The State Council, China's cabinet, said in a wide-ranging statement of policy principles released on Friday night that China should build a new share listing system centred on greater disclosure of information.
Issuers and intermediaries should be responsible for the truth, accuracy, completeness and immediacy of information, the council said.
The statement also said it is important to build and perfect a market-oriented and diversified delisting system.
Listed companies can delist on their own through mergers and acquisitions or through the National Equities Exchange and Quotations, China's third national equity exchange.
Those with fraudulent issuance will be delisted by force.
"The statement improves the role of the stock market and strictly regulates entries and exits, which makes the platform more innovative and effective," said Guan Qingyou, vice-president of Minsheng Securities Research Institute.
According to the statement, China will increase investment quotas for qualified foreign institutional investors and qualified domestic institutional investors. The domestic capital market will be more open to foreign individual investors as well.
Policies of foreign exchange and customs supervision will be carried out to support the opening-up of the Chinese capital market to foreign investors, the statement said.
It also said China will develop a system for direct bond issuance by local governments. They currently are forbidden to directly sell bonds or borrow from banks but have skirted the ban by borrowing through opaque special-purpose vehicles, or "shadow banking".
On derivatives, the cabinet promised to develop more varieties of commodity futures and options, commodity indexes and tradable carbon emission credits.
"The market did not expect the statement, so it should be a piece of good news," said Hong Hao, a managing director and chief strategist at Bocom International Holdings.
"Although many encouraging policies have been implemented by the securities regulator, it is more meaningful when put forward by a higher authority."
"The move shows that Beijing regards the developing capital market as a focus and will create better conditions for the reform," said Deng Ge, a spokesman for the China Securities Regulatory Commission.