China Securities Regulatory Commission or CSRC head Xiao Gang said the government's planned reforms for share sales will bolster the role of market forces. In a speech in a conference held in Beijing, Xiao said the answer to all reforms in the capital market is shifting to a registration system instead of IPO approval. He said that under the new rules, the role of regulators will be able to ensure that the firms meet the disclosure requirements instead of giving their approval for the share sale.

Xiao's speech followed a promise made by China's top leaders this month to make markets more decisive in distributing its resources, according a report by Bloomberg. The report added that this was China's largest undertaking of economic reforms since the 1990s.

Xiao said that the capital markets in China were not dictated by the forces of the free market but it decisions are still influenced by the administration. It also required too many approvals even as the resource allocation gets distorted by speculation on new stocks. He said instead of being merely an approver, the CSRC must turn itself to become a true regulator.

The current rules for initial public offerings dictate the listing committee of the CSRC to evaluate the applications filed for a public share sale. The committee then decides whether the firm is fit to be listed. However, the temporary ban on IPOs was placed in October 2012, which left over 700 companies still waiting for approval from the regulatory agency.

Xiao said there must be a gradual shift to the new system in order to prevent market shocks. The CSRC is also formulating rules to decrease misconduct before it lifts the freeze on public share sales. The policies will provide for heavy penalties.

Xiao also revealed that China will be opening up more of its capital markets since the existing Qualified Foreign Institutional Investor channels are too constricted.