China will adopt "stronger" fiscal policies to support growth, Beijing said as it seeks to sooth increasing fears about the world's second-largest economy following turmoil in domestic and overseas markets.

The government will accelerate major construction projects, allow more small companies to benefit from tax cuts, and encourage private capital to invest in key areas, among other measures, the finance ministry said in a statement released Tuesday.

Global markets have been in turmoil for weeks on worries about slowing growth in China, a key driver of global expansion, wiping trillions off share prices. The panic has also hammered mainland Chinese markets, with Shanghai's exchange plummeting after a debt-fuelled bubble burst.

The finance ministry gave no specific values for future spending. But it said that by the end of August the central government had already spent 96 percent of its annual infrastructure investment budget.

To achieve China's 2015 growth target of around seven percent, the ministry said it would step up and improve a "proactive fiscal policy, fine-tune the measures in a timely manner and accelerate reforms that will help stabilise growth".

In share trading Wednesday the Shanghai stock market surged 2.29 percent, extending a rally of almost three percent Tuesday on hopes for government measures to support the economy.

Economic expansion stood at 7.0 percent in each of the first two quarters this year, but on Monday the government lowered its 2014 growth reading to 7.3 percent, from the 7.4 percent announced in January.

Leaders have taken a series of measures to bolster growth and curb falling share prices, including cutting interest rates last month for the fifth time since November and lowering the Chinese currency's central rate against the US dollar by nearly five percent in a single week.

But the benchmark Shanghai Composite Index has slumped nearly 40 percent since mid-June despite official interventions that investment bank Goldman Sachs estimates have cost $234 billion.

Official data released Tuesday showed the country's imports decreased for the 10th consecutive month in August by dropping 13.8 percent, adding to concerns over sluggish domestic demand.

"China's economy has been placed under new pressures recently as uncertainties were added into the world recovery after turmoil in the global financial markets, sharp falls in main stock exchanges, continued depreciation of emerging market currencies and new record lows of prices of commodities including oil," the finance ministry said.

It vowed to reform the tax system and "further regulate" the management of local government debt, which is regarded as a main threat to financial stability.

On Wednesday, the National Bureau of Statistics announced it was reforming quarterly gross domestic product (GDP) calculation method to base the figures on economic activity of each quarter and "improve accuracy".

Analysts have questioned the veracity of official Chinese statistics, with some saying they can paint a rosier picture than reality.

China plans new push to reform state firms: reports
Shanghai (AFP) Sept 9, 2015 - China is preparing to unveil broad reforms for state-owned companies which will see some firms shut and others introduce more diversified ownership, according to media reports, in moves one analyst called a "game-changer".

Worries have mounted that China is slowing reforms because its economy, the world's second largest, is faltering, while the stock exchange remains volatile after a collapse from June.

The rout has prompted broad government interventions, largely seen as anti-market, to try to shore up prices.

A purported Communist party document circulating online said the government will "withdraw a batch, restructure a batch and innovatively develop a batch of state-owned enterprises" but gave no specific details.

Images of nine pages of the supposedly 20-page paper were posted on social media, but their authenticity and source could not be verified.

It emerged after the official Xinhua news agency said that the ruling Communist Party has approved guidelines for "deepening state-owned enterprise (SOE) reform" which will be announced publicly soon.

Reports have previously said that China is considering merging scores of its biggest state firms to create around 40 national champions, from the more than 100 companies managed directly by the central government.

The online document also showed the party urged state firms to diversify their ownership and list publicly after restructuring.

"We consider this round of SOE reform a game-changer of China's economic development," ANZ Banking Group said in a research report on Wednesday.

"By encouraging private sector participation and allowing market force to play a decisive role in resource allocation, the reform will unlock a massive amount of economic value."

Many of China's biggest state firms already have listed units on domestic and overseas stock markets, though the state continues to hold majority stakes.

A key Communist Party meeting in 2013 called for the market to play a greater role in the economy by giving private companies opportunities and requiring state firms to contribute more to public coffers.

Following the meeting, a unit of energy giant Sinopec sold a 30 percent stake in its marketing arm to outside investors for more than $17 billion while a subsidiary of another oil firm CNPC unveiled plans to spin off part of its pipeline business.

The new round of reforms envisions using investment companies to act as shareholders in state firms, similar to Singapore state investment giant Temasek, the China Daily newspaper reported on Wednesday.

But foreign companies complain that China has implemented few substantive market reforms in the last two years.

The economy "has been dominated by strong state-owned enterprises to which the government channelled the population's savings in order to develop large-scale projects," the European Chamber of Commerce in China said Tuesday.

"This approach has been costly and inefficient and has to be abandoned now if the market is to play a decisive role in the economy," the chamber said in its annual position paper.

bxs/slb/fa

Sinopec