This master’s thesis presents a detailed analysis of the Chinese stock market and the Chinese economy from a globalization perspective. The Chinese stock market has undergone a substantial development since its establishment in the early 1990’s. The large increases in share prices and market capitalization are mainly due to a liberalization of the market and improvements of investor protection. The Non-Tradable Share Reform has had the most significant effect on the Chinese stock market. The reform sought to remove the problems regarding the split share structure and the negative effects of dividends on the A-share investors, and was very successful. Other key improvements include establishment of the CSRC and changes in the auditing standards as well as the QFII Program, which allows qualified foreign institutional investors to invest in the A-share market. The main issue for the future of the Chinese stock market is the further opening of the market to foreign investors along with relaxing the restrictions on the domestic investors’ access to foreign securities. The growth of the stock market has largely contributed to the growth of the Chinese economy, which has recently become the world’s second largest only surpassed by the USA. The very high growth rates in the past decade have mostly been made up by investments and exports, while encouragement of increases in private consumption has been somewhat neglected. There are several important issues that have to be dealt with by the Chinese government for the growth to be sustainable in the long run. These issues include the development of a pension system, health insurance and unemployment benefits. The problem is exacerbated by the fact that the Chinese population is ageing, which leads to higher government expenditure and fewer taxes. The solution seems to be a reduction of the saving rate and a corresponding increase in private consumption. This can be achieved by increasing government expenditure and investments in areas that improves the social safety net. In spite of the future challenges, the ongoing globalization process seems to be largely successful.
|Educations||MSc in Finance and Accounting, (Graduate Programme) Final Thesis|
|Number of pages||143|