The Regulation of Stock Trading and its Enforcement in China

Abstract

The first public share issue in the PRC took place in 1994. By the early 21st century, in the space of less than two decades, the Chinese stock market has become the largest one in Asia, with the exception of Japan. Along with this rapid enlargement of the market, the Chinese stock trading regulation system has experienced a process of continuous improvement. A national centralized stock trading regulatory system has been set up, and many securities laws and regulations have been published.In the first part of this thesis, a brief introduction will be provided in order to give the reader an overview of the current state of the Chinese stock market and its regulatory system. In particular, some concepts which only exist in the Chinese stock market will be clarified. After that, the three main themes of this thesis will be presented.The first intention is to introduce the history of the development of Chinese stock trading regulations and their enforcement measures. This is mainly, but not only, dealt with in Chapter two where the whole history is divided into three periods and the most distinctive features in each period are introduced respectively. Apart from that, the development of some specific regulations is covered in the other chapters.The second goal is to present a detailed picture of the stock trading regulatory system in its current form. This is covered in the next two chapters. Detailed regulations will be discussed in Chapter three, which considers several different areas in stock trading. Key incidents in the development of the regulations are also introduced in this chapter. After that, the practical enforcement of the regulations is discussed in Chapter four.Although the Chinese stock market has made great strides, we need to keep in mind that it is still a primitive market, and these achievements are still embedded within the framework of a transition economy. So my third aim, presented in Chapter five, is to point out some problems with the Chinese stock trading regulatory system and suggest some potential solutions. Instead of covering all the problems that the system has, this chapter will concentrate on where the difference between the Chinese stock market and more sophisticated stock markets lies, in the hope of helping the former to better prepare for the rigors of exposure to the international financial markets.