China's State Council, or the Cabinet, said yesterday that more efforts would be made to encourage enterprises to upgrade technology and engage in independent innovation.

It also said there would be policies to promote merger and acquisition among enterprises.

The policies were clinched at an executive meeting of the State Council, presided over by Premier Wen Jiabao. The meeting was held to discuss measures to address difficulties faced by enterprises and promote economic growth and deliberate plans to reform finished oil pricing mechanism and fuel taxes and fees.

According to the meeting, plans would be drawn up to help some key industries, including steel, auto, ship manufacturing, petrochemical, light industry, textile, nonferrous metals, equipment manufacturing and information technology.

The meeting urged banks to increase credit supply to help small and medium enterprises overcome difficulties.

To offset adverse global economic conditions, the State Council on Nov. 9 has announced a 4 trillion yuan (US$585.7 billion) stimulus package to boost domestic demand. This will be combined with other boosting measures, such as loosening credit conditions and cutting taxes.

The huge amount of money will be spent over the next two years to finance programs in 10 major areas, such as low-income housing, rural infrastructure, water, electricity, transportation, the environment, technological innovation and rebuilding after several disasters, most notably the May 12 earthquake.

The State Council also discussed the reform plans of finished oil pricing mechanism and fuel tax and fees at the meeting. It decided to make public the two draft reform plans to solicit public advice.

According to the National Development and Reform Commission, the government has been studying a fuel tax to replace the current road tolls imposed upon vehicles.

The long-awaited fuel tax and fee reform was first proposed in 1994.

The State Council meeting also reached decisions to increase the storage of key materials and resources, accelerate development of the service industry and enhance measures to promote employment and social security.

More education and job training would be provided among the government's efforts to increase employment. This education and training should also cover the lay-off workers and rural laborers who returned from cities because of unemployment, according to the meeting.