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Boosted Development of a Financial System Anchored on the Securities Market

The goal of the reforms in the Chinese financial system is as follows: Shatter the financial structure of "uniformity" erected under the regime of traditional planned economy; establish a system of diverse financial entities including banks, securities firms, and insurers; set up a financial market system anchored on the capital market; and create a financial regulatory system mainly comprised of "one sector and three entities," thus constantly enhancing the vitality, flexibility, and efficiency of the Chinese financial system. More than 20 years later, this goal is materializing. The Chinese securities firms are not only products of the reforms, but they also made their respective contributions to furthering the reforms and developments in the financial system in the process.

TABLE 1.6 Main Index of Sectors of Listed Companies (Ended November 2011)

Main Index of Sectors of Listed Companies (Ended November 2011)

Securities firms gave a positive boost to the shareholding system reforms and developments of the state-owned banks in China. According to arrangements of the central government, after peeling off their toxic assets from the four major state-owned banks (Bank of China, the China Construction Bank, the Industrial and Commercial Bank of China, and the Agricultural Bank of China), the next priorities for the four asset management companies established in 1999 were to reform the shareholding system and IPOs for the four banks. Securities firms performed excessive work to directly boost reforms and IPOs of the four banks. In the process, they made significant contributions to the key issues in the reforms of the Chinese financial system.

Via maneuvers of the securities firms, other banks and financial institutions also made active progress in the reform of shareholding systems and establishment of a modern corporate regime. Financial institutions experienced dramatic changes in terms of ownership rights, assets, total debts, and structures. The vigor of the Chinese financial system was further boosted (see Tables 1.7 and 1.8 for comparisons).

 
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