protect the rights of shareholders and creditors when firms go into insolvency process. corporate bonds issuance and other financial innovations will enjoy a secure environment too. the company law and securities law currently either have many constrains on or unclear definition of private placement and otc market, affecting the establishment and development of multi - layer capital markets. some of the shortcomings have been amended in the recent revised version of the two laws. besides, the guarantee law and the property right law could affect the effectiveness of guarantee, pledge, and property rights applications in financial innovation if they have unclear definition of secured interests and property rights. there are many other similar cases that show the importance of such basic laws to financial ecological environment improvement as well as to financial innovation and development. 2. an orderly institutional environment. china is still in the transitional period to establish and improve socialist market economy, during which, how to clarify the relationships among government, market and enterprises, especially the administrative scope and ways of government, exerts great impact on financial innovation and development. on one hand, compared with the developed countries, china's governmental administration covers a much wider scope and has strong influence, which could promote financial innovation and development significantly if well organized. on the other hand, if the functions of the strong government are not properly fulfilled, it could also impede the improvement of financial ecological environment. for instance, currently, excessive administrative approval, unclear 1 / 4 approval standards and undefined accountabilities still exist in the financial industry. reflecting china's financial innovation process in 1980's to mid - 1990's in the 20th century, china once detoured in financial products innovation, experienced some financial risks and even tried to mitigate these risks by strengthening administrative control, because of the underdevelopment of qualified personnel, technology and management skills. it was unavoidable in a certain period of time, but, with the improvement of the market economy, we need to encourage and regulate financial innovation by making more use of market tools. 3. a good credit environment. a credit environment weighs much on financial ecological environment. in terms of credit information, financial innovation is a process in which credit information is collected and managed with various financial instruments to avoid risks and get returns. sound credit information system, true and effective information disclosure, real default accountabilities are fundamental factors to the success of financial innovation. at present, china's social credit system is still under construction and far from able

of financing products shall mainly target qualified investors. given the fact that we have neither rules regulating private funds nor classifying standards on qualified investors, people who are lacking in risk identification ability and risk bearing capacity are hence usually involved in collective trust plans, leading to relatively high market risks. as both the value of underlying assets and the number of units of privately - offered real estate funds are not high, problems of limited scope and low liquidity also exist for privately - offered stocks, consequently, the above two financing modes both face quite a few restrictions. to establish real estate investment trust fund via public offering or issuing beneficiary certificates based on specialized management shall be the future development direction as well as a sustainable developing mode for direct financing of the real estate industry, and it shall also be an important financing mode to support investment in house leasing market. i hope the current reform on non - tradable state shares and the implementation of the newly revised securities law shall expedite this process so as to develop a winwin situation for both the real estate industry and the financial industry.