After a decade of ups and downs, China's fledgling stock market is witnessing a debate between two different academic groups.
The debate, triggered by a series of disclosures of insider trading and price manipulation in the stock market over the past two months, is focused on the evaluation of the bourses and their genuine function.
Wu Jinglian, a leading economist with the Development and Research Center of the State Council, started the war by repeatedly blasting the corruption and irregularities in the market over the past few months, saying that it has turned into a big casino and that it is abnormal for the public in general to participate in stock speculation.
Wu's remarks coincided with the official announcement of a crackdown on price manipulations around the end of the year, which widely triggered panic among investors, driving down market indices sharply in the first trading week after the Lunar New Year that has just passed.
But a group of influential economists rebutted Wu yesterday in a joint statement in Beijing, stressing that the young stock market in China has become a lifeline for the national economy and should be viewed objectively, thus throwing a positive light on the prospects of the market.
"We must recognize that the stock market has undergone rapid development over the past 10 years and still has a bright future," said Xiao Zhuoji, a renowned professor at Peking University.
The market has helped raise hundreds of billions of yuan for listed companies and made a fortune for many investors, he said.
"It's true that there are some flaws such as insider trading that have darkened the image of institutional investors, but main stream business within the brokerages and among fund managers is positive," said Xiao, the initiator of the press conference that gathered together five heavy-weight economists yesterday.
"The problems we have met stem mainly from systematic hurdles," said Li Yining, another leading economist and also a legislator.
Li admitted that liquidity of stocks should be raised and that fund management should be more transparent, but added that relative terms had been written into the draft of the Investment Fund Law that is waiting for final approval by the National People's Congress.
"All countries have similar problems in the infancy stage of the stock market and they should not be exaggerated," he added.
Moreover, regulators have pledged to promote liquidity by planning to sell some state-held stocks and increasing the number and types of institutional investors to stabilize market order, he said.
(China Daily 02/12/2001)