Launched in 1991, the dollar-traded B-share market is designed as a channel for foreign investors to invest in China's stock market. But as the country's foreign investment channel widened and foreign reserves increased, trading in the first and secondary market went sluggish.

The market, which opened to domestic investors in 2001, had its latest IPO back in 2000. The B-share index plunged about 8 percent on April 27 and 28 on concerns that the planned international board may be launched sooner than expected.

"A preferable way to deal with the B-share market is to tweak the market a little bit and merge it into the international board, but according to the current timetable the move is unlikely," Wang said.

"The B-share market will become a bigger headache with the advent of the international board."

Sun Lijian, vice-dean of the school of economics at Fudan University, focused on the stability of the nation's financial market.

"Launching the international board has a similar effect as further opening up the capital account, which will expose the country to more international capital flow and greater risk," he said.

"Making the yuan more convertible under the capital account has its benefits but it will also incur more speculative activity and financial instability."

Sun suggested that regulations and supervision should keep pace to track how foreign companies use their funds through the international board and efforts should be made to guard against speculative activity.

Sun said Chinese regulators lack experience in supervising big international companies.

"They can learn from the regulatory frameworks from other major exchanges, but the problem is whether they can ensure sound enforcement. What I am worried about is the regulators allowing double standards in favor of foreign companies to attract them to list on the board," said Sun.

"Another issue is once disputes occur, which law should be enforced? Chinese law or the law in the company's home country?"

Lu Zhengwei, chief economist with Industrial Bank, said the launch of the international board could also bring more outside pressure on China to revalue its currency.

"The appreciation of the yuan will help people change the yuan they are holding into foreign currencies, so they will definitely want the renminbi to appreciate," he said.

Another issue that has attracted more attention from investors is pricing, said Wang.

"Big foreign companies generally have a lower price-earnings ratio than domestic companies listed on the A-share market," he said.

"If the shares' valuation is too low it will cause instability in the A-share market by draining capital from it. If the valuation is too high, investors are threatened with losing money. Measures have to be taken by regulators to give foreign companies' shares a reasonable valuation."

Despite these potential problems, it is necessary for Shanghai to allow foreign companies to get listed if the city wants to become an international financial center, analysts said.

"It's a step Shanghai and China must take in their process of financial internationalization. There is no other financial center where foreign companies cannot raise capital from the stock market," said Wang.

Meanwhile, many foreign companies in China have a lack of funding channels. Letting them directly raise capital can help them speed up their development in China, a market that is growing fast, he added.

"It's not about whether to launch the board or not. It's about how and when to launch it," said Fudan University's Sun.