The Draft Law on Securities Investment Funds provides clear rules on the organizational and operational patterns of funds, the protection of individual investors' legal rights and interests, and foreign investment in China's fund management institutions.

Li Yining, vice-chairman of the NPC's Financial and Economic Committee, told the meeting that the draft law "aims to safeguard investors' legitimate rights and interests, boost investors' confidence, and regulate the development of China's investment funds."

The draft law stresses the supervision of fund activities and institutions involved in fund operations, and lays out penalties for illegal practices.

The law does not apply to government construction, social welfare, insurance welfare, risk investment or industrial investment funds.

The law was first drafted by the Financial and Economic Committee in 1999 and has undergone several revisions.

By the end of June 2002, China had 56 listed funds valued at 93.6 billion yuan (US$11.3 billion), accounting for six percent of the total capitalization of China's stock markets.

(Xinhua News Agency August 23, 2002)