While legislators are still viewing the Investment Fund Law, the government will work out supporting regulations to create a sound legal and policy environment to boost the development of the fund industry and prepare for opening-up, said Zhou Xiaochuan, chairman of the China Securities Regulatory Commission (CSRC) in a conference in Beijing on Monday.

Fund management companies are encouraged to make innovations and produce more new investment products, he said.

CSRC is also considering enlarging business scope for the fund managers, including allowing them to do trust investment, based on sound risk control.

A healthy growth of the fund industry will help build a mature stock market in China, said Zhou.

While the nation's institutional investors will continue to play a leading role in the expansion of the business, China still has much to learn from foreign countries.

Zhou has promised to push hard to enable qualified foreign institutional investors to enter China's stock market as soon as possible, in line with China's World Trade Organization commitment.

Following the CSRC's release of new rules for fund management and securities joint ventures two weeks ago, many domestic and foreign fund managers and securities companies are champing at the bit, hoping to get the first joint venture licence.

Nearly 20 fund management companies, securities firms and banks in China have signed cooperative agreements with foreign asset management firms and other financial institutions. Some are in final negotiations over the establishment of fund management joint ventures and some have filed their applications.

Shanghai-based Haitong Securities Co has submitted its application to set up a fund management joint venture with Fortis Investment Management from Belgium, a company spokesman said on Tuesday.

"We have made all necessary preparations and are waiting for the approval," he said.

Some fund managers said the authorities will look into the strength of the foreign applicants for fund management joint ventures, including their asset scale, reputation and familiarity with the Chinese market.

Though it is hard to predict when the Chinese authorities will give the go-ahead to the newcomers, the attitude of the authorities is very positive, said Zhao Xinyu, an official with Beijing-based China Asset Management.

And compared with the past, it is already much easier to get approval for new fund products, he said.

(China Daily June 20, 2002)