TIANJIN - China's financial leasing market is expected to hit 5 trillion yuan during the first half of 2016 to become the world's largest, surpassing that of the United States, [Company Incorporation USA]according to a report released Tuesday.

The number of financial leasing firms surged nearly 45 percent during the first half of this year to 3,185, and the sector is expected to maintain an annual growth rate of 30 percent during the next five years, according to the report on China's financial leasing industry released jointly by the China financial leasing association and its partners.

Financial leasing contracts stood at 3.66 trillion yuan at the end of June, up 14.2 percent from six months ago.

The surge in financial leasing activities is partly fueled by listed Chinese firms tapping the service for cheap credit, as the 21st China Business Herald reported last week that listed firms in the telecom, agriculture, pharmaceutical, energy and equipment manufacturing sectors have waded into leasing territory.

The newspaper said that listed firms have increasingly used sale leaseback -- the practice of renting assets sold earlier -- to obtain financing as much as 10 percent cheaper than bank loans.

Dozens of listed firms have built, acquired or bought stakes in financial leasing firms.

Equipment used as collateral for bank loans can only win companies funding up to 60 percent of the equipment's book value, according to the news report. In sale-leaseback, however, [Hong Kong Company Registration Guide]funding can reach more than 80 percent.

About one-fourth of China's financial leasing activities take place in the eastern Chinese coastal city of Tianjin, and its Dongjiang bonded port seeks to spearhead offshore financial leasing using preferential policies for the Tianjin free trade zone.