SHANGHAI Nov 16 China may reduce the influence
of the state on stock markets as part of its sweeping reform
agenda, including by making it easier for companies to list
their stocks and making management of state-owned enterprises
more accountable to shareholders.
In a pointer to a winding back of government influence in
initial public offerings (IPOs), detailed plans released on
Friday night included a pledge to "push forward stock issuance
registration system reform" -- a term previously used to refer
to the listing process.
In developed economies, the process largely requires a
company to register and go through a rigorous audit before
investors make a decision on whether or not to buy the stock.
To list in China requires the approval of the China
Securities Regulatory Commission (CSRC). An early test of the
leadership's commitment to reform will be if it lifts a
year-long suspension of new listings in Shanghai and Shenzhen.
While the stated reason for the de facto ban was to clean up
fraud by forcing underwriters review the accuracy of IPO
applications, it was widely understood to be an effort to prop
up the chronically weak stock market by restricting new shares.
Lifting the suspension would be a signal that policymakers
are willing to cede more control to markets.
Analysts welcomed the plans, but cautioned they still had to
"A policy document, however weighty and well put-together,
does not in itself change anything on the ground," said Mark
Williams and Wang Qinwei in a research note.
"We have heard loud call for reform before. It is not just
the speed of reform implementation that matters, but the
The government also wants to encourage increased equity
financing, which would help wean Chinese firms off an their
overdependence on bank loans for funding.
Corporate debt in China has exploded since the global
financial crisis, and Fitch estimates that the economy-wide
debt-to-GDP ratio will reach around 218 percent of GDP by the
end of 2013, up 87 percentage points since 2008.
In July, the IMF warned similarly rapid debt run-ups have
been associated with financial crises in other countries.