The Chinese Stock Market: Development and Prospects

Xiangmei Fan, Yanrui Wu and Nicolaas Groenewold
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Xiangmei Fan: Business School, Hunan Normal University, PR China
Nicolaas Groenewold: UWA Business School, The University of Western Australia

No 03-04, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: This paper reviews the history of the development of the Chinese stock market, analyses the market scale and structure, and sheds light on the prospects of the market. The development of the stock market can be classified into four stages, namely, the early stage of stock market development (1983-1991), the transition of the regulatory system (1992-1996), the Red Chips craze and the deflation (1997-1999), and WTO entry and state share reduction (2000-present). We argue that the current structure of China’s stock market is unbalanced and that this has important repercussions on the performance of listed companies and the further development of the stock market. Solving the problem with the poor liquidity of non-tradable shares is a particularly urgent task. As China is expected to maintain its current economic growth momentum, the prospects are that the Chinese stock market will continue to expand in the coming decade.

Pages: 43 pages
Date: 2003
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