Funding China's Growth: Will the New Securities Investment Fund Law Help?

By Walter Hutchens Assistant Professor, Robert H. Smith School of Business, University of Maryland

Shanghai, arguably China's most commercially oriented city, is a study in contrasts and reflects much of the country's tumultuous 20th century history. The city's Xintiandi area bustles with trendy, upscale dining, shopping and nightlife spots thronged with a young generation raised in the reform era. A short stroll away, however, a visitor can view the site where Mao Zedong and a handful of others held the first congress of the Chinese Communist Party (CCP) in 1921. Resolutions adopted by that first party congress are on display in an adjoining exhibition hall. "Elimination of the capitalist private ownership system" was among the bold ambitions that first generation of CCP leaders embraced.¹

Upon coming to power in 1949, the CCP began to implement policies reflecting its radical goals. Their efforts to reinvent society were predictably hostile towards capitalist mechanisms such as stock markets, and they soon shut down China's securities markets.²