Beijing  - China plans to loosen bank lending rules and offer tax breaks to support smaller businesses through the global financial crisis, state media said Wednesday.

The State Council issued a directive loosening the rules for bank loans Tuesday with the aim of helping smaller businesses to overcome difficulties in raising funds, the influential Caijing financial magazine reported.

The directive also urged central and local government departments to set up funds for "guiding" investment in small businesses and to channel capital into China's financial markets, the magazine said.

The government would also cut the 2010 corporate income tax rate from 25 per cent to 20 per cent for businesses with a taxable income of under 30,000 yuan (4,400 dollars).

Additional measures included encouraging private capital to finance small businesses and promoting corporate training for 1 million managers in small companies over the next three years, other reports said.

"More actively effective measures are needed to help the ailing small and medium enterprises out of their difficulties," the State Council said in a statement on its website.

It said small businesses still faced "serious challenges" in overcoming the effects of the financial crisis.

Some small businesses with limited borrowing opportunities had turned to illegal loan sharks in recent months, the Shanghai Daily newspaper said.

The central government is to also cover part of banks' bad loans to small businesses.

China's ruling Communist Party said Friday that it would continue to prioritize rapid economic growth and warned that the country had still not regained stability since the global downturn.

China faced a "crucial period" in maintaining economic growth with "many uncertain factors" domestically and internationally, the party's elite 370-member Central Committee said at the end of a four-day meeting.

The Central Committee said China would keep its pro-active fiscal policy and "moderately easy" monetary policy, while strengthening efforts in restructuring the economy, innovation, reducing energy consumption and environmental protection.

Despite falling exports, most analysts said they believe that China's 4-trillion-yuan (590-billion-dollar) stimulus package helped to put it on track for growth in its gross domestic product of up to 8 per cent this year. (dpa)