Center

China must develop bond market: deputies

(Xinhua)
Updated: 2007-03-07 16:00

According to Chinese law, domestic companies have to wait as long as a year before being authorized to issue bonds.

"Without a prosperous bond market, China's capital markets will remain immature," said Chen Yaoxian, chairman of China Securities Depository and Clearing.

"The opaqueness of the bond market can make it attractive for illegal funds," said Ni Runfeng, former president ofSichuanChanghong Electron Group Corp.

"Take Wuxi Suntech Power Co. for example. Despite all the money available in the domestic market for corporate financing, the company had to seek out private overseas funds in order to be able to list," Ni said. "If Wuxi Suntech had been able to issue corporate bonds, that would have been a much more satisfactory solution."

"We are working on a mechanism to make it easier for companies to issue bonds," said Zhu Congjiu, general manager of theShanghai Stock Exchange.

According to the third national financial work conference concluded in January, theChina Securities Regulatory Commissionwill supervise corporate bond issues and theNational Development and Reform Commissionwill examine SOE bonds related tofixed assets investment.

But it is not yet clear who will have the final responsibility for developing the bond market.

"I think we should set up a consolidated supervision mechanism and I think securities regulatory organs should play a leading role in it," said Zhu.

Earlier reports said that Chinese corporate bond issues will approach 160 billion yuan in 2007 -- up a whopping 55 percent on the 2006 figure of 101.5 billion yuan.