In his appeal to the Beijing No 1 Intermediate People's Court, Xie Baisan, an economics professor at the university in Shanghai, said the ministry broke its commitment to investors when it cancelled the circulation and mortgage rights of registered treasury bonds in August.

The ministry issued its seventh batch of treasury bonds with 20 years of effective term this year for both Shenzhen and Shanghai stock markets in late July at a total value of 24 billion yuan (US$2.9 billion).

The ministry's notice about the bond distribution said "the bonds can be traded on Shenzhen and Shanghai stock markets after issuing."

But after the bond sold out in August, the ministry released another notice postponing the trade of treasury bonds on stock markets indefinitely and canceling the buy-back deals of the bonds.

The repurchase deal of treasury bonds guarantees that the bonds can be mortgage loans, according to Professor Xie.

He said the ministry violated the Regulation of State Bonds issued in 1992, which ensures treasury bonds' mortgage rights.

In his appeal, Xie urged the ministry to cancel its second notice and apologize to investors.

The Beijing court said it will investigate and decide within seven days whether to accept the petition. Ministry of Finance officials said yesterday that they knew they were being sued by Xie but denied further comment.

Since 1998, when the Chinese Government began carrying out a proactive fiscal policy, the country's bond market has experienced tremendous expansion.

(China Daily December 9, 2001)