A recent poll of seven analysts forecast that issuance of corporate bonds of maturities above one year would expand 60 percent this year from last year's 99.5 billion yuan (US$17.8 billion).

At less than 5 percent of total expected corporate fund-raising, the bond market is still small compared with those of other developed and emerging economies, but the heady pace of growth is likely to pick up further if the reforms go through.

"Expectations of a steady appreciation of the yuan and industry deregulation underline great potential for the still small market," says Dai Xu, senior corporate debt analyst at Galaxy Securities.

Analysts and several senior officials, including the head of China's central bank, have long argued that the country needed a mature corporate bond market to supplement the booming stock market and help firms cut their reliance on bank loans.

Direct fund-raising through stocks and bonds made up only about 10 percent of total corporate demand for funds last year, compared with more than 50 percent in mature markets such as the United States, Germany and Japan, official data show.

Last year's issuance of long-term debt, while at a record high, was well below the 165 billion yuan raised through domestic initial public offerings.

Moreover, the figures for debt and stock issuance both paled in comparison with the 3.18 trillion yuan in new Chinese bank loans last year, almost all of which went to corporations.

The corporate bond market got a major boost earlier this month, however, when a conference of top policymakers on financial reforms, which meets only once every five years, endorsed an expansion of that market for the first time.

That top-level support will be crucial for advancing reforms which have been delayed by turf wars and fragmented policies among the three different government bodies that supervise the market.

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