BEIJING - Chinese Premier Wen Jiabao has urged the nation's financial sector to do more to support entrepreneurs and industry and strengthen its capability in supporting the real economy.

The real economy is defined as production activity in sectors such as agriculture, manufacturing and service, which are the basis of a country's GDP.

"In future, China will stick to the principle of having the financial industry serve the real economy to prevent virtual bubbles from inflating the economy," Wen said at the National Financial Work Conference on Saturday in Beijing.

Analysts say reform is needed in China's banking industry to make the economy more efficient by increasing lending to entrepreneurs and letting market forces determine interest rates and who can obtain loans.

Chinese entrepreneurs, especially exporters, have been battered by slumping global demand amid European debt crisis and U.S. economic slowdown. Thousands of small companies have closed and the survivors have laid off workers.

Wen promised to "allow market forces a greater say in deciding fund allocation and to more clearly define the government's role" at the two-day conference.

Credit priorities will be given to the country's key infrastructure projects under construction, the affordable housing projects as well as small- and micro-sized enterprises that meet the state industrial policies, according to the premier.

By September 2011, China’s financial institutions had extended 10.1 trillion yuan ($1.6 trillion) to small businesses, 19.1 percent of the total loans.

The meeting, held every five years, maps out the development plans for the financial sector in the period in between. Similar meetings were held in 1997, 2002 and 2007.