(Yicai Global) Oct.23 -- The Financial Stability and Development Committee under China's cabinet the State Council recently held a meeting to avert and resolve financial risks stemming from the recent stock market sag and pressure to close the position of many stocks.

A series of policies will soon issue that will lift market confidence, Ma Jun, a member of the Monetary Policy Committee of the People's Bank of China, forecast as the future policy orientation in an interview yesterday.

From a big and macro perspective, the large-scale tax cuts Premier Li Keqiang has proposed will be a boon for the economy, said Ma, adding, "Tax cuts and fee reductions next year are expected to reach or exceed 1 percent of gross domestic product, greater than the extent of the US tax cuts," the China Securities Journal reported.

Substantial measures will soon issue to ease the financing difficulties of private firms, Ma believes. "Regulators are expected to clarify bank due diligence requirements and will not allow them to discriminate against private firms when they borrow under the pretext of 'being liable for life for any default.'"

He also thinks the government will churn out guaranty funds to support private companiesand improve the bank's willingness to lend to them.

In the short run, the capital supply in the market will improve through the entry of state-runenterprises, insurance and bank wealth management funds, and the buying back of listed companies. "Some local governments' initiatives to provide liquidity support to listed companies will also help alleviate the pressures they face in the capital chain," Ma noted.

For example, the Asset Management Association of China reaffirmed on Oct. 19 that private equity investment funds may buy listed companies' shares and participate in their mergers and acquisitions by opening securities accounts to partake of non-public issues, equity assignment agreements and block trades.

The association will provide 'green channel' services to eligible private equity funds and asset management plans for product filing and major event changes resulting from participation in listed company mergers and acquisitions and in resolving equity pledge issues, it also said Oct. 21.

Editor: Ben Armour