{"id":1668,"date":"2005-07-01T08:56:27","date_gmt":"2005-07-01T12:56:27","guid":{"rendered":"http:\/\/www.journals.law.harvard.edu\/ilj\/site\/?p=1668"},"modified":"2011-03-21T13:46:44","modified_gmt":"2011-03-21T17:46:44","slug":"issue_46-2_deng","status":"publish","type":"post","link":"https:\/\/journals.law.harvard.edu\/ilj\/2005\/07\/issue_46-2_deng\/","title":{"rendered":"Building an Investor-Friendly Shareholder Derivative Lawsuit System in China"},"content":{"rendered":"<p><span style=\"text-decoration: underline;\">Abstract:<\/span><\/p>\n<p><em> <\/em><\/p>\n<p><em>Despite  claims that China\u2019s capital markets resemble a \u201ccasino,\u201d China has in  fact made extraordinary strides in its quest to develop stable and  mature capital markets. Although the Shanghai and Shenzhen stock  exchanges only opened in the early 1990s, by the end of 2004 they  boasted a combined list of 1377 corporations with a total market  capitalization of RMB 3.7055 trillion ($447.5 billion). Currently,  China\u2019s capital markets rank as the twelfth largest in the world.<\/em><\/p>\n<p><em>What  is most striking about Chinese capital markets is the dominance of  individual investors. There are now more than seventy-two million  securities trading accounts in China. At the close of 2003, of the  accounts trading shares on the Shenzhen Stock Exchange, only 172,700 out  of 33.21 million were held by institutional investors. Individual  investors also generated more than 70% of the total trade turnover in  2003. Most of these individual investors are middle-aged individuals or  senior citizens, with an average age of 43.01 years. The majority of  them (86%) are low- or middle-income, and 55.63% have an annual income  below RMB 20,000 ($2,418). In addition, many Chinese individual  investors may lack basic financial or investment knowledge, as 43.81% of  them have no higher education.<\/em><\/p>\n<p><em>Faced with booming capital  markets packed with unsophisticated individual investors, China\u2019s  securities regulators have faced tough questions about the adequacy of  shareholder protections. The regulatory body adopted policies based on  La Porta\u2019s scholarship on the positive link between capital market  development and public shareholder protection. As stated by Meilun Shi,  former vice chairman of the China Securities Regulatory Commission  (\u201cCSRC\u201d), \u201cinvestors\u2019 confidence and participation are critical to the  healthy and stable development of China\u2019s capital markets. They have a  direct impact on the successful implementation of reform and the  Open-Door Policy, as well as on social solidarity.\u201d Since 2000,  therefore, investor protection has consistently been \u201cthe top priority\u201d  of the CSRC. In January 2004, China\u2019s State Council, in a policy  declaration regarded as an important milestone in the history of China\u2019s  capital markets, reiterated that \u201cprotecting the legitimate interests  of investors, particularly those interests of public investors\u201d shall be  one of the ongoing guiding principles in the reform and development of  capital markets. Most recently, this principle was incorporated for the  first time into the State Council\u2019s Annual Government Work Report, which  signifies the Chinese government\u2019s determination to further protect  investors.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Despite claims that China\u2019s capital markets resemble a \u201ccasino,\u201d China has in fact made extraordinary strides in its quest to develop stable and mature capital markets. Although the Shanghai and Shenzhen stock exchanges only opened in the early 1990s, by the end of 2004 they boasted a combined list of 1377 corporations with a total market capitalization of RMB 3.7055 trillion ($447.5 billion). Currently, China\u2019s capital markets rank as the twelfth largest in the world.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"jetpack_post_was_ever_published":false,"_FSMCFIC_featured_image_caption":"","_FSMCFIC_featured_image_nocaption":"","_FSMCFIC_featured_image_hide":"","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[123],"tags":[59],"class_list":["post-1668","post","type-post","status-publish","format-standard","hentry","category-print-archives","tag-asia-pacific"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/peZu3S-qU","jetpack_likes_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/posts\/1668","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/comments?post=1668"}],"version-history":[{"count":0,"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/posts\/1668\/revisions"}],"wp:attachment":[{"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/media?parent=1668"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/categories?post=1668"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/tags?post=1668"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}