China's securities regulator triggered a stock market rally yesterday, pledging not to dump state shares despite needing to raise cash for the social security system. China Securities Regulatory Commission chairman Zhou Xiaochuan gave the latest official promise that market stability would not be sacrificed to reform. That set off a bout of hectic trading and a rise of about 7 per cent for the composite indices in Shanghai and Shenzhen, the biggest one-day advance since October 23, when the state last announced it would not sell shares. Mr Zhou was quoted in official newspapers as saying: 'Any market reform measures can only be carried out based on market stability and the protection of the rights of shareholders. We must correctly assess the importance of the securities markets to the national economy, and protect and take care of these markets.' Newspapers quoted Mr Zhou as saying market regulation was a long-term issue that had to be undertaken gradually and according to domestic circumstances. Mainland share markets have been buffeted by Beijing's on-again, off-again plans to sell some of the state's huge shareholding, which accounts for two-thirds of all market capitalisation. The shares are not tradeable at present, but a sell-off would put them on the market and depress prices. A plan to sell shares and require state companies to contribute 10 per cent of initial public offerings sent the markets tumbling last year - until the policy reversal was announced on October 23. More recently, investors have been unnerved by efforts, supported by the finance ministry, to put those reforms back on track. In December, Premier Zhu Rongji said Beijing should find a way to resolve the problem of raising cash needed for key programmes such as social security and reducing the state's role in the market without jeopardising the interests of shareholders. Policymakers had sought comments from the public and came up with a list of possible methods. A weekend announcement appeared to suggest that public consultations pointed to public bidding based on the eventual full flotation of the state's holdings in listed companies. That unnerved investors despite official damage-control efforts that described it as a preliminary plan. Until yesterday's rebound, Shanghai's A-Share Index had lost 15 per cent this year and Shenzhen's had slid about 17 per cent. Stock analysts and brokers said it was unclear whether the benefits of the latest statements would be long term. A broker at Galaxy Securities said: 'This is an attempt to hold the line and give the market a bit of confidence. But this is very hard to do. It is not something that can be changed by just a few remarks.' Other analysts were also cautious. China Securities economist Zhu Jianfang said: 'This is a very sensitive topic. There has not been much change in market fundamentals but prices will closely track policy developments.'