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Corporate Governance and Financial Reform in China's Transition Economy

Corporate Governance and Financial Reform in China's Transition Economy

Series: Law Series
Copyright Date: 2009
Pages: 328
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  • Book Info
    Corporate Governance and Financial Reform in China's Transition Economy
    Book Description:

    The world economy is facing unprecedented challenges brought by the still unfolding global financial crisis. At this critical juncture in history, China's economic performance and financial stability are closely watched across the world. The current global economic downturn and the rigidities it poses on the growth prospects of any individual economy are a testing ground for the effects of China's corporate governance reform and financial reform that have been taking place in recent years. It is now a proper time to assess whether these reforms have yielded meaningful results which can help China withstand and navigate through the most severe economic difficulties of our times. This book provides a comprehensive and up-to-date review and critique of corporate governance reforms and related financial reforms in China during the country's transition to a market economy, involving its enterprise, banking and capital markets sectors. China's participation in economic globalization, symbolized by its accession to the World Trade Organization, is taken as a broad background to the country's domestic reform agenda. By exploring the dynamics of China's evolving corporate governance regime, this book presents an important country study of corporate governance reforms in developing and post-communist transition economies to show the possibility of alternative paths to the market.

    eISBN: 978-988-8052-15-8
    Subjects: Economics

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-viii)
  3. Preface
    (pp. ix-xii)
  4. Acknowledgments
    (pp. xiii-xvi)
    Jing Leng
  5. 1 Introduction
    (pp. 1-24)

    Chapter 1 presents an introduction to the domestic and international backgrounds to China’s corporate governance reform. Section 1.1 discusses the relevance of corporate governance to China as an economy in transition from central planning to the market in an age of rapid integration of the world economy.¹ Section 1.2 briefly examines China’s motivation in joining the World Trade Organization (WTO) as well as the implications of China’s accession to this multinational trading system for the country’s corporate governance reform. In particular, Section 1.2 reviews China’s commitments to financial liberalization under the WTO agreements and highlights their impact on China’s enterprise...

  6. 2 Basic Concepts of Corporate Governance and Global Movements in Corporate Governance Reforms
    (pp. 25-38)

    Chapter 2 locates the Chinese corporate governance regime in international and historical contexts. Section 2.1 introduces basic concepts of corporate governance through an analysis of various definitions of corporate governance and a brief description of different mechanisms impacting on corporate governance. Section 2.2 reviews new waves of global corporate governance reforms in the early 21st century, particularly in the wake of a series of corporate scandals in both the U. S. and Europe. Section 2.3 discusses some notable trends in contemporary research on comparative corporate governance.

    Of basic concepts associated with corporate governance, the most relevant to the discussions in...

  7. 3 The History of China’s Enterprise Reform and Emerging Corporate Governance Issues
    (pp. 39-62)

    Chapter 3 reviews the history of China’s SOE reform and the emergence of corporate governance issues during the country’s transition from a centrally planned economy to a market economy over the past three decades. The historical background, objectives, strategies, designs and actual effects of alternative reform initiatives at different stages of China’s economic development are discussed. The purpose of Chapter 3 is to illustrate how sequencing and pacing have played a dominant role in the selection and adjustment of SOE reform strategies in China.

    Over the course of China’s SOE reform, the government’s policy priority has experienced a gradual shift....

  8. 4 Corporate Governance Practices of Major Types of Chinese Enterprises and Institutional Constraints on Corporate Governance Improvements during Transition
    (pp. 63-116)

    Chapter 4 examines the design and implementation of corporate governance mechanisms at Chinese enterprises and assesses their effects on both firm performance and the growth prospects of Chinese economy. Under investigation are four types of Chinese enterprises: state-owned enterprises or SOEs, listed companies, township and village enterprises or TVEs, and private enterprises. Major issues to be discussed in Chapter 4 are reform strategies adopted by the Chinese government for difference types of enterprises, as well as typical corporate governance problems arising from reforms and their causes. In addition, Chapter 4 also investigates the current legal and institutional environments for China’s...

  9. 5 The Interaction between Capital Markets and Corporate Governance of Chinese Listed Companies
    (pp. 117-182)

    There is an important qualification of the subject of study in Chapter 5: the term “capital markets” used here primarily refers to the stockmarket in China and overseas. This is primarily because equity financing is the dominant method for Chinese listed companies to raise capital, compared to the small proportion of debt financing in their capital structures.

    China’s stockmarket was established in the early 1990s when two stock exchanges in Shanghai and Shenzhen officially came into being. The stockmarket in China’s transition economy is a nascent financial institution with a short history and operates on a totally different basis compared...

  10. 6 Corporate Governance Reform of China’s Banking System
    (pp. 183-220)

    Chapter 6 examines corporate governance reform of China’s state-owned commercial banks (the “big four”) in the context of globalization and China’s transition to a market economy.¹ Specifically, the critical issues of NPL (nonperforming loan) disposal and the preparations of the “big four” for overseas listings are under close investigation.

    As a special type of SOE (i.e., state-owned financial enterprise), the reform of the “big four” is by nature aimed at solving the same problem as China’s SOE reform has targeted: state ownership and its costs. There exists strong complementarity between China’s SOE and banking reforms, primarily because the “big four”...

  11. 7 The Chinese Experience in International Corporate Governance Debates
    (pp. 221-258)

    Chapter 7 explores both the potential of the Chinese experience to inform, or contribute to, major debates in contemporary comparative corporate governance, particularly in relation to transition economies, and the lessons that China should learn from international experience.

    Section 7.1 examines alternative approaches to corporate governance that have been advanced by academics over the last two decades. Of these alternative approaches, an historical and political model, as opposed to a purely economic model, of countries’ corporate governance regimes is emphasized in the Chinese context.

    Section 7.2 depicts ongoing movements of international convergence of corporate governance, and also assesses the implications...

  12. 8 Conclusion
    (pp. 259-270)

    Chapter 8 concludes by reiterating the central argument of this book and the major findings in preceding chapters that support it. Chapter 8 also suggests the broad implications of China’s experience for developing and transition economies in their pursuit of corporate governance reform and economic growth.

    This book proposes a dynamic theory of corporate governance which applies to transition economies — particularly, China — committed to a process of gradualism in legal and institutional reforms, as opposed to “big bang”-type reforms favoured by other commentators which have had mixed-to-poor results in Central and Eastern Europe. The proposed dynamic theory of corporate governance...

  13. Appendix 1 Abbreviations
    (pp. 271-273)
  14. Appendix 2 Chinese Government and Regulatory Agencies
    (pp. 273-274)
  15. Appendix 3 Chinese Terms
    (pp. 274-275)
  16. Appendix 4 Chinese Language Financial Newspapers and Journals
    (pp. 275-276)
  17. Appendix 5 Glossary
    (pp. 276-290)
  18. Index
    (pp. 291-304)