Finally, I would like to talk about our efforts to further open up the market.
Talking about the level of opening in China’s capital market, if we use the current concepts, definitions and standards of some international agencies like the IMF to make the assessment, we will find that it is still rather low. But that is not true in reality. We conducted an assessment on the current situation in China, which found the 40 items under the 7 categories of the IMF’s concept of capital accounts have all achieved certain levels of convertibility. No item is entirely inconvertible. The best examples include real-estate transaction by individual mainland residents in other countries, and overseas derivatives trading by mainland enterprises. The key point is that, the Residents Principle makes a great difference from the Citizens Principle. What’s more, the control of foreign exchange may not always be that effective.
Let’s look at this issue from another perspective. By the end of 2012, foreign shareholders have over 11 thousand trading accounts on the A-share market, holding an aggregate of 77.5 billion shares, accounting for 2.56% of total equity capital and 3.66% of total market cap on the A-share market. However, if we look at the number of companies they invest, over 200 QFII investors hold shares in 89.1% of all the listed companies, overseas shareholders 10.7% and foreign-invested-enterprises (FIEs) 75.1%. In addition, we have more than 1,000 companies listed overseas, among which H-share companies, red-chips and China-concept-companies listed in Hong Kong have 1.8 trillion US dollars in market cap. If we take into account all the domestic companies listed at home or abroad, 15% of their shares are held by overseas investors. Meanwhile, as you all know, the B-share market has been entirely open to foreign investors since it started. So, it’s fair to say that, the actual level of opening in China’s capital market is already very high. This is an undeniable truth.
We always believe, for a capital market to grow mature, it must have openness and competition. We also understand, in any economy in the world, capital account convertibility does not mean no regulation or supervision at all. In reality, fully free flowing capital does not exist. In the future, we will gradually achieve full convertibility of RMB under the capital account, and steadily open the capital market wider and deeper, while taking into account the actual demand of the capital market in China. Specifically speaking, the following measures will be taken.
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