The China Securities Regulatory Commission (CSRC) has named the upgrading of the quality of listed companies as its top pursuit in the next five years, according to CSRC Chairman Zhou Xiaochuan Thursday.
The regulatory authorities must strive to further improve the accounting standards of these companies, Zhou said at the China Development Forum 2001 which kicked off Thursday in Beijing.
"The quality of listed companies is the basis for the further development and reform of China's securities industry," he said. "At present, the priority for listed companies is to set up better corporate governance systems."
But China's accounting standard still does not align with the internationally accepted one, which will hinder the sector's further development.
"One problem with listed companies is that some of them provide fake accounts and information to fool investors."
Foreign investors who are interested in Chinese stocks want Chinese companies to use international accounting standards and Chinese companies which want to list abroad are required to use international standards too, he said.
"We must upgrade our accounting system to adapt it to the international standard."
China's domestic accounting firms, however, are still weak compared with their foreign big-name counterparts, he said.
"I think the accounting sector should introduce international co-operation and competition."
He said improvement of the quality of listed companies is vital for the protection of China's small and medium-sized investors.
In the next five years, the CSRC will enforce the supervision of the market and firmly crack down on illegal behaviour including insider trading and market manipulation, he said.
More securities rules, regulations and laws will be promulgated to cement the legal framework and more advanced technologies will be adopted to facilitate this supervision.
Zhou also talked about the development of issuance of corporate bonds. To stimulate the issuance of corporate bonds, the accounting standard must be improved and the credit-rating market should be cultivated.
China still has no credit-rating companies that enjoy a long history or international fame and that can thus be trusted by investors, he said.
(China Daily 02/16/2001)
