Viability and the Development of China’s Capital Markets

I. Some Facts about Chinas Capital MarketsThe official stock markets of Mainland China were set up in Shanghai and Shenzhen respectivelyin1990 and 1991. The original intent was to improve the reform of Chinas SOEs. Theoretically,it was held that absence of owner is the main problem of SOEs; after being listed, the smallshareholders who buy stocks with their own money will care about the value of their assets, sothey will actively supervise the listed enterprises managers and thus the gov…