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China’s capital markets

The evolution of China’s capital markets is traced by Wang Boming as part of The China Report of the China Advisory Council of Cambridge Judge Business School.

Shanghai cityscape with digital stock market overlay.

While China’s modern capital markets are only 30 years old, the “genes of the stock market have been in the blood of the Chinese people” for 100 years or more, says Wang Boming, Founder of the Stock Exchange Executive Council (SEEC) in China, in the third edition of The China Report from the Cambridge Judge Business School’s China Advisory Council (CAC).

The Dasheng Yarn Mill was founded a century ago in Nantong, Jiangsu Province, and the firm issued Dasheng Shares in order to expand beyond its geographical location at the estuary of the Yangtze River, while the concepts of stocks has been discussed by the Chinese people for decades including in the 1933 novel Midnight by author Mao Dun.

The stock market concept came to a “dead stop” with the founding of New China and its planned economy. But China started opening up and “soon after transformed to a market-oriented economy” so stock markets were “rediscovered as a meaningful topic,” says the article by Wang Boming, who is also Editor-in-Chief of CAIJING Magazine and a member of the China Advisory Council at Cambridge Judge.

When China opened the Shanghai stock exchange and the Shenzhen stock exchange in December 1990. It all occurred so suddenly that a government regulatory agency – the China Securities Regulatory Commission (CSRC) – was established without an adequate budget and set up in a rented hotel room. “However, we all knew there was no turning back from an opened market economy,” the article says.

“The greatest benefit from China’s reform and opening up is more opportunities for Chinese people, Gao Xiqing (former Vice Chairman of the CSRC) once said, because the securities market is the only place in the society invested by investors independently,” the article says.

While there are still some problems with China’s capital markets and there remains huge potential for improvement, the article concludes that “great progress has been made during 30 years of ups and downs”.

Wang Boming spoke about the founding of the capital markets in a video interview last year with Christoph Loch, Dean of Cambridge Judge Business School, as part of a series called CJBS Perspectives: Leadership in Unprecedented Times.