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As a result of the Chinese programme for partial flotation of large-scale state-owned corporations and the ensuing expansion of equity markets, corporate governance issues are becoming of critical importance for the success of enterprise reform and capital market development in the country, as well as for the stability of financial markets in the region. Since 2002, China has undertaken crucial reforms and initiatives to enhance both corporate governance and the management of state-owned assets.
Corporate Governance Policy Development in China
On the corporate governance front, the “Code of Corporate Governance for Listed Companies in China” was issued by the China Securities Regulatory Commission (CSRC) and the State Economic and Trade Commission in January 2002. This Code is based on the OECD Principles of Corporate Governance and the Chinese authorities have been taking steps to enhance its enforcement through special inspections. A first report on corporate governance in China, which highlights the progress to date and remaining challenges, was published by the Shanghai Stock Exchange in 2004.
In parallel, the 16th Communist Party Congress in late 2002 concluded that better management of state owned assets would be one of the top priority areas for the current government and a new commission was set up in April 2003 to manage state-owned assets, the State Assets Supervision and Administration Commission (SASAC). The establishment of the SASAC represents a crucial step in separating the ownership function regarding state owned assets from the regulatory function within the Chinese administration.
Goals and Objectives
For both the above mentioned reform initiatives as well as the pending capital market development in the country to succeed, stability of financial markets is of essence. Sound and transparent corporate governance policies will play a crucial role in this and may also well function to attract the international investors required to sustain China’s long term economic growth.
In order to support the aforementioned policy reforms, the OECD wishes to share its experiences in the area of corporate governance with China through regular policy dialogue exchanges in China and in Paris at the OECD Secretariat. Considering China’s emerging role in the global economy, it is also important for the OECD member countries to understand and fully appreciate the depth and scope of Chinese reforms in corporate governance. Sharing views and experiences between Chinese institutions, including the Enterprise Research Institute of the Development Research Centre, the Shanghai Stock Exchange, the SASAC, the CSRC as well as several Chinese universities, and the OECD member countries, will build and sustain the relationship between China and the OECD in the area of corporate governance.
Meetings
The third Policy Dialogue on Corporate Governance in China took place on 29-30 March 2007 in Shanghai, jointly hosted by the OECD and Shanghai Stock Exchange. The dynamic discussion among senior officials, business leaders and scholars from China and OECD countries provided stimulating debate on boardroom challenges and recent Corporate Governance Policy developments.
The second Policy Dialogue on Corporate Governance in China took place on 19 May 2005 in Beijing, jointly hosted by the OECD, and the Enterprise Research Institute of the Development Research Centre of the State Council of China. This dialogue focused on the corporate governance of state-owned enterprises and was also the first occasion where the OECD Guidelines on Corporate Governance of State Owned Enterprises were presented after their endorsement by the OECD member countries at the end of April 2005.
The first Policy Dialogue on Corporate Governance in China took place on 25-26 February 2004 in Shanghai, jointly hosted by the OECD and the Shanghai Stock Exchange. Issues discussed included scaling down state ownership of listed companies; the role of the state as a shareholder; the role and responsibilities of boards of directors (including board committees), as well as the issue of corporate governance enforcement.
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