The Chinese government listed seven priority sectors crucial to the development of the national economy on Monday.

It said these sectors must remain under the government's control to promote the macro-economy.

In the meantime, China will work to enhance state firms' vitality and competitiveness in a variety of fields.

CRI Reporter Chen Xi has more.

Armament, electricity generation and distribution, oil and chemicals, telecommunications, coal, aviation and shipping must remain under the government's control.

The Chinese State Assets Watchdog listed the seven priority sectors as part of the ongoing drive to improve the efficiency of state spending.

The Director of the State-owned Assets Supervision and Administration Commission or SASAC, Li Rongrong, said large state-owned enterprises must continue to play a leading role in these sectors.

He told a press conference on Tuesday large state-owned enterprises should work harder to learn from advanced international companies.

"Our enterprises have made great efforts in the past few years, which are reflected by how their responsibilities have improved. But compared to their outstanding international counterparts, the disparity is still large. I am confident we are on the way to speeding up this process."

Li Rongrong says the total profits from large state-owned enterprises are expected to reach nearly 92 billion U.S. dollars in 2006。

He also says state-owned companies in the seven vital sectors should expand their assets and optimize their business structure. Some key organizations should aim to grow into world business leaders.

He estimates between 30 to 50 large business groups capable of competing in the global arena will emerge from the country's state businesses by 2010.

The official also explained the new guidelines for state-owned enterprise reform.

He said the state should either completely own, or hold a majority share, in the enterprises engaged in power generation and oil, as well as some others.

He emphasized that most of the total investment from central companies is focused on a few crucial industries

"The complete amount of investment from SOEs under the supervision of the SASAC has reached 125 billion US dollars. The majority of these funds have been put into the major industries, including petroleum, communication and steel。So I think our SOEs have already established a standard mechanism in this regard."

SASAC will also work to redirect state capital away from non-critical areas to the priority areas.

They will reduce the number of state-owned enterprises by at least one third through mergers, reducing total numbers to between 80 and 100 by 2010.

Chen Xi，CRI News