| Last updated at: (Beijing Time) Monday, November 19, 2001 |
Chinese Debt Market Needs Further Development |
 China's government debt market has increasingly played an important role in the Chinese economic market over the past two decades. It needs further development and Chinese government is considering adopting new measures to increase its transparency and efficiency.
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Debt Market Playing an Important Role in National EconomyChina's government debt market has progressed robustly over the past two decades and need to further develop, financial experts said Monday in Hong Kong.
Since the start of issuing debts in 1981, China's debt market, though still underdeveloped, is playing an increasingly important role in the national economy, Li Young, assistant minister of finance of China, said at a Beijing-Hong Kong government debt market forum.
Debt is not only an abundant source of funds for the growth of China's economy, but an important part of the fiscal policy used by the central government to exercise macro-control, Li said.
The Chinese government has adopted a pro-active fiscal policy for four conservative years to meet the needs of the economy.
Following the issuing of 100 billion RMB (12 billion U.S. dollars) of long-term debts for infrastructure development in 1998, the government issued 110 billion RMB (13 billion U.S. dollars) in 1999, 150 billion RMB (18 billion U.S. dollars) in 2000 and 2001 respectively.
The pro-active fiscal policy has played an important role in the economic restructuring, deflation control, and maintenance of the sustainable rapid and robust growth of the economy, said Li.
Admitting a pro-active fiscal policy will also bring more deficit and increase the amount of debt, Li noted that the Chinese government has always attached importance to the risks of debt issuing and is committed to improving the transparency and scientific management of the debts and has taken some positive measures.
Government Considering Increasing Transparency of Debt The government will take a number of measures to promote the development of China's debt market in the years to come, Li said, noting that first of all, the government "will strengthen legislation" and "step up efforts to modify the debt regulation."
The government will also promote the development of a unified debt market, increase transparency of debt issuance, adjust the term structure of debts as well as gradually introduce market- based pricing in debt insurance, he said.
Patrick Conroy, director of the Financial Sector Development Department of World Bank, agreed that "the pace of China's financial sector development over the past decade has increased at a remarkable pace."
In the past decade, China's stock market capitalization and daily turnover has grown from nothing to 5 trillion RMB (609 billion U.S. dollars) and 25 trillion RMB (3 trillion U.S. dollars) respectively in March 2001, making the Chinese stock markets the third largest in Asia after Tokyo and Hong Kong.
With the development of its securities market, the Chinese government has made progress in strengthening the regulatory framework including issuing the securities law and establishing separate regulatory agencies for insurance and securities market, said Conroy.
A Long Way to Go before Establishing Mature Security Market However, Conroy noted that China still has a considerable way to go before establishing a mature securities market. Above all, the market development effort needs to move forward with a clearly defined market development strategy, he said.
Conroy also called for efforts to build a deep and liquid market and integrate the currently fragmented market. "For this phase, the establishment of an effective government cash management program is critical," he said.
The two-day forum on China's government securities market in the new century has drawn officials and financial experts from the mainland, the HKSAR, and world organizations such as World Bank, to share perspectives of the development of China's government bond markets and prospects after China's WTO entry.
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