Degree Name

Doctor of Philosophy


School of Accounting and Finance


It is clear from stock markets in western countries that a share holding system is a necessary prerequisite. However, the development of a stock market affects not only that share holding system but is connected to a country's macro-economy and its entire society In fact, the stock market once formed has its own functions and momentum. When this momentum matches the development speed and scale of the substantive economy, it will promote the development of that economy. Once it deviates from the normal momentum too much, it will likely cause an economic crisis. The stock market is a double edged sword: to what extent should it be left to promote economic development yet be restrained from leading to the production of an economic bubble is a very important research question.

The economic reforms that took China from a centrally-planned economy to a market economy necessitated a share holding system and stock market on the basis of western economic models. This also required a change to the administration mechanism of statedowned enterprises, reform of the banking management system and the establishment of a complete financial system. To now, China's stock market has had little more than a ten year history yet has developed at a very rapid speed; it has expanded the financial channels for enterprises and promoted enterprise reform. But, because China is in the process of transition, the administration and management methods that have been applied to the stock market, have resulted in a series of institutional problems. These institutional problems, along with some immaturity (inexperience) of investors, the lack of an effective surveillance system for the Chinese government, the incomplete construction of a legal framework and so on, have restricted the further development of China's stock market. The Chinese secondary stock market shows not only the common characteristics of an emerging market but also has some special characteristics.

This thesis focuses on the special and developing problems facing the Chinese stock market through a method of comparative analysis and testing of investors, surveillance institutions, and listed companies. It is found that there are several infrastructural problems that policy makers will have to resolve in order to make the Chinese stock market comparable to the sophisticated stock markets in some developed economies. Added to these problems are international pressures as the global economy develops. The study concludes with some strategic suggestions that policy makers might consider if they are to make the Chinese stock market one of the leading markets in the new world order.



Unless otherwise indicated, the views expressed in this thesis are those of the author and do not necessarily represent the views of the University of Wollongong.