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The People's Bank of China (PBOC) announced non-financial companies could issue bonds with maturities of less than one year on the inter-bank market without its approval from April 15.
Instead, they would only need to register at the National Association of Financial Market Institutional Investors set up in September, the PBOC said in a statement issued late on Saturday.
It said other negotiable notes "with a certain maturity" issued by non-financial companies on the inter-bank bond market wouldn't need administrative examination and approval, either. Nor would future innovative financing tools on the market.
China has vowed to develop its capital market and broaden direct financing channels to curb enterprises' heavy reliance on bank credit.
"China's financial structure has long been unbalanced, with its direct financing underdeveloped," said the statement. "Enterprises rely on bank loans too much, bringing them fairly large hidden risks."
To boost innovation in debt offering and raise the share of direct financing could mobilize the transfer of deposits to investment and decrease credit risks of the banking system, it said.
China allowed companies to offer short-term bonds to qualified institutional investors on the inter-bank market in May 2005.
From then to the end of 2007, 316 companies issued 769.3 billion yuan (about 109.9 billion U.S. dollars) of short-term bonds, with 320.3 billion yuan of outstanding debts, statistics showed.
In comparison, short-term loans to non-financial companies and other institutions surged 1.25 trillion yuan in 2007, while middle- and long-term loans jumped 1.65 trillion yuan.