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Home >> Great Minds China Forum >>  3rd Great Minds China Forum >>  Reflections from Micro Economic Perspective: Supervision and Corporate GovernanceReflections from Micro Economic Perspective: Supervision and Corporate Governance
Huang Haizhou:legal system and proper supervision for the reform of China’s capi


First, I would like to thank you for inviting me here to engage in this discussion. In my opinion, Mr. Patrick Bolton’s paper is of highly importance, and Professor Xu Chenggang has carried out a very attractive discussion about this paper. In the speech, Mr. Bolton has stressed that the roles of major shareholders are very important. According to LLSV, as long as the business is lawful, you should leave the rest to the market. And just now, Dean Tian Guoqiang mentioned the information asymmetry determined that it is unreasonable to leave all problems to market; we need to design a mechanism system. In his paper, Mr. Bolton has analyzed the supplementary action between supervision and laws. His paper is based on natural experiment- difficult to find sometimes-making a comparison between the Securities Act of 1933 and 1934 and selecting the supervised American power market as its study object. This paper is informative and full of profound insights, which can give instruction to the further economic reform of China’s capital market.


Mr. Patrick Bolton raised a question in his paper: do those major shareholders come back after 1992? Who are they? The answer is that they are investors from financial institutes which include BGI, Blackrock, etc. Why these investors can become the major shareholders? It is because they are the biggest issuing bank and dealer of ETF. The electricity share is very essential. If you want to enter the electricity ETF business, you should purchase sufficient shares from power plant. Market liquidity is the mainly concern of ETF issuers and dealers, so they are not inclined to engage in monitoring the enterprises as the major shareholders.


To further the reform of China’s capital market, we need a sound legal system and proper supervision. Now that we have so many postgraduate and doctoral students gathered here today, I hope you all can further the study on the relationship between product supervision and financial supervision, and that between supervision and legal system. Actually, neither the financial supervision nor the legal system can be replaced mutually, they shall work jointly. Today, Professor Bolton has introduced to us topics about supervision, laws and regulations, market reflection, and so on. I believe that with these instructions, you can make a further study from any perspective in accord with the actual situation in China.


At last, I would like to congratulate Professor Qian Yingyi and Professor Xu Chenggang, for they have been awarded the 1st China’s economic prize. They really deserve it! I also want to congratulate President Xia Bin for his success in setting up this prize and building the platform for economic discussion on Great Minds China Forum.


◆please indicate the source if authorized: National Economics Foundation

◆photo:National Economics Foundation