China Warehouse- More Than Crockery Message Board

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Strategies & Market Trends : China Warehouse- More Than Crockery

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To: RealMuLan who wrote (1003)	10/13/2003 1:23:55 PM
From: RealMuLan	Read Replies (1) of 6370

China edges towards options China is cautiously expanding its investment markets as its leaders meet to consider how to move forward the country's market system without diluting the Communist Party's control. The moves come as Communist Party leaders attending the 16th Party Congress in Beijing may back a constitutional amendment allowing private property for the first time. Rules published on Monday could lead to more widespread use of derivatives, complex bets on future market performance. The slow move towards derivatives comes ahead of China's 2006 World Trade Organisation deadline for opening up its banks to overseas competition. China has been nervous about allowing the trade ever since the Barings scandal of the 1990s, where the British bank was brought down by a trader misusing derivatives. The rules remain stringent, demanding regulatory approval before trading and long experience on the part of the staff responsible. Foreign firms wanting to trade derivatives will have to show evidence that their headquarters are adequately supervised. That may prove difficult, since in the US, for example, the derivatives trade is much less regulated than equity or bond trading. Private ownership Meanwhile, the Party Congress deliberations on private property are also keenly awaited. Should the much-touted amendment come about - and thus far no-one is sure it is even on the agenda - it could underwrite a more stable legal system, a common complaint among the investors who have rushed into China in recent years. China's leaders have been edging towards private property rules since a 1999 amendment which said private business was an "important component" of the economy. But the Communist Party is still walking a tightrope, wanting to use the energy of enterprise without ceding any political control. Ceding control of the currency, for instance, remains off the agenda despite heavy pressure from the US. President George W Bush is due at the Asia Pacific Economic Cooperation (Apec) summit in Bangkok this week, and may well tackle Chinese President Hu Jintao in person on the issue. news.bbc.co.uk

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