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Active Contributions to Activating Idle Social Assets and Improving Overall Operational Quality of National Economy

Chinese securities companies fully played a role in adjustment and optimization of the idle social assets, adjusting the structure of the national economy, optimizing the industrial landscape, and bolstering smooth and healthy growth of the overall economy by actively promoting IPOs and M&As.

Regarding M&As of listed companies, statistics provided by An Qingsong (2011) show an increase in M&A volume. The total trading volume ballooned more than 40 times, from CNY 22.503 billion in the 2002 to 2005 period to CNY 910.9 billion in the 2006 to 2009 period. The average merger transaction also surged 11 times, from CNY 0.417 billion to CNY 4.67 billion. M&A transactions of listed companies in China gained 7.7 times in that period.

M&As of listed companies also played a distinct role in promoting economic restructuring. In total, 114 listed companies completed integrated restructuring from 2006 to 2009, with trading volume totaling CNY 641 billion.

Relevancy between GDP, Lending, and Stock Market

FIGURE 1.7 Relevancy between GDP, Lending, and Stock Market

Source: Wind Information Co.

After the restructuring in 2006, the companies saw their total assets, revenue, and net profits increase by an average of 306 percent, 208 percent, and 187 percent, respectively, in three years. Also, 27 public companies completed industrial upgrading through M&As with transactions totaling CNY 245.6 billion. Their total assets, revenue, and net profits increased by an average of 332 percent, 318 percent, and 595 percent, respectively, in three years. And 49 losing public companies eliminated their underperforming capacities and realized profitability through M&As. These deals involved CNY 125.7 billion in total and protected the interests of 1.06 million investors and tens of thousands of employees. The companies restructured in 2006 and saw their total assets, revenue, and net profits rise by an average of 41 percent, 32 percent, and 536 percent respectively in the following three years. Of state-owned listed companies, 121 in total completed strategic M&As with transactions totaling CNY 805.8 billion. Those companies that restructured in 2006 saw their total assets, revenue, and net profits boost by an average of 338 percent, 200 percent, and 181 percent, on average, in the next three years.[1]

From an overall national economy viewpoint, the proportions of first, secondary, and tertiary industries steadily optimized to a reasonable level, especially since 2006. The fueling role of the tertiary industry for economic

FIGURE 1.8 Structural Changes of the Three Industries in China Since 2006

Source: Wind Information Co.

Structural Changes of the Three Industries in China Since 2006

growth constantly improved, and the industrialization of the national economy attained effective quality assurance (see Figure 1.8).

The structures, growth speed, and quality of main sectors in the national economy also adjusted and optimized. For example, the number and market values of public companies in the main sectors have been gradually adjusted. Despite high market values of the manufacturing and mining industries, sectors in the tertiary industry, such as finance, insurance, transportation, storage, and information technology, also saw their proportions steadily improve (see Table 1.6).

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