Although growth of China's gross domestic product and industrial added-value continued to slow, the quality of the economy is improving, Lin said.

But analysts warned of risks from new share issuance as hundreds of companies are lining up to be listed. Reform and oversight are important in the new share offering process, they said.

Bank, aviation and petrol-chemical shares were strong on Friday.

Well-informed sources have told Xinhua that China is set to introduce its long-awaited deposit insurance scheme as early as at the beginning of 2015. A deposit insurance scheme is considered a precondition for China to free up deposit rates -- the last and most important step of interest rate liberalization in China.

Bank shares rose across the board. Five banks including China CITIC Bank and Bank of Communications rose by the daily trading limit of 10 percent.

Aviation shares performed well due to a slump in international oil prices. China Eastern Airlines and China Southern Airlines rose by the daily limit of ten percent.

Lower international oil prices are expected to reduce production cost of petrol-chemical companies. China Petroleum and Chemical Corporation (Sinopec), the country's largest oil refiner, jumped 2.08 percent to 5.39 yuan per share.

The ChiNext Index, a NASDAQ-style board of growth enterprises, closed 0.48 percent higher at 1,570.85 points.