Investment, Finance Sector Advances

During the ninth Five-Year Plan (1996-2000), China made substantial progress in reforming its investment and finance sector into a new system that is well suited to the socialist market economy, said official sources from the State Development and Planning Commission.

During its refurbishment of the investment and financing sector, China centered on strengthening the responsibility for banking credit risks, and making sure that government institutions no longer interfere in banks' independent credit appraisal. Commercial banks will now independently grant loans according to the credit principle and the demand of asset-liability management.

At the same time, China actively promoted mortgage and guarantee systems for loans to increase risk awareness. Efforts were made to regulate various securities investment activities and gradually raise the proportion of direct financing.

The reforms were based on these prerequisites: qualifications of companies planning to go public or to issue bonds were strictly examined; issuance of securities and bonds were actively and steadily expanded; and restructuring and upgrading was done through the capital market.

Efforts were also made to launch pilot projects in developing securities investment funds, industrial investment funds, high-tech risk investment funds, as well as convertible bonds, project mortgage financing and other forms of financing.

On January 1, China enacted the Law on Public Bidding, which is important for regulating market activities. Its implementation is a milestone in China's public procurement, helping it to enter the realm of world-class legal systems. It is of great significance for regulating public bidding activities, protecting national interest, social public interest and improving the efficiency and quality of public procurement.

Supervision of government investment was further reinforced in the ninth Five-Year Plan period. In 1998, the central government employed a special commissioner to check important projects, and after two years the system has proven to be effective in ensuring the efficiency and profits of government investment, especially the projects using capital financed from treasury bonds.

In line with the principle of separating administration from enterprise management, intermediary service institutions including investment consultation, appraisal, accounting, law, auditing, designing, supervising and public bidding agencies have been gradually separated from government departments and become legal person entities responsible for themselves.

Meanwhile, in a move to strengthen management of quality-oriented project construction, China has implemented comprehensive systems for legal person responsibility, capital funds, public bidding, contracts and project supervision.

(People’s Daily 10/08/2000)

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