The debate over the need for a second board stock market in China has re-emerged at the ongoing National People's Congress (NPC) session in Beijing.

Supporters of a second board stock market - which, with less strict listing requirements than the main board, could help small high-tech companies raise funds - lobbied strongly for their idea during the meeting.

They appealed to the central government to approve the opening of the market, or at least allow listed companies to offer new shares on the main board of the Shenzhen stock market, where a second board was to be located.

Initial public offerings (IPO) in Shenzhen were suspended about two years ago when the second board was close to being realized.

Policy makers decided to mothball the plan at the last moment. They were worried about the risks involved and the parlous state of second boards around the world, including the NASDAQ in the United States.

But NPC deputies from South China's Guangdong Province, where Shenzhen is located, spearheaded the new push for the second board.

"Opening a second board would be crucial for the Shenzhen market in attracting investment and competing with Shanghai," Shui Pi, a renowned stock market columnist, wrote in the China Business Times.

The Shenzhen market has long been an underdog to the Shanghai bourse. The problems Shenzhen have experienced in opening the second market have hurt the city economically - many financial institutions are reportedly leaving this special economic zone.

Some economists and former government officials supported Guangdong's motion. They included Li Yining, former chairman of the NPC Financial and Economic Committee, and Wu Jinglian, a researcher with the State Council Development Research Centre. Both are members of the Chinese People's Political Consultative Conference (CPPCC).

But the voice of those who oppose the idea was also heard.

"For today's China, opening a second board is just a pipe dream," said Justin Lin Yifu, a professor with Peking University.

Although a second board would give technology firms access to capital, the market also involves great risks. In addition, few Chinese firms planning to go public at the second board have technology that really deserves a place there, said Lin, who is also a CPPCC member.

He said the problem of funding shortages among small firms can be solved by establishing more small banks.

Columnist Shui Pi said that 70 per cent of the second board listing applicants were established after the plan to set up a second board market was announced three years ago. He believed many are gamblers who aimed to cheat stock investors by issuing an attractive prospectus.

China's securities watchdog made no significant comments on the debate.

Shang Fulin, chairman of the China Securities Regulatory Commission, said they will "do serious research" on the issue.

(China Daily)