China's State Council has taken a significant step towards bolstering the country's financial infrastructure by releasing a new guideline aimed at strengthening the regulation of the capital market. This marks the third such directive from the State Council in the past two decades, following previous guidelines issued in 2004 and 2014.
The newly unveiled guideline emphasizes the creation of a secure, regulated, transparent, open, dynamic, and resilient capital market. By focusing on robust regulation, risk prevention, and promoting high-quality development, the State Council aims to fully harness the potential of the capital market to drive economic growth and modernize China's financial sector.
Key measures outlined in the guideline include strict regulation of securities issuance and listing, along with rigorous and sustained oversight of listed companies. Additionally, the guideline calls for intensified regulation on delisting processes and a tighter oversight of institutions such as securities and fund management firms. Efforts will also be made to curb high-frequency trading and other speculative trading practices, while enhancing strategic reserves and developing stabilizing mechanisms to ensure market resilience.
Furthermore, the State Council will factor in the impacts of major economic and non-economic policies on the capital market as part of a policy orientation consistency evaluation. This approach is intended to enhance the intrinsic stability of the capital market and ensure cohesive policy implementation.
To support these initiatives, the guideline advocates for the guidance of medium and long-term capital flows into the market, further deepening reform and opening up, and strengthening the rule of law within the capital market framework. These measures collectively aim to build a strong and stable financial sector that can support China's broader objectives of modernization and economic advancement.
Reference(s):
China to strengthen capital market regulation, risk prevention
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