China will learn from the US subprime crisis and further strengthen supervision on financial innovation to ensure the safe operation of its capital market, the head of the country's stock market regulator said on Friday.

"We need to transfer the emphasis of supervision from the institutions themselves to the businesses they are involved in, so that we can reduce the supervision areas we neglected and raise efficiency," said Shang Fulin, chairman of the China Securities Regulatory Commission (CSRC), at the Lujiazui Forum 2008 on Friday.

He said that the market regulator should carry out in-depth research into innovative products and form an effective risk evaluation mechanism.

"The supervision should better balance the relations between safety and efficiency, and the risks of innovative products to the real economy should also be considered by each supervision institution," Shang said.

He added that the CSRC will continue work on the preparations and launch the long-awaited stock index futures and growth enterprise board in a "prudent manner".

"We will push forward construction of the financial derivatives market and complete a cross-market supervision coordination system," he said.

Analysts said that the launch of financial innovation products, such as stock index futures, margin trading systems for stockbrokers and covered warrants, should be introduced in line with the actual development of China's capital market.

"The exact time to introduce innovative products, which will be considered by supervision sectors, should be in line with the actual market development, and certain factors, such as a sound and effective regulatory framework, must be taken into full account," said Zhu Haibin, an analyst at Essence Securities.

Shang also said that the capital market should make full use of its function to provide capital support for innovation companies in their different development periods, which is in line with the government's strategy to promote innovation and adjustment of the economic structure.

The launch of the growth enterprise board on the Shenzhen Stock Exchange is at its final stages, which is expected to provide fund support for small and medium-sized companies.

Shang added that, at the current period of global resource re-allocation and re-structure, the build-up of a strong capital market will help China sharpen its competitive edge and attract more financial talent.