In another move towards making itself a financial center, north China's port city of Tianjin has applied to the State Council to establish an over-the-counter (OTC) market rather than a third stock exchange for the Chinese mainland.

"We have no plan for a third stock exchange. The OTC market will mainly deal with equity transactions of unlisted public companies, but not trust products and industrial funds", said city vice mayor Cui Jindu, at a finance forum in Beijing.

"The OTC market is not a property rights market", said Cui.

In an OTC market, securities are traded by dealers who negotiate directly with one another over computer networks, rather than on a centralized exchange. In general, a stock is traded over-the-counter because the company is not big enough to meet the requirements for exchange listing.

Meanwhile, Tianjin's plan to set up the Bohai Industrial Fund is being scrutinized by the State Council, or China's cabinet, and is expected to be approved soon, said the vice mayor, without revealing exactly when the fund would be established.

Cui said the fund was primarily a means of equity investment and would be listed for public trading after its establishment.

The fund, which will be capped at 20 billion yuan (2.5 billion U.S. dollars), will provide Tianjin and the Bohai Sea Rim with new channels for direct fund raising for modern, innovative manufacturing, high-tech projects, and infrastructure construction.

Competition among different regions is mainly in the service industry, especially in the finance sector, said Cui, adding that currently China has no other financial and capital markets besides Beijing, Shanghai and Shenzhen of southern Guangdong Province

China has publicized plans to build Tianjin into a third economic powerhouse - after Shenzhen and the Pudong New Area in Shanghai - by introducing a range of reforms in the city's Binhai New Area.

The reforms include facilitating direct fund raising, building a capital market, widening the scope of banking business and boosting financial cooperation between the Chinese mainland and Taiwan.