FEARING a recurrence of rioting by frustrated investors, the head of China's securities watchdog has called for a crackdown on malpractice to ensure the smooth issue of stocks worth five billion yuan (about HK$6.7 billion at the official rate) this year, according to Xinhua (the New China News Agency). Liu Hongru, chairman of the China Securities Regulatory Commission, warned that careful steps should be taken to prevent chaos and corruption in stock issuing procedures. Mr Liu was speaking at a Beijing conference on ways to solve problems in underwriting share issues. ''The riots in Shenzhen cannot be allowed to recur this year,'' the agency quoted Mr Liu as saying. ''We've made up our minds that we'd rather spend more time and money to guarantee no disturbances occur.'' Mr Liu was referring to violence that erupted last year in Shenzhen, where hundreds of thousands lined up in blistering heat to buy application forms for shares in newly listed companies. The crowd rioted when they found that some officials had kept the forms themselves instead of selling them to would-be investors. Mr Liu said China would use fairer means to issue the new shares this year. Cities including Qingdao, Shanghai, Hefei, Wuhan and Shenzhen had started their share issues by releasing an unlimited number of application forms before holding a lottery to decide who could buy the shares, he said. Previously, the number of forms was limited, causing frantic demand and long queues. In Guangzhou, the week-long sale of forms to the public had ended on Tuesday without incident. More than 60 million forms were sold, a Guangzhou official said. The forms allow holders a chance to buy into a public offer of 226.37 million A shares of five Chinese companies to be listed in Shenzhen and Shanghai. Government officials said the anticipated long queues outside distribution stations had not occurred and he described the process as ''smooth''. Observers said the cool response was because the unlimited number of forms made it impossible for investors to calculate the success rate. The stocks were also priced too high for investors to make a profit, they said. Officials were also banned from buying the stocks issued by the five big Guangzhou enterprises. Mr Liu said essential but poorly financed basic industries would be given priority for stock exchange listings. Healthy firms in the energy, communications and raw materials sectors would be selected for listing ahead of other industries. ''The share issues will help these companies raise cash for development,'' Xinhua quoted Mr Liu as saying.