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China has limited plans to sell more than US$200 billion of government shareholdings in listed firms, telling companies to specify minimum stakes to be kept in State hands for the first time.

The move should ensure State control in sensitive sectors and reassure investors nervous about an impending flood of stock.

Controlling official shareholders in firms that join the program must now propose a minimum stake to be kept in State hands, which must be approved by regulators, according to regulations published in the Shanghai Securities News on Saturday.

According to the regulations, the Central Government should also retain controlling interests in companies in “pivotal” industries affecting national security or the economy. No specific sectors nor companies were specified.

“The idea of a minimum State shareholding is a transitory one,” an official with the State-owned Assets Supervision and Administration Commission was quoted as saying, “so nontradable State-held stock will be floated, but it doesn’t mean those shareholdings would be sold on markets all at once.”

The government is picking its way cautiously through its latest version of a reform that triggered panic in markets the last time it was tried in 2001, but which regulators deem crucial to enhance transparency and boost corporate profitability.

It revived the program in late April to unload its nontradable shares, which are a legacy of a centrally planned economy and, comprising two-thirds of stock exchanges’ capitalization, have weighed on markets for years.