan Chung, a senior analyst at Moody's Investor Service, said.

The regulator is also working to further open the securities market to foreign investors by raising the investment quota for Qualified Foreign Institutional Investors (QFII) in the A-share market, Guo said.

Analysts expect that the regulator may boost the current quota by as much as 50 billion U.S. dollars and another 50 billion yuan for QFII investors using overseas yuan deposits.