《CHINA FINANCIAL MARKET DEVELOPMENT REPORT 2007》(English Edion)

《CHINA  FINANCIAL  MARKET  DEVELOPMENT  REPORT 2007》(English Edion)

Contents

Part l Overview    1

 I．Highlights of China’S Financial Market Development

  in 2007    3

1．1 Market Size GFew Rapidly，and Market

  Width and Depth Continuously Increased  3

1．2 Direct Financing Further Developed，and

  the Financing Structure Improved

  Somewhat    3

1．3 Innovation Speed Picked up，Products

  and Instruments Developed in a Diversified

  Manner 4

1．4 Institutional Building was Steadily

  Advanced,and Market Operational

  Mechanism was Further Improved 4

1．5 The Market Participants were Increasingly

  Diversified，and Institutional Investors

  Continued to Grow    5

1．6 The Financial Market Opened up to the

  Outside World at a Faster Pace and the

  Degree of International Participation

  Continued蛔Rise    6

 2．Macroeconomic Environment Analysis for China’S

  FinanciaI Market Development    6

2．1 The Analysis of the Domestic

  Macroeconomic Environment    6

2．2 The Analysis of the International Economic

  and Financial Environments 8

3．China's Financial Market Development Outlook    10

3．1 To Build a Multi—tier Market System and

  Promote Balanced Development of the

  Financial Market    10

3．2 To Speed up Product Innovation,and

  Enrich the Financial Market Product

  System    11

3.3 To Improve the Market Discipline

    Mechanism and Ensure Healthy

     Development of the Financial Market      11

3.4 To Establish and Improve the Financial

    Market Risk Monitoring and Early-

    warning System for the Purpose of Risk

     Prevention in the Financial Market        12

3.5 To Increase the Openness of the Financial

     Market and Further Improve International

     Competitive Edge                      12

Part II Operations of Financial Market  15

I. Money Market                          17

1.1 Inter-bank Lending Market: Presented

    Great-leap-forward Development         17

1.2 The Bond Repo Market: the Trading Size

     Touched a New High                     19

1.3 The Bill Market: Strengthened Effects

    Caused by the Credit Structure

    Adjustment of Commercial Banks         20

2. Bond Market                          23

2.1 Bond Issuance Market: New Highs Both in

    Issuing Volume and Holding Volume in

    Custody                             23

2.2 Bond Trading Market: Climbing Bond Yield

     and Rising Tumover                    24

2.3 The Characteristics of 2007 Bond Market

    Operation                             26

3. Stock Market                         27

3.1 Primary Market: IPO Financing Amount

    Ranked First Globally                  28

3.2 Secondary Market: Stock Indices Rose

    Continuously                           2 9

3.3 Operational Features of Stock Market     3 2

4．For69n Exchange Market    33

 4．1 Foreign Exchange Spot Market：the Elastidby

  of RMB Exchange Rate Continued to Improve 33

 4．2 Foreign Currency Pair Transactions on

  Inter—bank Market：Steady Development

  Maintained    37

 4．3 Operational Features of Inter—bank Forex

  Market    37

5．Gold Market    38

5．1 Movements of Gold Price in 2007：Gold

  Price Making a Record High    38

 5．2 SGE Business：Gold Spot Trade Growing

  Tremendously    38

5．3 Commercial Banks7 Gold Related

  Businesses Developed Rapidly 4 l

5．4 Operational Features of Gold Market 43

6．Fund Market 44

6．1 Fund Market：Capital Size Multiplied 44

6．2 Operational Features of Fund Market 45

7．Insurance Market 46

7．1 Insurance Market Maintained a Good

  Development Momentum 46

7．2 Operational Features of Insurance Market 47

8．Futures Market 47

8．1 Futures Market Experienced Total

  Turnover Rise Sharplv 47

8．2 Operational Features of Futures Market  50

9．Financial Derivatives Market    51

9．1 Interest Rate Derivatives Market：

  Centering upon Short—term Products    51

9．2 Exchange Rate Derivatives Market：USD·

  related Products Played a Leading Role  52

9．3 Stock Derivatives Market：Individual

  Investors Became Major Warrants Market

  Participants    55

 PartⅢThe Construction of FinanciaI Market 57

1．Finandal Market Institutional Construction    59

1．1 Institutional Construction in the Inter．

  bank Lending Market    59

1．2 Institutional Construction in the Bill

  Market    60

1．3 Institutional Construction in the Bond

  Market    62

1．4．Institutional Construction in the Stock

  Market    65

1．5 Institutional Construction in the Futures

  Market    67

1．6 Institutional Construction in the Financial

  Derivatives Market    68

 2．Product Innovation in the Finandal Harket    69

 2．1 Corporate Bonds    69

2．2 Forward Rate Agreement    71

2．3 Financial Bonds Issued by Finance

  Companies    7 2

2．4 The RMB／Forex Currency Swap    72

2．5 The Au(T+N)Product in the Gold Market 73

2．6 Innovative Closed—end Fund    75

2．7 Product Innovation in the Futures Market 76

3．Financial Market Infrastructure Construction    78

3．1 Official Launch of the New Foreign

  Exchange Trading System    78

3。2 Completion of DVP Settlement for Non-

  bank Institutions    79

3。3 A11一around Construction of Xinhua 08

  Financial Information Service System 80

4．The Opening of Financial Market and Intemational

 Cooperadon 81

4．1“Go Global”Strategy Implemented

  Steadily 8l

4．2 The‘Introducing Foreign Investors In’

  Strategy Was Promoted in an Orderly

  Manner 84

4．3 Fruitful Intemational Cooperation 85

Part IV FOCUS Analysis 89

 Focus I The Practice 0f Credit Asset Securitization in

    China    91

  1．General Description of Asset Securitization 91

  2．Practice of Asset Securitization in China  92

  3．Outlooks for Credit Asset Securitization  95

  Focus 2 The Primary Establishment of Shibor as

    Benchmark Interest Rate in the Money Market 96

  1．Fostering China7S Money Market

    Benchmark Interest Rate by Drawing on

    International Experiences    96

 2．Widely Application of Shibor in the Pricing

    of Market-based Products    97

  Focus 3 Analysis 0f Structurai Transition 0f China Stock

    Market in Recent Years    99

 1．Structural Transifion of Listed Companies 99

 2．Structural Transition of Investors    103

 3．Transformation of Financing Structure  1O6

 Focus 4 Perspectives on the Development of China's

    Credit Derivatives Market    |l O

  1．Concept and Functions of Credit Derivatives 110

  2．Significance of Developing China’S Credit

    Derivatives Market    111

  3．Preliminary Conditions for the

  Development of China’s Credit Derivatives

  MarketHasFormed    112

  4．Some Issues Related to the Development of

  Credit Derivatives Market    114

  Focus S Reform and Development 0f China's Financial

    Industry    I I 7

  1．Reform and Development of China’s

    Financial Industry in 2007    117

  2．Reform and Development of China7s

    Financial Market and Financial Industry  122

Focus 6 Strengthening Self-discipline and Supervision，

    Promoting the Establishment of NAFHII    124

1．The Necessity of Establishing Market Self—

disciplinary Organization to Strengthen

 the Market Self—disciplinary Management  124

2．Establishment of NAFMII and Its Defined

  Functions    126

3．NAFMn is of Great Importance to Inter-bank

 Market Administration and Development  I 2 8

Part V Appendices    131

Appendix I Highlights of Financial Market Development

    ifl 2007    133

Appendix II China Financial Market Statistics    139

Table 1 Major Macroeconomic Financial

    Indicators from 1998 to 2007(Year—end

    Balance)    139

Table 2 Composition and Growth Rate of RMB

    and Foreign Currency Deposits and

    Loans from 1998 to 2007(Year-end

    Balance)    140

 Table 3 Outstanding Loans，Outstanding

    Bonds，and Stock Market Capitaliza—

    tion as a Percentage of GDP from 1997

    t02007    140

 Table 4 Composition of Social Financing from

    1997t02007    141

 Table 5 Inter-bank Lending／Borrowing and

    Bond Repo Transactions from 1997 to

    2007    141

 Table 6 Participants in the Inter—bank

    Lending／Borrowing Market from 1997

    t02007    142

 rI'able 7 Commercial Bill Market from 1998

    t02007    142

 Table 8 Transactions in the Bond Market from

    1997t02007    143

 Table 9 Bond Market in 2007    143

11able 10 Issuance in the Bond Market from

    1998to 2007    144

Table 1 1 Bond Custody in the Bond Market

    froml997to 2007    144

Table 12 Issuance and Redemption of Treasury

    Bonds from 1998 to 2007    145

Table 13 Number of Participants in the Inter—

    bank Bond Market from 2000 to 2007 145

Table 14 Bond Settlement Agency Business in

    the Inter—bank Bond Market in 2007 I 4 6

Table 15 Market Makers in the Inter_bank

    BondMarket    147

Table 16 Pilot Banks for OTC Trading in the

    BondMarket    147

Table 17 OTC Trading of Book—entry Treasury

    Bondsin2007    148

Table 18 Primary Dealers for Open Market

    Operations in 2007    I 4 9

Table 19 Stock Market Statistics from 1997 to

    2007    I SO

Table 20 Change in Stock Market Turnover and

    Stock Indices from 1997 to 2007    l 5 0

Table 21 22 Market Makers for RMB Trading

    in the Inter-bank Spot Foreign Exchange

    Market    I 5l

Table 22 Foreign Exchange Market and

    Foreign Exchange Reserves from

    1994 to 2007    151

Table 23 Insurance Market from 1999 to 2007 I 5 2

Table 24 Transactions in the Futures Market

    from 1993 to 2007    152

1'able 25 Transactions in the Gold Market from

    2003to 2007    153