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Financial markets will be developed and the securities industry opened further to foreign participants in a bid to diversify risk in the banking sector, a leading financial official said. China should be "highly cautious" about systemic risk in the banking sector and needs to substantially boost the scale of direct financing, such as stocks, to diversify the risk, Guo Shuqing, chairman of the China Securities Regulatory Commission (CSRC), said. The regulator plans to launch several new products, including high-yield corporate, municipal and government agency bonds, in order to boost direct financing. The regulator will also reduce administrative procedures regarding the issuing of bonds, he added. Three of the world's top 10 banks, judged by assets, are Chinese. However, cash-strapped small businesses are still experiencing difficulty in raising capital. Guo said at a regulator's annual work conference that "Some of the firms may be more suitable for stock or bond financing but they can't get sufficient financial support because direct financing remains small-scale." "This structural problem can damage the economy seriously," he added. The total assets of China's securities industry stood at 4.7 trillion yuan ($744 billion) by the end of 2011, according to the regulator. This accounts for only 3.9 percent of the total assets of the country's financial industry. The banking sector accounts for more than 90 percent. | 
