China to strengthen capital market regulation, risk prevention

China’s State Council has released a guideline on strengthening regulation, forestalling risks and promoting the high-quality development of the capital market.

This is the third guideline document on the capital market from the State Council in two decades, following earlier issuances in 2004 and 2014.

The guideline noted that the country should build a secure, regulated, transparent, open, dynamic and resilient capital market.

In this regard, the guideline calls for efforts to focus on strengthening regulation, preventing risks and pushing forward high-quality development to fully harness the functions and roles of the capital market, promote the building of a country with a strong financial sector and serve the goal of advancing Chinese modernization.

An investor at a securities exchange in Hangzhou, east China’s Zhejiang Province, February 8, 2024. /CFP

An investor at a securities exchange in Hangzhou, east China’s Zhejiang Province, February 8, 2024. /CFP

The guideline mandates strict regulation on the entry into the capital market through securities issuance and listing, as well as rigorous sustained oversight of listed firms.

It also urged intensifying regulation on delisting as well as on institutions like fund management companies.

The bull sculpture in front of the Shenzhen Stock Exchange in south China’s Guangdong Province, August 14, 2023. /CFP

The bull sculpture in front of the Shenzhen Stock Exchange in south China’s Guangdong Province, August 14, 2023. /CFP

Efforts should be made to tighten supervision over high-frequency trading, the guideline said.

It added that the impacts of both major economic and non-economic policies on the capital market will be taken into consideration as part of efforts to enhance the intrinsic stability of the capital market.

China will vigorously guide the entry of medium and long-term capital into the market, comprehensively deepen reform and opening up, and strengthen the rule of law in the capital market, the guideline said. 

The China Securities Regulatory Commission buidling in Beijing, China, February 2, 2024. /CFP

The China Securities Regulatory Commission buidling in Beijing, China, February 2, 2024. /CFP

The guideline sets development goals for the capital market for the next five years and is aimed at building a modernized capital market.

High-quality development of the capital market will improve the modernization of China’s industrial system and promote the development of new quality productive forces, said Wu Qing, chairman of the China Securities Regulatory Commission. 

It will also help enrich financial products and services so that more growth opportunities for residents’ income from assets will be created, he added.

(With input from Xinhua; Cover via CFP)