HISTORIC CONTRIBUTIONS OF CHINESE SECURITIES FIRMS
Over the past three decades, Chinese securities firms made significant contributions to the securities market in China. As financial intermediaries, they played an instrumental role in the birth of China's modern capital markets by fostering distribution channels for China's capital.
Facilitating Stock Reforms of State-Owned Companies and Improving Quality of Corporate Operations
Once the CPC central committee decided on the general objective of reforms and the opening-up program in 1978, stimulating the state-owned economy and stock reform in state-owned companies became the top priorities in economic reform. This directly gave birth to the Chinese capital market and carried the significant historic responsibilities of offering capital mobilization, equity pricing, and liquidity for stock reforms of state-owned companies onto the Chinese capital market. And it has been the securities firms that have been fulfilling this historic mission for the China capital market. The last 20 years of growth have confirmed that Chinese securities firms have achieved this historic mission rather successfully.
According to statistics from the State-Owned Assets Supervision and Administration Commission (SASAC), among the 121 corporations owned by the central government and overseen by the SASAC, 43 have gone public with their main businesses. Their total assets, net assets, business incomes, and net profits accounted for 52.88 percent, 68.05 percent, 59.88 percent, and 130 percent, respectively, of the totals of all 121 companies (listed companies onshore and offshore totaled 336).
As indicated by the proportion and importance of state-owned companies in the overall economy, the quantity and quality of state-owned economy gained significant improvement. For example, Wind Information statistics show that since 1999, the proportion of assets of state-owned and state-controlled industrial companies in comparison to all industrial companies dropped about 27 percent, from 69 percent in February 1999 to 42.34 percent in September 2011. Their total assets gained 2.85 times, from CNY 6.9 trillion to CNY 26.6 trillion, thereby effectively realizing the conservation and appreciation of values of state-owned assets. The percentage of profits of state-owned and controlled industrial companies compared to all industrial companies rose from 8.38 percent to 56.64 percent in September 2000, and dropped from there to about 31 percent currently, for a net gain of more than 22 percent. Their total profits skyrocketed 1,215 times, from CNY 945 million to the current CNY 1.15 trillion (see Figure 1.4).
Chinese securities firms also played an important intermediary role in the capital market, in the reforms and development of the state-owned companies, and provided strong support for the development of the overall economy while making important contributions to the growth of economic entities of other natures. According to statistics, the number of public companies shot up by more than 1,200 (from 1,120 in 2001 to 2,304 in November 2011), and their market values surged from CNY 5.3 trillion to CNY 24.93 trillion in the same period (maximizing at CNY 32.7 trillion in 2007), realizing remarkable growth of social wealth (see Figure 1.5).
FIGURE 1.4 Proportion Shifts of Assets and Profits of State-Owned Industrial Companies Compared to All Industrial Companies
Source: Wind Information Co.
FIGURE 1.5 Changing Number and Market Values of Listed Companies in China Since 2005
Source: Wind Information Co.
FIGURE 1.6 Capital Raised by the Chinese Lending Market and Capital Market
Source: Wind Information Co.
Meanwhile, the money-raising function of the Chinese capital market has steadily improved. Securities firms have been making distinct contributions to the optimization of the social investment and financing system and structures. They have also been strongly promoting the fast and healthy growth of the Chinese economy (see Figures 1.6 and 1.7).
