China is stably implementing its split share reform. By December 12, 339 listed companies have completed or started the reform. The market value of these companies accounts for 30 percent of the overall market value of companies listed in Shanghai Stock Exchange and Shenzhen Stock Exchange.
China will intensify supervision over the market from four aspects in the future.
--Actively develop the capital market. A profound and effective capital market is crucial on the way to realizing China's modernization and enhancing the comprehensive national strength. Whether risks in operation, innovation and bankrupt can be dissolved through enough direct financing can help avoid bad bank assets accumulation and has a direct bearing on national economic and financial security.
--Put emphasis on improving market functions. Giving play to the basic functions of the capital market can make the state macro control more flexible and effective, urge enterprises to enhance their management and competitive strength and offer investors opportunities to increase wealth. The perfection of the basic functions of the capital market should be done through basic policy construction. Intensify the mechanism of the survival of the fittest and guide listed companies to attach more importance to system reform than financing and to returns than investment.
--Continuously strengthen building of infrastructural systems to guarantee the market functions. While implementing share merge reform actively and steadily, we need to solve deep-rooted structural problems in the market to prop up stable market operation.
--Actively promote market innovation to boost capital market and raise its efficiency. In order to increase the ratio of direct financing, we need to actively encourage market innovation in three aspects: 1) establish multi-level capital market; 2) develop new financial products in the favor of institutional investors; 3) continuously improve transaction settlement system to provide a safe, highly efficient and suitable service.
(China.org.cn by Yuan Fang and Tang Fuchun, December 21, 2005)
