On the evening of December 7, China Top 100 Listed Companies Summit Forum held a grand award ceremony to honor the top 100 enterprises and top 100 entrepreneurs who have made significant contributions to China's economic development. At the ceremony, Huang Qifan, Vice Chairman of China Center for International Economic Exchanges (CCEIEX), delivered a keynote speech titled "Focuses and Key Points of the Reform of China's Fundamental System of Capital Markets", which is the following as the full text of the speech.

Good evening, comrades and friends!

I am very glad to participate in the Summit Forum of Top 100 Listed Companies in China, and I will witness the award ceremony in a while. Last year, I also participated in the forum of the top 100 listed companies, talking about the topic of asset reorganization and mergers and acquisitions of listed companies, and today I would like to talk about the reform of the basic system of the capital market.

It has been 29 years since the development of China's capital market, from the development of Pudong in the 1990s and the establishment of the Shanghai Stock Exchange to the present day, and it should be said that we have made tremendous achievements, the market has grown from scratch, and the scale of the market has reached the second largest in the world, so it goes without saying that it is a great achievement in terms of performance. But there are indeed areas that are not satisfactory. If we want to talk about problems, we can talk about a bunch of specific problems. Said the overall problem I think we China's capital market now there are three problems, a capital market should be a barometer of the country's economy, but we have this decade, two decades the size of China's economy from more than a trillion in 2000, to the current trillion, almost eight times, tripled, but our capital market does not reflect the growth of the national economy, which is more regrettable.

Second, the basic function of the capital market is to optimize the allocation of resources. Through the listing of the capital market, the competitive development of listed companies enables the better enterprises to occupy more financial and economic resources. We now have a total of more than 3,000 listed companies, the allocation of resources is not very good, or even more than 3,000 companies, more than 2,000 manufacturing enterprises return on capital or profitability of total assets, not as good as hundreds of thousands of general corporate return on capital, in this sense, we have not realized the best enterprises in the capital market to focus on the manifestation. Fifty percent of the profits of this capital market of over 3,000 enterprises of ours are realized by dozens of financial listed companies, so it is very sad, and the other 3,000 enterprises, which only occupy half of the profits.

Thirdly, our problem is that the return on investment of our listed companies is lower than the growth capacity of the GDP. French writers wrote the 21st century capitalism, 100 years of capital market equity return growth rate, on average, are much higher than the GDP growth rate of 2-3 times, the GDP growth rate of 3% to 4%, the capital market return rate of more than 10%, so 100 years of global GDP in the profits more and more concentrated in the hands of the shareholders, the capitalists or the capital of the hands of the hands of the capital, but also produced polarization. Our capital market does not have this effect, it should be said that the return rate of profits in the capital market is lower than the growth rate of GDP, which is a very strange phenomenon, indicating that the fundamental system of our capital market has a problem, we are around the re-reform of the capital market, and then start again should be centered on our problem-oriented, do not avoid the contradiction, and put the fundamental system of reform and in-depth promotion.

It can be said that this basic system involves many aspects, its most important basic system, I think there are so nine: the first we did not carry out a good registration system, the definition of the registration system I do not expand. As this item is not achieved, so our enterprise listing is always more when more, less when less, on and off, a period of concentrated listing, a month listing a dozen, a period of six months a year and no longer listed. Our decade, from 2000 to the present, there are almost eight times the climax of the listing, and there are eight times the suspension of the listing, in the process of this audit system, the loss of the free allocation of the market mechanism.

Secondly, the delisting system is not in place, any capital market superiority, no delisting system, the registration system want to engage in can not be engaged in, this delisting system can be roughly every three years how many listed, how many delisted, 30 years ago, more than 3,000 shares of the Dow Jones, 30 years later is not a listed company on Wall Street to become 10,000 it, in fact, today is still more than 3,000, from 2011- 2015, Wall Street's stock market more than 1,500 newly listed, more than 1,400 delisted, this way there is a constant old eliminated out of the game, but also continue to make the newborn company on the field, delisted ten to the listing of the 100 to make a sample of the securities company finance companies various accounting firms, law firms, to help listed companies together to fool the stock market, if, delisted, these intermediary institutions are to be Pink bones, there will be five years, ten years can no longer do the business of intermediaries. From this perspective, delisting is a very important practice. Of course, the delisting of mature markets, not only is the government mandatory delisting, but also includes the delisting of listed companies on their own, the delisting process will have to buy back the shares, with a low price recovery, and finally, all the clearance, buyback, announced delisting, no good delisting mechanism, the registration system can not be engaged, so it is the palm of the hand back to each other as a prerequisite. We have more than 20 years, or nearly 30 years of the capital market a total of 100 retired, listed 4000, which is still talking about the A-share market. That our new three board on more than 10,000, there is nothing to exit, and now is a zombie, so the science and innovation board is very important to grasp both import and export, to the registration system and delisting system in one step, we hope that the science and innovation board in the three years to see the live delisting.

Thirdly, our entire Chinese stock market lacks long-term capital, the most important is the three major funds, one is the government engaged in the pension fund, the second is the insurance company engaged in the people's commercial insurance fund, and the third is the enterprise engaged in the supplementary pension insurance enterprise annuity. Now the government's basic system of five insurance and one pension is basically mature, has been in place for more than 20 years, and now has a scale of nearly 20 trillion dollars, the commercial insurance company's life insurance is also basically mature, but we are missing the annuity system, which has been promoted for several years, and now is only more than one trillion dollars, accounting for only 1% of the GDP. In the U.S. annuities are almost $10 trillion, 50% of GDP, so in fact the total size of the three major insurances in the U.S. is basically equal to the GDP, because the U.S. has about five trillion dollars of government pension insurance, five trillion dollars of family pension insurance, and ten trillion dollars of annuities, which together add up to 20 trillion dollars, and now we have only more than 1% of GDP in annuities, and more than 3% of GDP in pensions, health insurance, and insurance for families. All together accounted for about 3% of GDP, if this scale and GDP 1:1, there are 40% -50% of the funds are into the stock market, the amount of funds will become the stock market total fund of 1/3, which is a more stable long-term investment funds, we are here today in the top 100 forum of listed companies in the major shareholders, as well as strategic investors own the equity is not every day will be speculation, but also basically It is also basically stable in the long term.

The real change in the flow should be about 1/3 of the market value of the entire capital market, this time the fund management company is also more stable in it, so the mature capital market is not speculation, but a healthy market stable there.

Fourth, the scale of China's capital market is too small, last year, the national Shanghai and Shenzhen markets it is 92% of the total annual trading volume of retail trading, so our institutional investment transactions accounted for less than 10%, our people own 26% of the equity, the volume of trading, speculation equal to the annual volume of 92% of the trading volume of our fund team in the stock market is very small, although the fund from the 2000s began to develop, we are talking about 12 trillion in private equity funds, 13 trillion in public funds, adding up to 25 trillion, and of the 13 trillion in public funds last year, 7 trillion were buying money funds. Within the $5 trillion stock market, $3 trillion bought bonds and only $2 trillion was in the stock market. Private equity funds 12 trillion, the same 7 trillion is outside the stock market investment, the remaining three trillion to buy bonds, two trillion in the stock, so add up to only four trillion in the stock market, accounting for less than 10% of China's total stock market, so institutional investors are not in place. Of course, it's also possible that they're smart enough to think that the stock market won't do well, so they're conservative with their money and buy bonds and buy money funds, and that's also a smart move, but all in all, because there's not enough long term capital, there's not enough private equity, there's not enough public equity, there's not enough institutional investment in place, and China's stock market has become a retail market.

The fifth is the stock buyback, the stock market, the chairman of the listed company to manage the stock market, one of the most important means, is to their own company's share price fell to a certain level when he thinks it is unreasonable, he can buy back the shares. This does not mean that the low time to buy, high time to throw off, if this kind of low suck high throw then it is insider operation. Reasonable operation is low when the repurchase write-off, there were 500 million shares, repurchase 10% write-off, this time into 450 million shares, the original share price of 10 dollars, may have risen by 10%, the shareholders may be followed up, this time you repurchase 10%, may be the share price rose 20%, the U.S. stock market this year's January-August, the repurchase of eight hundred billion dollars. Apple is such a good company, from 2010 to 2017, seven times seven years of repurchase, and finally the share price from 200 yuan to six or seven hundred dollars, and then give away the shares, I said this paragraph, is to say that the mature capital market has a repurchase and write-off of the management of the way, this way in itself has its own inherent mechanism, our country's securities law, from the birth of the 1990's does not allow the repurchase, that is, the repurchase is a pumping capital The performance of the time we say this thing, the capital market has not yet begun, more than 20 years since no one has ever done this thing. Until last year, the Standing Committee of the National People's Congress held a regular meeting, allowing listed companies to repurchase and write off, or to employees as a source of stock for incentives and dividends, this approach is better.

The sixth is the reorganization of assets, the board of directors of listed companies in the market performance, can be in the development of the time of acquisition and merger, not when the bankruptcy and closure, or let others to buy and merge you, that is, the reorganization of assets. There are times to deal with the issuance of additional shares, the capital operation of listed companies is often happen, this kind of rules of the game in the first few years of the strict control of the Securities and Futures Commission, this year the Securities and Futures Commission launched the asset reorganization of listed companies in a new way, the asset reorganization of the activation of the matter, which is a major boon to China's stock market.

The seventh is that the index management and expectation management of China's capital market are problematic. Our current index is more than 3,000 stocks good and bad mixed together in the composite index, the U.S. stock market has more than 3,000 listed companies, but the Dow Jones 30, only managed 30 stocks, the Dow Jones 30 will always be 3,000 in the best companies, can rise from 6,000 to 28,000, which 30 stocks must be in the development of, so the ordinary people retail investors speculate on the index, the institutional investor is only right! Non-index listed companies to track, we have more than 3,000 companies to make the Shanghai Composite Index rose 30%, good companies to pull the index of 20%, the growth of the magnitude of 50, 60, to be able to pull the other a large number of drag the tail of the enterprise together, this is how difficult the index management, this is unreasonable. 90's the Shanghai Stock Exchange launched the composite index, that time only 28 stocks, are put into the Composite index, to a thousand is also a comprehensive index, why do not we adjust with the times, so China's index management is always a bunch of garbage stocks to the index suppressed, the people do not know what is good, what is bad, this aspect is also our problem.

The relationship of time I would like to say nine points, and then say that we can not eat, there are two points I can only briefly mention, one is that our securities companies should be a soul of the capital market, a key, not only used to help shareholders speculate on the stock market, do channel, not only to help listed companies to engage in the investment adviser, not only their own money to engage in some of the self-management business, the securities company's most core function is the function of capital intermediary. We 130 brokerage firms, whether listed or unlisted brokerage firms, basically no capital intermediary function, which is like the most important function of the bank is to help the people to play the function of the loan intermediary, the savings funds loan to the need for money, if the bank does not have this function, the bank said that I can manage their own finances, I can provide their own small and medium-sized financial institutions to the commissioning agent, to do some other non-principal business of the thing, that's very That's ridiculous. The real core business, which securities companies basically do not do, is also one of our shortcomings, and these problems should be addressed.

Another thing is regulation. Our regulation is not in place. The Securities and Futures Commission is busy as hell, checking a case, engage in two or three years, the penalty of 5 million, 1 million is useless, the financial market is too complex, we have to follow the inference of guilt, which means that I think you have a problem, you have to prove your innocence, you come up with all the proof that you do not have a problem, then there is no problem. If you can not prove that there is no problem, you can be investigated deeply, mature society in the investigation of securities company problems, are in accordance with the presumption of guilt, this way, then, the investigation of the efficiency of the fight against the weight will grow a hundred times, this way no one dares to do bad things, all the financial institutions will be very rational to avoid the possibility of leaving bad things to do some of the traces of the time, so careful, it will greatly reduce the probability of crime! This is where we are lacking in regulation.

It is because of these eight or nine aspects of the basic system problems, ultimately brought about the securities market of the three major problems, so we have to learn more seriously about the general secretary on the spirit of the speech of the financial supply-side reform, the general secretary on the capital market to establish a standardized, dynamic and vibrant market, the capital market is a move to activate the whole plate, is China's deconstruction of the real, the key to the transformation of the track. By the end of the year, I was very pleased to see four happy things about the capital market. First the opening of China's financial system is the most open in the process of opening up over the decades, the most sensational opening is the moment. We note that last year General Secretary Xi talked about financial liberalization, this year and a half since the Financial Stability Board, the People's Bank of China, the China Banking and Insurance Regulatory Commission issued 64 measures related to financial liberalization, there are 11 on the foreign financial institutions market access conditions, there are 24 about the financial institutions access to its shareholding requirements, for example, can not be controlling, can not be more than 50, can not be more than 25 in the proportion of equity Where the equity ratio is restricted, we have 24 articles to expand the liberalization, that is, financial institutions can be wholly-owned, can hold. Some of them are for insurance, some of them are for banks, some of them are for trust companies, some of them are for fund management companies, in short, it's an opening of equity.

The second one, there are a total of 64 articles, that is, plus 24 articles plus 11 articles, 11 articles on market access, 24 articles on expanding equity ratio, plus 29 articles on expanding the scope of business, this is a very specific article on the financial liberalization of our country, and I believe that in the next two years, there will be a large number of foreign financial institutions in China, including funds, including foreign-funded insurance companies and banks, and recently, there are a lot of securities companies that now want to Additional capital, after these things happen, will definitely bring the effect of dancing with the wolves to China's financial circle, and will be beneficial to the improvement of the quality of China's financial system, the improvement of the management level, and the improvement of the scale of capital, which is a good thing.

Third, our country's experimental free trade zone in full swing, this year pushed to 18, China's open area, the special zone out of the economic and technological development zones covered, the special zone has a number of development zones can not do things, the new area of the policy covers all of the policies of the special zone, are and special zones can not do eight or nine kinds of privileges, and now we are talking about the eighteen free trade zones, it can be said that the original special zones, the new area of the things can be done, but also can do the special zone, the new area of the things can be done. But also can do special zones, new zones can not do the work, mainly in four areas, one is China's open bottleneck short board is financial, our industrial and commercial industry more than 100 trillion in assets, foreign-funded industrial and commercial industry accounted for 30% of the financial sector accounted for only more than 1%.

The second aspect, China's trade in services has not been liberalized, so our trade in services is a deficit of 300 billion, we have managed to have a surplus of more than 300 billion in trade in goods, and a deficit of more than 300 billion in trade in services, this aspect of our trade in services is not enough to open up, the FTZ will be a complete liberalization of trade in services.

The third aspect, the government's public service openness is not enough, the FTZ in this piece will be open, the General Secretary asked for all-round, wide-ranging, multi-channel openness, the past industrial and commercial industry openness, covering education, health and culture, covering the trade in services and financial trade.

The fourth aspect, data trade will also be opened up, China's 18 free trade zones will bring a new trade upgrade, industrial upgrading, China's opening up of new heights, depth and breadth in the heights, in the development of data trade, trade in services.

The Securities and Futures Commission and the relevant departments are on the issue of how to gather long-term capital, including the Social Security Fund and so on are in full swing research, I believe that the next few years in this area of long-term capital to add ten trillion, twenty trillion are imperative, and there will be a lot of benefits to our economic development.

The relationship of time can not be said again, the general idea, although the problem is more concentrated, the nine aspects of the fundamental system of reform, now in accordance with the requirements of the central government, is being pushed forward in full swing, good information, good major events are also happening, so the development of China's capital market in the next ten years to be full of confidence, the spring of the Chinese capital market will certainly be in the next ten years to show up, I'm just going to say these!

(Arranged by Walton Economic Institute based on the recording of Huang Qifan's speech)