The Development of China's Stockmarket, 1984-2002 by Stephen Green

Author:Stephen Green [Green, Stephen]
Language: eng
Format: epub
Tags: Social Science, Ethnic Studies, General, Regional Studies
ISBN: 9781134345342
Google: VfxA3wwMZ_MC
Publisher: Routledge
Published: 2004-07-31T03:38:16+00:00

Table 8.1 Size of an average IPO, 1991–2002, Rmb million

Year Average A-share issue

1991 36

1992 125

1993 160

1994 45

1995 96

1996 234

1997 318

1998 422

1999 590

2000 730

2001 834

2002 700

Source: Author's calculations based on CSRC Statistical Yearbook, various.

After intense debates throughout 1997 about the direction of economic policy, Jiang Zemin threw his weight behind the decision at the Fifteenth Congress in October 1997, reviving Zhao Ziyang's ‘primary stage of socialism’ theory to justify shareholding on a large scale, the zhuada fangxiao policy and increased private sector activity. The congress, for the first time, recognised the share market as ‘as an important component of the national economy’.347 The market was no longer termed ‘experimental’.

However, proposals for institutional change in the stock market were still not implemented. The State Council's ‘Securities and Futures Work Outline’ for 1996 stated that the CSRC should;

practice systematic regulation of securities organisations’ underwriting and proprietary trading ... carry out fixed date investigations into securities organisations, impose appropriate punishments for illegal behaviour, up to rescinding licence . . . and gradually implement a unified approval and management system.348

A ‘unified’ system was a euphemism for the elimination of provincial government and PBoC influence. Such fundamental institutional reorganisation did not come, though the CSRC did continue to gain in capacity and influence. In February 1996 it gained permanent access to fee-based revenues from the market when the State Council allowed it to levy fees on trading, as well as on securities companies, TICs, and listing applicants. This fee structure has endured, the only significant change being that the trading turnover rate it levies rose to 0.003 per cent on the regulator's assumption of control of the SHGSAO and SHZSAO in 1999 (both of which had previously levied their own trading tax).349

As a non-government organ, the CSRC's annual budget is approved, but not funded, by the MoF. In the event of its annual revenues exceeding the budget, revenues may be put aside for future use but the CSRC may not spend more than its budget without special dispensation from the State Council. In this way the CSRC's leadership is not endowed with an organisational interest in nurturing trading volume, as the Shanghai and Shenzhen governments were with the stamp tax. Interviewees suggested that by 2000 this funding structure had created a comparatively rich organisation, able to pay its staff salaries at roughly 50 per cent more than the standard rate for central government employees, not to mention its provision of far superior housing and other welfare arrangements. Table 8.2 shows the author's estimates of the fees that the CSRC would have collected from A-share trading, the dominant but not exclusive part of its revenues, during 1996–2002. Adding in the other fees, total revenues would probably have exceeded Rmb 200 million in 2000 but would have since declined with the slump in the market.

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