CSRC Invites Public Opinion on Methods to Reduce State Share

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Last updated at: (Beijing Time) Monday, November 26, 2001

CSRC Invites Public Opinion on Methods to Reduce State Share

The China Securities Regulatory Commission (CSRC) is collecting suggestions from the public concerning measures to reduce state shares by 10% on the country's stock market. The CSRC declared to temporarily halt the proposal of reducing state shares by 10% on October 23, which sparked fierce debate in trading circles. Any useful suggestions are welcome to be sent to this address.

The China Securities Regulatory Commission (CSRC) is collecting suggestions from the public concerning measures to reduce state shares by 10% on the country's stock market.

Historical Problems Deep-rooted

The issue of reducing state shares by 10% is particularly troublesome due to historical problems. The state shares play a dominant role in the Chinese stock market and the total state shares are not currently in circulation in the market at all.

The state shares that are not in circulation do no good to the accumulation of social security funds. Thus the government implemented the proposal of reducing state shares by 10% to activate the stock market and to amass social security funds. However, it developed in such a way that the country can now make more profits at an extremely low price before Initial Public Offering. Comparatively it has harmed small share holders' interests.

Proposal of Reducing Halted

The CSRC declared to temporarily halt the proposal of reducing state shares by 10% on October 23, which sparked fierce debate in trading circles.

Many experts say the implementation of the proposal is a must, but the problem lies in how to reduce the state shares in an appropriate fashion. Securities Law expert Wang Lianzhou said China should carry out the plan under legal protection and supervision, while guaranteeing the transparency of market operation.

Address for Public Opinion

CSRC said any useful suggestions are welcome to be sent to the following address: the China Securities Regulatory Commission (CSRC) Planning Committee, 16 Financial Street, Xicheng District, Beijing.

Xiang Huaicheng: State Share Reduction Beneficial to Stock Market

1, it is an objective requirement for solving the problem of shortage of social insurance funds and improving insurance system;

2, to reduce part of the state shares may relevantly lower the proportion of the state shares and make the equity rights of the listed companies more diversified.

3, the conversion into cash can help amplify the function of the state-owned economy, raise its controlling, influencing power and driving force, thereby contributing strategically to the readjustment of the state-owned economy.

4, part of the capital can return to the stock market since it is collected for setting up social insurance funds which in turn will enter into the capital market once entrusted to be operated by professional investment fund management institutions.

More Details

State Share Sale Program, a Problem of How but not Whether, Economist