"China is closely following the issue and adopting measures against problems" companies may have in overseas futures trading, Li said.

China's economy has more than doubled in size in the past decade, turning the country into the world's biggest user of commodities. Disclosure and risk controls at state-owned agencies haven't kept pace with the boom, according to analysts and traders.

The country may have lost as much as US$300 million (HK$2.3 billion) this year after Liu Qibing, a trader for the State Regulation Center of Supplies Reserve, sold as much as 130,000 tonnes of copper he didn't own in the belief prices would fall. Prices subsequently rose to records.

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The wrong-way bets marked the second time in a year that a Chinese company had got into trouble in commodities. The chief executive officer of China Aviation Oil (Singapore) Corp, a government-owned fuel supplier, lost US$550 million in oil trades last year.

China has approved requests by Luoyang Copper (Group) Co, one of the country's biggest copper processors, and four other companies to trade metal and other futures overseas, Zhao Jufeng, an official at the China Securities Regulatory Commission, said in November.

They joined Jiangxi Copper Co, PetroChina Co and 19 others allowed to trade futures abroad since the government lifted a ban in May 2001.

China's market regulator restricts companies' positions in overseas futures markets to the type and volume of commodities they buy and sell in cash markets, a move aimed at curbing speculation. The State Regulation Center of Supplies Reserve, where Liu Qibing worked, did not come under the market regulator.

Separately, Li said the asset regulator would urge state-owned companies controlled by the central government to list overseas first before listing on the domestic markets.

"The overseas markets are more regulated and Chinese companies can benefit and learn to fine-tune corporate structure and governance," Li said. "So listing overseas first and then coming back to list will also benefit the domestic stock market."

The government is revamping the industry to bolster confidence in the country's stock markets after four years of decline. China wants to lure money back to equity markets, whose value has halved from record highs reached in June 2001. Investors have been reluctant to buy shares partly because of the ailing securities industry, which is under scrutiny for mismanagement and misappropriation.

China National Coal Group Co, China's second-largest coal producer, is ready for its initial public offering next year, Li said, without saying where the listing will take place.

The government also plans to issue stock option rules in January, Li said.

Combined profit of the 169 companies controlled by the commission rose 24.7 percent in the first 11 months of the year to 565 billion yuan (HK$542 billion) from the year earlier. Combined revenue rose 21.8 percent to 6 trillion yuan.

The benchmark Shanghai Composite Index has lost 8.8 percent this year, and is the world's fourth-worst performer among 80 stock benchmarks tracked by Bloomberg.

China in May halted approval of initial stock sales to accommodate a government program to dispose of about US$210 billion of non-tradable state- owned shares in domestically listed companies.

The government revived a twice- scrapped program in May to convert about $210 billion of nontradable, mostly state-owned, stockholdings in public companies into common stock that can be traded on stock exchanges.

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