China to Deepen Financial, State Bank Reforms

China will deepen financial market reforms, restructure state policy banks and accelerate development of the rural financial system, according to excerpts from Premier Wen Jiabao's speech seen by Reuters.

The speech contained no new concrete initiatives but covered a broad range of reforms at the top of the government's agenda including capital markets, financial regulation and risk management.

Wen is scheduled to give his speech later on Monday at the opening of the annual plenary session of the National People's Congress, or parliament.

Priority will be given to foreign investment that brings cutting-edge technology, management expertise and research and development skills to China, according to the excerpts.

China will continue the steady development of stock markets, accelerate bond market reforms and expand the futures markets. 

Emphasis will be placed on the development of China's service industries. In particular, the logistics, financial, information, communications and travel industries will be supported.

Foreign firms will also be encouraged to speed their investment in the lesser developed areas of the country, where out-dated manufacturing centers are based.

Beijing will strengthen rules on mergers and acquisitions by foreigners and improve the investment environment, according to the excerpts.

The government aims to correct illegal regulations and laws of local governments that offer incentives to attract investment, in violation of central government policies.

China will also offer tax breaks, preferential loans, foreign exchange and insurance advantages to encourage Chinese companies that are competitive and have strong credit worthiness to invest overseas.

China will encourage bank lending to develop agriculture, small and medium enterprises, energy-efficient technology and innovation, according to the excerpts. 

At the same time, lending will be severely limited for heavy polluters, energy wasters and industries facing over capacity.