Capital market reform on the road to a market-oriented economy: the case of stock markets in China

Emphasizing bank financing as a source of funds for industry are not valid in the current Chinese context, since the banking sector itself is in need of reform. These reforms in turn depend on the ability of state owned enterprises to generate funds independently from both domestic and foreign sources through the issuance of stocks. It is against this backdrop, that this paper discusses and examines the historical, institutional, and structural development and characteristics of the Shanghai and Shenzhen stock markets. The paper considers the shortcomings and problems that must be overcome if the newly established stock market in China is to operate efficiently. -from Authors