File photo shows an exterior view of the Shanghai Stock Exchange at Pudong New Area in Shanghai, east China (XINHUA)

China has sent a clear signal that more efforts will be made to stabilize the capital market and improve investor confidence.

Policymakers were briefed on the operation of the capital market and considerations for related work at a State Council meeting on January 23.

The country will further improve the capital market's fundamental system, pay more attention to maintaining a dynamic balance between investment and financing, enhance the quality and investment value of listed companies, increase flows of medium and long-term funds into the market, and strengthen the market's inherent stability, according to the meeting.

The meeting reflects the great significance the authorities attach to the development of the capital market and investors' concerns, said Peng Wensheng, chief analyst with the China International Capital Corporation.

Zhang Wangjun, an official of the China Securities Regulatory Commission (CSRC), said more will be done to reform the investment side of the capital market, promote the counter-cyclical investment by institutions, and improve the investment channels of social security funds, insurance funds and annuity funds in a bid to foster long-term stable investment forces.

The CSRC will improve the quality evaluation and classified supervision of listed companies, and guide them in better repaying investors through share repurchases and cancellations, and increasing dividends, he said.

The proportion of medium and long-term funds remains low in China's capital market, and more policy support should be introduced to encourage those funds to enter the market, said Li Xunlei, chief economist of Zhongtai Securities.

The meeting pledged to take stronger, more effective measures to stabilize the market and improve confidence.

The CSRC will enrich the policy tools to deal with market fluctuations, hedge risks promptly, and safeguard the bottom line of risk control, Zhang said.

The government policies related to the capital market will be more coordinated, continuous and stable, he said, adding that efforts will be made to prevent the rollout of policies unfavorable to improving market expectations, while work will also be done to defuse risks in the property sector and local government debts.

The meeting stressed the need to enhance the consistency of macro-policy orientation, strengthen the innovation and coordination of policy tools, consolidate the trend of economic recovery, and promote the stable and healthy development of the capital market.

It is necessary to strengthen market supervision with zero tolerance for illegal activities to create a transparent environment, according to the meeting.

The CSRC will strengthen the monitoring of trading behaviors of key investors, crack down on abnormal trading, stock price manipulation and other irregularities, and formulate plans to punish and prevent financial fraud.

The division of responsibilities regarding cracking down on illegal securities and futures trading will be improved to ensure that all activities are placed under supervision, according to the CSRC.