China's cabinet calls for innovation, investment

China's cabinet called Monday for stepped up innovation and an increased role for private investment in state-dominated industries, warning the country's economy was under intensifying pressure.

"With the domestic economy under increasing downward pressure, the timely adoption of effective policy measures" is needed, the State Council, or cabinet, said in a statement.

It called on industries to adopt new technologies and materials as well as upgrade facilities to help get China's slowing economy back on track.

The statement was released on the central government website following a meeting of the State Council chaired by Premier Wen Jiabao.

The cabinet called on officials to prioritize guiding private investment into key industries including railways, municipal administration, energy, telecommunications, finance, health and education.

The announcement comes as China is coping with a loss of momentum in its economy, the world's second biggest. Growth in the second quarter slowed to 7.6 percent from the same period the year before.

That was the worst performance since the world economic crisis of 2008-2009 and marked the sixth straight quarter of slowing growth as global problems, including the eurozone debt crisis, hit home.

Officials have taken various steps to boost growth, including the rare move of slashing interest rates twice within a month. They have also lowered the amount of funds banks must keep in reserve, in a bid to spur lending.

The International Monetary Fund said last week that China's economy will rebound in the second half of this year to expand eight percent in 2012 as government policies to spur growth take effect.