Policy Market: What's Next for China's Stock Market?

Author: Shui Pi
Publisher:
Publish Date: 2005-07-01
Features: More than 100 securities firms, over 1,300 listed companies. 300 billion yuan in funds, over 70 million investors, 4 trillion yuan in market capitalization. The Chinese securities market has grown from nothing to something at an astonishing speed, leaving Wall Street in awe. However, the problems that have emerged have also left Wall Street baffled. Is the Chinese stock market a gambling den? Is there a bubble? Should state-owned shares be reduced? Should full circulation be compensated? Does the Chinese stock market have value? Is it being marginalized? Does the "1000-point theory" hold any weight? Will the market be rebuilt from scratch? Does the ChiNext have meaning? Is the valuation theory relevant? Can the "Nine Policies" be implemented? Does the regulatory body have the ability? Since the Shanghai Composite Index peaked at 2,245 points in 2001, discussions about the future direction of the Chinese stock market have never stopped. The Chinese stock market is a unique capital market built on a public ownership system dominated by state-owned enterprises. The economic form of this market is the split share structure, while the political core is centralized control. Therefore, any attempt to blindly copy Wall Street's governance model is bound to be dogmatic, directionless, and counterproductive. As a result, "marketization" has turned into "garbage," and "internationalization" has become a mere formality. Shumei Lun became a scapegoat, and returnees became the scapegoats. Stock investment has become a high-risk industry, and the securities market has become a place that most investors despise.
On July 1, 1921, the Communist Party of China was founded. Seventy years later, in August 1991, the China Securities Association was established. In January 1935, the Zunyi Conference, a turning point in the history of the Chinese revolution, was held. Seventy years later, in January 2005, the Chinese securities market, like the Chinese revolution at the time of the Zunyi Conference, fell into its lowest point in history. From 1921 to 1935, the Chinese revolution took 14 years to find a path where Marxism was combined with the practice of the Chinese revolution. From 1991 to 2005, it was also 14 years. Can the Chinese stock market find its new historical direction? It is easy to drive out Li De, but it is difficult to find Mao Zedong; it is easy to criticize returnees, but it is difficult to establish new thinking; it is easy to attack the China Securities Regulatory Commission, but it is difficult to build a new institution. Policy is our life, and strategy is equally our life. "Big Talk Policy Market" includes more than 100 selected essays from Shui Pi's 400+ reviews since 2001, divided into four parts: Big Truth, Big Non-truth, Big Wisdom, and Big Confusion.
What is Big Truth? The truth, or the law. Whether it is the "Nine Policies" or "rescuing the market," they all address the "contradictions" of the Chinese stock market, thereby seeking a bright "future" for it. What is Big Non-truth? The non-truth, or the mistakes. "Popping the bubble" led to the "1000-point theory," and the index was pushed down, but the market did not restart. Instead, an ugly "enterprise board" emerged. The fact that this board was born so stubbornly shows that the power of interest groups has exceeded people's imagination. What is Big Wisdom? The wisdom, or great wisdom. The split share structure is the characteristic of the Chinese market and the difference between the Chinese and U.S. markets. To solve the "reduction" of state-owned shares, to allow legal person shares to roll into "C-shares," and to ultimately achieve "full circulation," we need time and the great wisdom that this generation lacks. What is Big Confusion? The confusion, or the confusion. Why is the new "IPO" policy not recognized? Why is "institution building" so difficult? Is Shang Fulin effective or ineffective? Are "economists" playing the role of conscientious public intellectuals or capital advocates who seek profit? The facts tell us that the stock market is full of struggles for fame and fortune. What one thinks may not be what one says, what one says may not be what one does, and what one does may not bear fruit. Everyone worries about the outcome, but Sa Pu worries about the difficulties. Where is the policy market heading? It concerns every investor and every Chinese person.