Abstract: By using the amount of the fund raised and the industrial added value in China’s capital markets from 1994 to 2009 as the samples, this paper tests the relationship between the capital market and the industrial structure upgrade with the methods of co-integration test and gray correlation analysis. The results indicate that there exists a (1, 1) order co-integration relationship between China’s capital market fund raising rate and the rate of industrial structure upgrade, which means that there is a long-term stable equilibrant relationship between those two rates. The result of the gray correlation analysis shows that the relevance between the amount of China’s stock market financing and the industrial structure upgrade has the highest degree, followed by the bond market, and the long-term bank loan market is the lowest. This indicates that the direct financing represented by equity financing plays an important role in the process of industrial structure upgrade.

Key words: capital market；industrial structure upgrade；gray correlation analysis