NYSE Euronext (NYX) is backing efforts to launch a new equities market for small and medium-sized businesses in China as part of wider efforts to tap the potential of the country's capital markets.

Duncan Niederauer, chief executive, said in an interview that the proposed Growth Enterprise Market, or GEM, at the Shenzhen Stock Exchange is likely to be the top priority for Chinese regulators addressing a raft of capital markets reform.

The exchange operator is contributing technical expertise gleaned from its own small cap-focused NYSE Alternext US market to the initiative as China addresses tight credit conditions for smaller enterprises.

"They recognize that for a lot of the smaller companies, while there's some credit available, given their limited access to capital, the equity market gives them a pretty good opportunity," Niederauer said, fresh from his fifth visit to China since becoming CEO.

The GEM is one of the first concrete results from a raft of alliances signed by NYSE Euronext and other exchange operators with Chinese partners.

Niederauer acknowledged that proposed ventures have had a mixed record in generating real business, but said China is moving forward with long-gestating plans to open up its financial markets.

NYSE Euronext is also exploring collaboration to develop base metals index futures and other products with the Shanghai Futures Exchange, the smallest of the country's three commodities platforms.

Partnerships with the Dalian and Zhengzhou commodity exchanges have yet to bear fruit, highlighting questions about the worth of memorandums of understanding between international exchange operators and their Chinese counterparts.

Rival exchange operators Nasdaq OMX Group Inc. (NDAQ), CME Group Inc. (CME) and Deutsche Boerse AG (DB1.XE) are also seeking inroads to China via partnerships with local exchanges, but going has been slow as Chinese authorities decide just how much foreign involvement they'll allow.

"Exchanges over the years have signed lots of MOUs with lots of [Chinese] exchanges, and in most cases they haven't led to much more than good conversations," Niederauer said. "It's hard to point to tangible results."

NYSE Euronext continues to pursue a listing on the Shanghai Stock Exchange, where it hopes to be the first U.S. company listed on a planned international board, but Niederauer said early 2010 is now a more likely timetable than the previous target of late 2009.

Chinese financial regulators are considering a multitude of potential reforms, like launching the GEM market, opening markets to more institutional and international investors, inviting international companies to list in Shanghai, and moving forward with regulated derivatives.

During his visit, Niederauer advised Chinese officials that while the country's regulators might be tempted to use the crisis as a reason not to move forward with long-awaited financial reforms, China should take advantage of its relative strength in the current environment.

"They're somewhat comforted by the way the world's markets are behaving," Niederauer said. "China and the U.S. are among the countries they think will be out of this downturn quicker than most, but they're still being very conservative. They realize, as we do, that their capital markets are still fairly young."

-By Jacob Bunge, Dow Jones Newswires; 312-750-4117; jacob.bunge@dowjones.com