From the chinese press

Capital market regulation

The fraud case of Goldman Sachs serves as a warning to China to strengthen its market regulations, says an article in the Huashang Post. Excerpts:

Recently, the US Securities and Exchange Commission filed charges against Goldman Sachs, claiming that the firm defrauded investors in a mortgage-related deal. This marked the initiation of tough regulation on financial derivatives on Wall Street.

The Goldman case sounds alarms for market regulation mechanisms in China, whose capital market models Wall Street practices. Due to an overwhelming number of medium and small-sized inexperienced investors, China's capital market bears a weaker risk tolerance compared to its US counterpart.

With the emergence of stock index futures in the burgeoning capital market, technical measures need to be enacted to restrict the entry of medium and small-sized investors.

Actually, the strict supervision mechanism, instead of denying their entry, can help lower the high risk in further development. Thus, a powerful regulation is needed to protect the interests of the vulnerable majority of investors.

Property market reform

The reform of China's property market marks the initiation of structural adjustments to its economic system, says an article in Youth Times. Excerpts:

Immediately after the release of new policies in China's real estate market, securities markets saw sharp slides, with the benchmark Shanghai Composite Index falling nearly 5 percent to less than 3,000. Also, it was expected to cause a panic withdrawal of property investors.

Deficiencies in the property market symbolize disorders in China's economic structure at large, featured by the poor public revenue and tax systems and the unbalanced income distribution.

Now that the central government resolves to abolish perennial maladies in the realty market, it should carry the reform through to the end, despite the pressures of increasing inflation and rising resource prices.

To carry out the new property policies, it is necessary to intensify the tax reform, focusing on taxes on consumption and real estate possession.

Correspondingly, financial reforms are needed in bank regulations, as well. China will witness internal economic adjustments at the structural level, avoiding significant changes in exchange or interest rates.

(China Daily 04/26/2010 page9)