China seeks to stabilize its multi-tier capital market in an effort to protect the country's economy from the ongoing financial crisis.

The statement was made by the country's State Council, or the cabinet on Saturday.

It urged the completion and start of the Growth Enterprise Board, a NADSAQ-like entity to help small start-ups raise funds.

Qi Bin, director of the research center of the China Securities Regulatory Commission, highlighted the importance of reform amid the financial crisis, especially "capital market reform". He said, the Growth Enterprise Board should be introduced as soon as possible to promote interconnection between high-innovative enterprises and the capital market.

The cabinet also stated it will support enterprises to conduct mergers and acquisitions through the capital market to enhance industrial upgrades and integration.

The country's futures market for agricultural products should be improved to help rural areas, farmers and agriculture, the statement recommended. It went on to say, new kinds of commodity futures should be introduced to meet the need of economic development, such as steel and grain.

The government also encouraged the expansion of bond issuance, including corporate bonds, short-term financing bonds and medium term notes. Bonds concerning infrastructure, people's livelihood, environmental protection and post-quake reconstruction will enjoy preferential issuance.

The statement also proposed insurance companies to expand insurance coverage including agriculture insurance, car and house purchase insurance, short-term export credit market insurance, and individual and collective pension insurance among others.

Additionally, insurers were encouraged to invest in infrastructure construction for transportation, telecommunications, energy and rural areas by buying state bonds, financial bonds and corporate bonds.

Wu Dingfu, chairman of the China Insurance Regulatory Commission (CIRC), said 15 percent of insurance funds could be invested in the stock market. Currently, there is only an eight percent investment.

CIRC called for insurers to invest in the capital market directly or indirectly as long-term investors to help boost consumption and stabilize exports.

(Xinhua News Agency December 14, 2008)