Open policy to stay but safely

By Wang Yanlin  |   2008-6-21  |     NEWSPAPER EDITION

CHINA will continue to open the country's securities industry and capital market but "excessive or too rapid" openness would create potential financial risks, said Shang Fulin, chairman of the China Securities Regulatory Commission.

Shang made the remarks in Washington where the fourth Sino-US Strategic Economic Dialogue has just concluded, the Shanghai Securities News said yesterday.

"China will open the securities industry to overseas investors in a gradual, orderly, safe and controllable manner. Global experiences show that any excessive or too rapid openness could lead to potential risks and deal a blow to the capital market," said Shang.

He said China's current openness of the securities' industry was in line with its level of maturity and the country would accelerate the process of openness after a comprehensive analysis of its current policies and practises.

Since last year, global financial markets have been volatile with many multinational financial institutions suffering huge losses from securities markets. Shang said China has paid close attention to the phenomenon as well as to the uncertainties this might bring to the Chinese capital market.

Shang also stressed the importance of openness for the introduction of advanced management and technology, the promotion of competition and innovation, the improvement of market development, and the enhancement of Chinese brokerages' competitiveness in the global market.

During the fourth Sino-US Strategic Economic Dialogue, China has agreed to shorten the lockup period of capital for more overseas institutional investors in the Chinese mainland's stock markets, its latest move to open the capital industry to foreign participation.

Overseas monetary authorities, charity funds and donation funds are subject to a three-month lockup period for the invested principal, down from one year.

In earlier dialogues, China has given consent for qualified foreign companies to issue yuan-denominated stocks and considered establishing an international board to list foreign companies on the Chinese mainland.