The State Council announced Wednesday that it supported the development of direct financing to reduce production costs for enterprises.
Through direct financing, enterprises can get funds from the capital market by issuing shares or bonds, rather than from costly intermediary institutions like banks or insurers.
China will establish "a strategic emerging board" on the Shanghai Stock Exchange, which lists innovative enterprises and startups, according to a statement released after a weekly State Council executive meeting.
The government will study the possibility that securities brokerages, fund companies and futures traders could conduct the other two businesses.
"Eligible financial institutions will be gradually allowed to apply for licenses to broker securities trading," said the statement.
The government also supports the development of private equity firms, including angel investment and venture capital investment.
In addition, China will step up supervision over rating agencies, accounting companies and law firms to secure a sound environment for the capital market.
These measures follow Chinese leaders vowing to reduce financing costs for enterprises during the policy-setting Central Economic Work Conference earlier this week.
