of fiscal authority. and the china jianyin investment co. ltd. is not a legacy company. the china construction bank reform is still complete restructuring. to sum up, property right has become clearer as a result of this approach. in fact, many of the problems we had to cope with in the process of reform are from supporting measures. that is to say, the problem with return on capital is related to a series of issues, including the systematic reform of enterprises and others that are yet to be properly resolved. as a result, i think we should stress the importance of enterprises ’ reform under current conditions, and not neglect it since it has been ongoing for many years. owners of a company have the right to enjoy its profits through decisions made by the board of directors and shareholders ’ meeting in line with corporate governance. in a high - growth environment, many enterprises will find themselves lacking of capital. if a company distributes all its profits, how can it continue development when it lack of capitals? in fact, these are two different matters. on one hand, investment should have returns. on the other hand, a company should have other financing channel to supplement capitals in addition to profits. without financing channel, companies may worry about dividends distribution since they cannot obtain additional funds for future growth. as a result, capital market should be further developed by resolving the non - tradable shares problem. i believe, with our efforts, we will make more progress in the reforms. i hope my speech will contribute to the discussion. your comments and criticisms are warmly welcome. thank you.

. a lot of works are still waiting ahead, though after many years ’ efforts great progress has been achieved in raising accounting standards and amending accounting rules since the asian financial turmoil. in the end of 1980 ’ s and early 1990 ’ s, serious distortions in enterprises ’ costs and profits propelled the launching of financial accounting reform in 1993 and adoption of new accounting standards and general financial rules. comparing the profit margin of chinese enterprises with their international counterparts, we would notice that, profit margin of chinese enterprises was much higher than the average 5 percent of the top 500 enterprises in the world. you can check the detailed data of chinese enterprises at that time for yourself. such comparison doesn ’ t mean higher profitability of chinese enterprises, as a large amount of costs was not reflected in cost, but in profit. for instance, bonus, employees ’ pensions, health, r & d and advertisement expenditures should have been cost items, but they were covered by profits. if such artificially high profits of enterprises were paid out as dividends, enterprises could not survive and develop. therefore, resolving distortions in cost and profit should be the first task in a series of supporting reforms. this involves upgrading accounting standards. in recent years, continued progress has been made in this regard, for instance, adoption of many practices. further international comparison may help us detect the remaining problems. financial treatments of complicated operations are also involved in the fundamental issue of cost and profit classification, such as risk provisioning, loss write - off and accounting rules on derivatives. without a clear classification, there will be serious disputes and complaints from enterprises when distorted profits are used as a basis to pay dividends. some entrepreneurs think it is a difficult problem. we can look at it from the perspective of distorted relationship between profit and cost. second, there are deficiencies in the tax system. our tax system should be rational and with few distortions. yet, this is not easily achievable for countries in transition and emerging markets and usually takes a long time. the first is tax category. improper tax categories affect the amount of profits before anything else, thus causing problems. the second is tax base. right now, reform of tax base is underway in china. the value - added tax ( vat ) will be shifted from production - based to consumption - based. one of the issues involved is how to apportion equipment investment and whether such input should be taken as costs. some large state - owned enterprises also face problems in taxa