China stocks soared after mainland authorities announced progressive rules in order to increase access of Chinese entities to foreign investments. The new rules will help individuals, investment firms, financial houses and banks to invest in foreign stocks and bonds. The ultimate goal is to free Chinese markets from a communist legacy and move it to a more free-market orientation. This should in turn increase Chinese power over Hong Kong’s financial powerhouses.
The Hang Seng Index closed upwards of 345 points while the Hang Seng China Enterprises also closed upwards of 293 points. This is good news for investors who appear to be reacting positively to the new opportunities created. Jin Dehuan a Chinese economist states, "The Shanghai Stock Exchange has gained the upper hand in pricing index heavyweights.(Jianxin & Gu, 2007)" Thus the China mainland will be the new master of financial markets wrestling the title from the pro-western city of Hong Kong.
China has been moving towards a freer and more open society. Since 1978 The People’s Republic of China has instituted key reforms that move it away from Soviet style communism to a more market-orientated economy branded “Chinese Socialism”. These changes have been credited with reducing poverty levels of 58% of the population in 1978 to about 8% in 2001 (World Bank, 2006).
Most of China is owned by the private sector while major utilities, energy sources, etc. were controlled by the central government. Much of China’s growth is from promoting trade, economic growth, and consumption. The GNP of China has grown four-fold in about 30+ years. The new exchange rules are seen as an important step in getting private individuals and companies to invest their earnings to help spur growth in other sectors.
| | Author Info: Murad Ali is a two time published author, Ph.D. candidate, and workds in human resource managementl. For similar type articles visit http://www.thenewbusinessworld.blogspot.com and http://www.thenewmarketingworld.blogspot.com |
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