China’s Capital Markets

China’s Capital Markets

Challenges from WTO Membership

Advances in Chinese Economic Studies series

Edited by Kam C. Chan, Hung-Gay Fung and Qingfeng ‘Wilson’ Liu

China’s economy has been growing rapidly since the late 1970s and is expected to maintain this momentum in the foreseeable future. Coupled with the biggest population in the world, there is tremendous growth potential for China’s capital markets and financial services industry, both vital to the continued development of the economy. The contributors present research on all facets of China’s markets including: stock and bond markets; futures and over-the-counter markets; regulatory issues; and the development and roles of financial institutions such as brokerage firms, banks and insurance companies. Also addressed are the recent performance of equity markets, the emergence of small and medium enterprises, and the state banks’ bids to be listed in overseas stock exchanges. Taken together, the book sheds a welcome light on China’s overall economic growth.

Chapter 13: Chinese Financial Markets: Regulators and Current Laws

Mary Ip

Subjects: asian studies, asian economics, economics and finance, asian economics, financial economics and regulation


13. Chinese financial markets: regulators and current laws Mary Ip INTRODUCTION Since 1979 the Chinese economy has undergone extensive transformation from a command model into a socialist market system. Finance is a key branch of a national economy. As part of the overall economic reform, the Chinese financial sector has also experienced significant change. Chinese leaders are aware of the connection between a sound legal regime and investment, especially from overseas, which is vital to the continued economic growth in the country. Without a solid legal environment for business, investors would have no confidence to enter the Chinese market. To translate this awareness into action, the legal system in China has been radically improved in recent decades fostering the economic reformation process. There has been an explosion in the volume of legislation, especially for laws governing business activities. China accessed the World Trade Organization (WTO) in 2001, officially marking the country’s integration into the world economy. Benefits flowing from the consequential increment in foreign investment and international exchange would encourage China to further modify its legal structure. Besides, the transparency principle under the WTO agreements is a catalyst for China to move toward a system governed by rule of law. The transparency commitment not only compels China to make available to signatory members the laws it has passed, but also to put them into practice. Development in the financial industry has been accelerated by the WTO membership because, in accordance with the WTO Accord, China is...

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