State Council’s “Nine Articles” on the Development of PRC Capital Markets
February 23rd, 2004There have been some noteworthy PRC sec reg developments while I’ve been otherwise occupied. For one, the State Council issued a policy pronouncement on developing the mainland’s capital markets. These “Nine Articles” (available here in Chinese) have gotten a good bit of attention in the foreign press.
But I don’t think they say much that is novel. I would describe them as an administrative (or executive branch) elaboration of the ideas the Party laid out in 16th Party Congress documents and the economic policy decisions of the 16th Central Committee.
The Nine Articles do not enact any specific changes in any operational sense. They are simply general policy pronouncements. Moreover, many of the policy goals the Nine Articles articulate are in tension with each other. Indeed, the “guiding philosophy” for capital market development announced in the Nine Articles is to seek both stability and continued reform. This is a mao-dun because many contemplated reforms (a second board, FIE listings, SME/private issuer listings, liberalization of the bond markets, sell-off of state-owned shares, permitting capital outflows through a QDII system) could de-stabilize the status quo. The Nine Articles do not explain what sequence of actions will be taken or how the conflicts among goals can be reconciled.
Thus the Nine Articles are like a political stump speech in the US–lots of generalities are offered to get applause, but few specifics are offered on how all the grand goals will be realized and at what costs.
Links to articles in Chinese on the Nine Articles are available here through a People’s Daily website. The full name of the Nine Articles is something like Various Opinions of the State Council Concerning Promotion of the Reform and Opening and Stable Development of Capital Markets (国务院关于推进资本市场改革开放和稳定发展的若干意见 or Guo Wu Yuan guan yu tuijin ziben shichang gaige kaifang he wending fazhan de ruogan yijian).