China will further open up state-controlled sectors to private capital to put the economy on a more sustainable footing.

At a meeting on March 24, the State Council, China's cabinet, pledged to allow more private investors into a series of sectors, including transportation, telecommunications, energy, financing and social welfare.

The good news comes as concerns grow over the prospects for private enterprises, which received a heavy blow from the economic downturn.

Efforts will also be made to help private companies move up the value chain and press ahead with technological innovation, as well as seek expansion through mergers and acquisitions, said the State Council.

In addition, the country will also support private companies with heavier government procurement and better services, such as streamlining the approval procedure for their investment.

Analysts believe this will help prop up productivity of the state-controlled sectors and breathe fresh life into the economy. Data from the IMF indicated returns on invested capital for average Chinese private companies is 50 percent higher than their state-owned counterparts.