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World Bank Report: China's Stock Market Promising
Latest semi-annual report released by the World Bank shows that the prospects of China's recent macroeconomic situation augur fine. Its GDP growth is estimated to reach about 7 percent in 2001. In the face of a further decline in trade volume and worsening trade conditions, high-level investment and private consumption, following a restructuring of enterprises, financial institutions and labor market, will become the main force in maintaining a robust growth. In addition, China's entry of the WTO and the "effect of Olympic bid success" is expected to play an positive role in promoting investment and expectations so as to offset the negative influence of the US "9.11" Attacks. The government possibly will keep on taking a moderate expanding fiscal policy to ensure employment and consumption growth in the coming several years.
The semi-annual report by the WB thought that China's stock market had achieved impressive progress as a result of stringent governance and extensive debates conducted on problems found in stock market. Present China stock market has more than 50 million individual investors. In recent days, market manipulation and fraud exposed by the media had aroused intense complaints from the public thereby attracted more attention to the companies in straightening the structures. Currently, the structures of the companies have been given the first priority for considerations by the governments at different levels. China Securities Regulatory Commission (CSRC) particularly decided to frame mandatory criteria for listed companies in line with the principles governing stock market operation put into effect in November 2000.
Besides, the CSRC also promulgated draft regulations on independent trusteeship and solicited opinions and suggestions, following which all boards of directors of listed companies are required to practice independent trusteeship. It is carried out in step with an all-round effort in improving the ownership structures of Chinese domestic state-owned enterprises.
Meanwhile, the CSRC kept on adopting measures to control illegal market operation and took mandatory measures to some securities companies. Sources say that the government has undertaken to strike down the banks that finance for stock market investment. This phenomenon is obviously seen in the deals of quite a lot of stocks. With the implementation of new regulations promulgated on March 29 which demands securities companies to take more responsibility for the truthfulness of the newly issued and added stocks, the speed of the issuance work of new stocks will be slowed down.
With regard to Chinese financial institutions, the report said that all related government bodies are busy making evaluations on the progress of the reform taken in financial institutions and giving suggestions on their reform direction as well. This work should be finished by the yearend. By then, a blueprint on the future financial system reform with a consensus reached will possibly take shape. The work refers to a series of major challenges including state-owned commercial bank reform and the improvement of supervision on banks. The challenges to the government are to implement the work in the forming of common consensus towards further financial reform, long-term overall strategy and mid- and short-term preferential targets and actions.
By PD Online Staff Du Minghua
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