HONG KONG/BEIJING, Jan 18 (Reuters) - China's top banking regulator said on Monday it was incorrect to label China's economic system as being "state capitalism", in the wake of recent criticism of China's increasing control over the private sector.

"The main basis (of the accusation) is that China holds a strong state-owned economy, and its national industrial policies have distorted market relations." said Guo Shuqing, head of China's Banking and Insurance Regulatory Commission (CBIRC), according to the CBIRC's official transcript of Guo's speech at Hong Kong's Asia Financial Forum.

"That is a big mistake," he said.

Guo is also the chief of Communist Party Committee at the People's Bank of China (PBOC), a role that ensures that the central bank's decision-making is subject to the influence and thinking of the party and the government.

Guo's remarks come amid growing caution about China's tighter regulations over the private sector, and the dramatic collapse of fintech giant Ant's $37 billion IPO in November.

China's private economy now accounts for 60% of the country's total economic activities, thanks to market reform since the late 1970s.

China's national industrial policies were overall in line with its market-oriented reforms, Guo said.

He also said China's state-owned enterprises shouldered broader social responsibilities, paid almost twice as much tax as private companies, and were, he emphasised, financially independent from banks.

Lastly, Guo rebutted the criticism that the competitiveness of Chinese products was a result of the sacrificing workers' interests, and said their rights were protected by law. (Reporting by Alun John in Hong Kong and Cheng Leng in Beijing; Editing by Raju Gopalakrishnan)