The Chinese government is to open its capital market step by step and forcefully boost the reform in the area so as to make the financial system more flexible.

Chairman Shang Fulin of the China Securities Regulatory Commission (CSRC), the national capital market regulator, made the remark here Tuesday at a seminar on China's capital market, the China Securities Journal reported.

The CSRC always attaches great importance to the opening up and international cooperation, Shang was quoted by the newspaper as saying.

He said 58 overseas securities agencies now can directly conduct B-share trading, and 7 joint-venture securities companies and 19 joint-venture fund management companies have been approved to set up in the country.

According to China's market demand, China launched the QFII (qualified foreign institutional investors) pilot program in December 2002, having allowed 28 foreign investors to engage in the securities business in China's A-share market, he said, mentioning the total investment quotas approved by the government for QFIIs are about 4.05 billion US dollars.

A-shares refer to those issued by domestically-listed firms mainly for Chinese investors. B-shares are issued by Chinese firms and denominated in the US dollar. H-shares are issued on the Hong Kong market for overseas investors.

The Chinese economy has been growing by an annual average of 9.4 percent in the past 27 years, while the domestic stock markets, far from being an economic barometer, were down nearly by half during the past four years since 2001.

Foreign investors such as the UBS, Deutsche Bank, Normura Securities, and Citigroup Global Markets Limited, have shown great interest in China's stock market.

As their investment quota has almost been used up, they expressed strong wish for more investment quota so as to buy more shares in the country.

Meanwhile, China also encourages its own companies to be listed in overseas stock markets. Since China's first company went public in overseas market on July 15, 1993, a total of 117 domestic companies have got listed overseas.

"China will open its capital market gradually, actively and stably," Shang said.

China has made incomparable achievement in opening its capital market in the past 15 years, and now the opening-up process of capital market must accord with China's overall reform and opening-up drive, he said.

China strives for learning from the systems and regulations of mature markets in the world, and the CSRC has basically set up systems and regulations on capital market through combining international practice and national conditions, he said.

As a developing country, China must follow the principle of prudence in its opening up so as to safeguard the security and stability of China's financial systems, he said.

Insiders said huge demand for capital for the country's economic growth and restructuring and an increase in corporate and individual investment capability represent broad space for the development of China's capital market.

Source: Xinhua