The rules, which were detailed in financial newspapers, are aimed at meeting international standards. They will force companies to disclose financial losses and other balance sheet numbers which could harm profits. Economist Desmond Supple of Barclays Capital in Singapore says Beijing's move is a step in the right direction at a time when institutional investors around the world are scrutinizing China. That is a very encouraging move and it is a start of a trend that is going to have to be maintained given the likelihood of the WTO membership in the second half of next year. So it is an encouraging move, and one which is going to be met with a degree of optimism.
China has close to one thousand publicly traded companies.
Since share trading began in China nine years ago, they have been able to operate with few disclosure requirements. Under the new rules, some companies will have to provide investor reports in English, Japanese or French. They will have to offer explanations when their financial performance is poor, or when they do not declare a dividend. While the new rules will require big adjustments in China's corporate sector, Mr. Supple says the efforts will pay off. It is good for China over the long run.