GUANGDONG expects to set up a regional stock exchange which will complement the Shenzhen stock market, says Guangzhou mayor Li Ziliu. Mr Li said the People's Bank of China had been deliberating opening the Guangzhou Regional Securities Exchange Centre since last summer. The Shenzhen authorities are also considering co-operating with the new stock exchange to facilitate more flexible trading within the province - a proposal which needs to be approved by the State Council, the country's Cabinet. 'We have received some positive responses from them [these institutions] recently and expect to get an approval by spring,' Mr Li said in Hong Kong yesterday. It is understood a joint operation between the Shenzhen and Guangzhou stock markets will provide a means for Guangzhou's citizens to trade securities listed in Shenzhen and vice versa. Mr Li said under the proposal, companies from all over China could apply for a listing on the new exchange. 'Co-operation will bring about competition and thus help upgrade our financial elements,' he said. 'This will certainly enhance industrial development in the province.' However, he said the new stock exchange would not take over the existing Shenzhen market. Mr Li said Guangzhou had 28 securities companies providing brokerage services on the Shenzhen and Shanghai stock exchanges. The turnover of negotiable securities amounted to US$6.29 billion. Mr Li said that apart from the new exchange, Guangzhou had other plans to transform itself into an influential financial centre. The city intends to move all factories to its suburbs, or other cities such as Panyu and Qingyuan, and provide more land to develop commerce, finance and tourism. Mr Li said the central bank had backed the city to improve its telecommunications network. Guangzhou also intends to approve plans by 13 foreign banks to open branches within two years. Seven foreign banks have set up their branches in the city so far. 'Yes, Guangzhou will compete with Shanghai, which is superior in the financial sector. Competition will always bring about progress,' Mr Li said. He also said that in the next 10 years, Guangzhou would spend $7 billion to launch its plans, with 40 per cent coming from foreign investment. Meanwhile, the deputy head of the Economic Affairs Department of Xinhua, Liu Zhiqiang, yesterday urged the Chinese Government to relax credit for infrastructure projects but tighten funding for property developers to sustain stable economic growth. 'The austerity programme should not be a short-term policy which lasts for a year or so. Our economy should be adjusted all the time,' he said. He said China had been successful in fighting inflation in the past year, despite expectations that inflation for the year would run to 20 per cent in December. Mr Liu said in order to solve the problem of triangular debts, the government should speed up the restructuring of ailing state enterprises and keep investment at an optimum level.