A mixed-ownership economy will be encouraged by allowing non-State capital to invest in State projects in the oil, railway and telecom sectors, according to a government work report delivered by Premier Li Keqiang on Wednesday.

"We will formulate measures for non-State capital to participate in investment projects of central government enterprises," Li said at the opening of the annual session of the National People's Congress.

Non-State capital will be allowed to participate in projects in areas such as banking, oil, electricity, railways, telecommunications, resource development and public utilities, the report said.

The government has pledged to reform the railway investment and financing system, and to open competitive operations in more areas to encourage full participation of private capital.

The government also announced some reform moves for the country's State-owned enterprises.

"We will improve the system for managing State-owned assets, clearly define the functions of different SOEs and carry out trials for investing State capital in corporate operations," Li said.

A reform master plan released after a key plenum of the Communist Party of China Central Committee in November pledged to let the market play a decisive role and recognized the private sector's role in fostering growth and creating jobs.

The November document said China will actively promote a mixed-ownership economy, allowing more SOEs and other firms to develop into mixed-ownership companies.

Sinopec, China's top oil refiner, announced in mid-February that it would bring in social and private capital to jointly market and sell its oil products, the first opening up of the largely monopolized sector.

"Private capital will play a bigger role in the market sooner or later with its advantages in quickly developing manufacturing and service sectors to share the huge pool of State projects," said Chen Naixing, director of the Research Center for Small and Medium-sized Enterprises at the Chinese Academy of Social Sciences.

Chen added that the government should establish policies to balance the contribution of private capital and SOEs within certain government projects to avoid market competition.

Li pointed out in the report that the program of small and medium-sized privately owned banks would be promoted continuously.

Private capital will be guided to buy shares and invest in financial institutions and financing service organizations.

According to a video conference hosted by the China Banking Regulatory Commission earlier this year, a pilot regulation on privately owned banks is planned as a work focus by issuing restricted licenses to qualified private capital holders with high supervision standards and risk control systems.

Three to five privately owned banks will be launched as a pilot program, while the rest will be approved one by one later on.

Huafeng Group, a major polyurethane manufacturer in China, is trying to enter the financial field with Chint Group Corp, the country's largest maker of low-voltage electrical apparatus and nine other companies.

The Wenzhou companies applied for a privately owned bank license last September.

"The project was proposed by Chint, which will own a 20 percent share, while we plan to have a 10 percent share as our first step into the banking industry," said Weng Yifeng, chairman of Ruian Huafeng Small Loan Co Ltd in Wenzhou, Zhejiang province, under the Huafeng Group.

Weng added that the proposal has been submitted to the banking commission, but the backers had not received any feedback on the submission yet.

Xinhua News Agency contributed to this story.

yuran@chinadaily.com.cn