"Completing the State-share program in 2006 is the primary task and top priority for the reform and development of the equity market," the China Securities Journal quoted Shang Fulin, chairman of the China Securities Regulatory Commission, as saying.

"We must push the reform and speed up the process, and take this opportunity to improve the corporate governance and quality of listed firms."

The reform of the overhang of shares owned by the government began in earnest in April last year, with companies generally offering compensation to public shareholders, usually in the form of free bonus shares.

Of the over 1,300 listed companies trading on the domestic exchanges, about 70 percent of the State groups have put forth reform plans.

Investors are hopeful that the painful reforms will put the securities markets back on track after four lean years that saw share prices struggle at eight-year lows in 2005.

The government owns about two-thirds of the four trillion yuan(US$500 billion) of market capitalization and the flawed structure has been a major impediment to real growth in the Shenzhen and Shanghai exchanges.

Share prices have recovered recently amid investor hopes that new share sales will soon be resumed after the regulator indicated last week it would do so, although it failed to fix a date.

The government suspended initial public offerings last April as it pressed ahead with its long-planned share reform to prevent a further deterioration in liquidity.

(Source: Shenzhen Daily/Agencies)