Chinese financial regulators announced on Wednesday that preferential financial policies would be applied in Kashgar and Huoer Guosi in the Xinjiang Uygur autonomous region.

To facilitate the two special economic zones, the government will provide more credit support in the areas, promote innovation of cross-border yuan usage, and encourage the establishment of various financial institutions in the two places, according to a statement posted on the central bank's website.

"And the authorities would provide support for the two zones in terms of direct financing, insurance reform and innovation, foreign exchange management, settlement and clearance," it said.

The statement was jointly announced by the People's Bank of China, China Banking Regulatory Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission.

China announced in 2010 plans to spur economic growth in Xinjiang. Kashgar, a pivotal freight station in western Xinjiang, and Huoer Guosi have been chosen as locations for planned special economic zones modeled on Shenzhen.

With a borderline of 888 kilometers, Kashgar connects China with Tajikistan, Afghanistan, Pakistan, Kyrgyzstan, Kazakhstan, Turkmenistan, Uzbekistan and India.

China planned to invest 50 billion yuan from 2009 to 2013 to build 13,000 projects in the Kashgar region.

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