Taking stock in China: Company disclosure and information in China's stock markets

Georgetown Law Journal

Volumn 88, Issue 6, 2000, Pages 1919-1951

  Anderson, Daniel M ^a  

^a NONE

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EID: 26844553833     PISSN: 00168092     EISSN: None     Source Type: Journal    
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References (220)

1. Zhonghua Renmin Gongheguo Zhengquan Fa [Securities Law] (passed Dec. 29, 1998, effective July 1, 1999) [hereinafter Securities Law], translated in CHINA L. & PRAC., Feb. 1999, at 25.
2. China to Hold Securities Law Contest, XINHUA ENGLISH NEWSWIRE, Apr. 1, 1999, available in 1999 WL 7930771.
3. See Trish Saywell, Finance Coming Clean: Chinese Finns Open Their Books as Securities Law Looms, FAR E. ECON. REV., Feb. 4, 1999, at 40 (reporting that the Securities Law has prompted an unprecedented surge of honesty among listed companies).
4. LOUIS D. BRANDEIS, OTHER PEOPLE'S MONEY AND HOW THE BANKERS USE IT 92 (A.M. Kelley 1986) (1914) (describing the need for disclosure in the banking industry);
5. see also LOUIS LOSS & JOEL SELIGMAN, FUNDAMENTALS OF SECURITIES REGULATION 25-26 (3d ed. 1995) (describing Brandeis's importance to the acceptance of a disclosure philosophy in U.S. federal securities regulation).
6. See Donald C. Clarke, Regulation and Its Discontents: Understanding Economic Law in China, 28 STAN. J. INT'L L. 283, 288-89 (1992).
7. See id.
8. See Loss & SELIGMAN, supra note 4, at 25-26.
9. See Paul Bowles & Gordon White, The Dilemma of Market Socialism: Capital Reform in China - Part II: Shares, 28 J. DEV. STUD. 575, 576-77 (1992) (explaining the policy reasons behind issuing shares in China);
10. see also ELLEN HERTZ, THE TRADING CROWD 45 (1998) (same).
11. See Bowles & White, supra note 8, at 579.
12. See Henry R. Zheng, Business Organization and Securities Laws of The People's Republic of China, 43 Bus. LAW. 549, 607 & n.403 (1988) (discussing Interim Provisions of the State Council on Several Policy Issues of Urban Collective Economy, promulgated Apr. 14, 1983).
13. See Yi-Chen Zhang & Da Yu, China's Emerging Market, COLUM. J. WORLD BUS., Summer 1994, at 112, 113.
14. See Henry R. Zheng, Securities Regulation in China: Development and Conflicts, E. ASIAN EXECUTIVE REP., May 15, 1987, at 7, 9.
15. See id. at 8-9
16. See id.
17. See id.; see also Jay Zhe Zhang, Comment, Securities Markets and Securities Regulation in China, 22 N.C. J. INT'L L. & COM. REG. 557, 561-62 & nn.30-33 (1997).
18. See, e.g., Bowles & White, supra note 8, at 579 & n.9 (alluding to the development of curb markets in Shanghai).
19. See HERTZ, supra note 8, at 37.
20. See, e.g., Shanghai Shi Zhengquan Jiaoyi Banfa [Administrative Measures of Shanghai Municipality Governing Securities Trading] (1990), translated in 2 CHINA LAWS FOR FOREIGN BUSINESSES: SPECIAL ZONES & CITIES 1985-1994 ¶ 91-038 (1995);
21. Shenzhen Shi Gupiao Faxing Yu Jiaoyi Guanli Zhanshi Banfa [Provisional Measures of Shenzhen Municipality on Share Issuing and Trading] (1991), translated in 1 CHINA LAWS FOR FOREIGN BUSINESSES: SPECIAL ZONES & CITIES 1985-1994 ¶ 73-553 (1995).
22. See Zhang & Yu, supra note 11, at 118.
23. See CHINA: Bourse Control Tightened, FAR E. ECON. REV., Aug. 28, 1997, at 65, available in 1997 WL-FEER 11441629.
24. See id.
25. See Mark O'Neill, Securities Law: Long Awaited Legislation Due This Year, S. CHINA MORNING POST, Nov. 12, 1998, Business News, at 6.
26. Gupiao Faxing Yu Jiaoyi Guanli Tiaoli [Interim Regulations on the Administration of Issuing and Trading of Shares] (1993) [hereinafter Interim Regulations], translated in I.A. TOKLEY & TINA RAVN, COMPANY AND SECURITIES LAW IN CHINA 179-96 (1998). Tokley and Ravn translate the regulations as "Provisional," but I follow other translations and use the word "Interim."
27. Jinzhi Zhengquan Qizha Xingwei Zanxing Banfa [Provisional Measures on Eliminating Securities Fraudulent Activities] (1993) [hereinafter Provisional Measures], reprinted in YU JIWEI, GUFENZHI JINGJIXUE GAILUN [ECONOMIC CONCEPTS IN STOCK SYSTEMS] 535-40 (3d ed. 1996).
28. Different aspects of the Interim Regulations and Provisional Measures have been the subject of numerous law review articles. See, e.g., Minkang Gu & Robert C. Art, Securitization of State Ownership: Chinese Securities Law, 18 MICH. J. INT'L L. 115, 122 (1996) (describing ideological principles in Interim Regulations);
29. Fang Liufang, China's Corporatization Experiment, 5 DUKE J. COMP. & INT'L L. 149, 181-85 (1995) (describing listing process under Interim Regulations);
30. Benjamin R. Tarbutton, China - A National Regulatory Framework Begins to Emerge, 24 GA. J. INT'L & COMP. L. 411, 419-29 (1994); Zhang, supra note 15, at 595-606.
31. See China's Securities Legislation Pressing Ahead, CHINA DAILY, April 21, 1998, available in LEXIS, News Library, China Daily File.
32. See Zhonghua Renmin Gongheguo Gongsi Fa [People's Republic of China Company Law] (1994) [hereinafter Company Law], translated in TOKLEY & RAVN, supra note 23, at 133-75.
33. For the most thorough critique of the Company Law see generally Fang, supra note 25.
34. See Zhonghua Renmin Gongheguo Xing Fa [People's Republic of China Criminal Law] (1997) [hereinafter Criminal Law], reprinted in ZHONGHUA RENMIN GONGHEGUO XING FA (Renmin Chubanshe 1997).
35. See id. at arts. 178-82, 197; see also Cai Dingjian, China's Major Reform in Criminal Law, 11 COLUM. J. ASIAN L. 213, 215 (1997).
36. See O'Neill, supra note 22, Business News, at 6.
37. See Securities Law, supra note 1, art. 17.
38. See O'Neill, supra note 22, Business News, at 6.
39. See id. One U.S. dollar is approximately 8.3 yuan.
40. See id.
41. See Jackie Lo, New PRC Securities Law Fails to Fully Unify Regulations of Securities Issues in China, CHINA L. & PRAC., Feb. 1999, at 21.
42. See Securities Law, supra note 1, art. 213; see also Lo, supra note 36.
43. Cf. Jian Fu, Information Disclosure and Investor Protection in China's Securities Markets 5, (visited Feb. 10, 1999) 〈http://www.otago.ac.nz/Web_menus/Dept_Homepages/Law/ALTA/ALTA%20 Papers/Fu.html〉 (describing disclosure requirements in China prior to Securities Law).
44. See Securities Law, supra note 1, art. 45.
45. See id. at art. 47.
46. See id. at art. 48.
47. See id. at art. 11. Compare id. at art. 45, with Company Law, supra note 27, art. 153.
48. Compare Interim Regulations, supra note 23, art. 23, with Securities Law, supra note 1, arts. 45 & 48.
49. See Jian, supra note 38, at 5-6 (describing CSRC regulations on company disclosure with respect to listed companies).
50. Zhonguo Zhengquan Jiandu Guanli Weiyuanhui Guanyu Fabu Gongkai Faxing Gupiao Gongsi Xiaoxi Pilu de Neirong Yu Geshi Zhunze Di Yi Hao ≪Zhaogu Shuomingshu De Neirong Yu Geshi≫ De Tongzhi [Notice of the CSRC on Rule No. 1 on the Content and Form of Information Disclosed by Companies Publicly Issuing Shares "Content and Form of Prospectus"] (Jan. 6, 1997), available in CSRC Website (visited Feb. 2, 1999) 〈http://www.csrc.gov.cn/csrc/statute/1997/ f0466.htm〉; see also Jian, supra note 38, at 5-6.
51. See Zhonguo Zhengquan Jiandu Guanli Weiyuanhui Guanyu Fabu Gongkai Faxing Gupiao Gongsi Xiaoxi Pilu de Neirong Yu Geshi Zhunze Di Liu Hao De Tongzhi [Notice of the CSRC on Rule No. 6 on the Content and Form and of Information Disclosed by Companies Publicly Issuing Shares] (Oct. 28, 1996) [hereinafter CSRC Rule No. 6], translated in TOKLEY & RAVN, supra note 23, at 258-71; see also Jian, supra note 38, at 6.
52. See CSRC Rule No. 6, supra note 46; see also Jian, supra note 38, at 6.
53. See Securities Law, supra note 1, arts. 47-48.
54. See Zhonguo Zhengquan Jiandu Guanli Weiyuanhui Guanyu Fabu Gongkai Faxing Gupiao Gongsi Xiaoxi Pilu de Neirong Yu Geshi Zhunze Di Qi Hao ≪Shangshi Gonggao De Neirong Yu Geshi≫ De Tongzhi [Notice of the CSRC on Rule No. 7 on the Content and Form of Information by Companies Publicly Issuing Shares "Content and Form of Listing Announcement"] (Jan. 6, 1997), available in CSRC Website (visited Feb. 12, 1999) 〈http://www.csrc.gov.cn/csrc/statute/1997/ fo465.htm〉; see also Jian, supra note 38, at 6.
55. Compare Interim Regulations, supra note 23, arts. 57-59, with Securities Law, supra note 1, arts. 60-62.
56. See Securities Law, supra note 1, art. 60.
57. See id.
58. See Zhonguo Zhengquan Jindu Guanli Weiyuan Hui Guanyu Shangshi Gongsi Bianzhi 1997 Niandu Zhongqi Ruogan Wenti de Tongzhi [CSRC Notice on Certain Problems with Publicly Traded Companies Working Out 1997 Semiannual Reports] (June 24, 1997), available in CSRC Website (visited Feb. 12, 1999) 〈http://www.csrc.gov.cn/csrc/statute/1997/f0472.htm〉.
59. See Securities Law, supra note 1, art. 61.
60. See id.
61. See id.
62. See Interim Regulations, supra note 23, art. 59.
63. See Zhonguo Zhengquan Jiandu Guanli Weiyuanhui Guanyu Yinfa Gongkai Faxing Gupiao Gongsi Xiaoxi Pilu de Neirong Yu Geshi Zhunze Di Er Hao De Tongzhi [Notice of the CSRC on Rule No. 2 on the Content and Form of Information Disclosed by Companies Publicly Issuing Shares] (Dec. 17, 1997), available in CSRC Website (visited Feb. 12, 1999) 〈http://www.csrc.gov.cn/ csrc/statute/1997/ f0488.htm〉.
64. See id.
65. See Zhongguo Zhengquan Jindu Guanli Weiyuanhui Guanyu 1996 Nian Shangshi Gongsi Niandu Baogao Bianzhi Gongzuo Zhong Ruogan Wenti De Tongzhi [CSRC Notice on Certain Problems with Working Out 1996 Annual Reports of Publicly Trading Companies] (Jan. 22, 1997), available in CSRC Website (visited Feb. 12, 1999) 〈http://www.csrc.gov.cn/csrc/statute/1997/ f0469.htm〉.
66. Compare Interim Regulations, supra note 23, art. 60, with Securities Law, supra note 1, art. 62.
67. See Securities Law, supra note 1, art. 62.
68. See Interim Regulations, supra note 23, art. 60; see also Lo, supra note 36, at 22.
69. See Zhang, supra note 15, at 599.
70. See Zhongguo Zhengjianhui Chu Tonggzhi Jinyibu Guifan Shangshi Gongsi Peigu Xingwei [CSRC Releases Notice on Improving Listed Companies' Stock Dividend Activities] available in CSRC Website (visited Mar. 3, 1999) 〈http://www/csrc.gov.cn/csrc/news/1999/f02115〉 (press release describing 1999 amendments to 1996 notice regarding problems with listed company's stock dividends).
71. See Foo Choy Peng, Firms Fined Over Fund Rule Breach, S. CHINA MORNING POST, June 11, 1998, at 5, available in 1998 WL 2982698.
72. See Huang Tingjun, Gujia Yidao, Bu Zai Wuli Kan Hua [Stock Prices Strangely Move, Do Not Again Look at Flowers in a Fog], ZHONGGUO ZHENQUAN BAO [CHINA SEC. NEWS], June 13, 1998, at 1.
73. See id.
74. See Securities Law, supra note 1, art. 79.
75. See id. at art. 80.
76. See id. at art. 81.
77. See id. at art. 82.
78. See JAMES D. COX ET AL., SECURITIES REGULATION 4-9 (2d ed. 1997) (describing the development of mandatory disclosure in United States securities regulation and the mandatory disclosure provisions).
79. See YUN-WEI TANG ET AL., ACCOUNTING AND FINANCE IN CHINA 143 (3d. ed. 1994) (discussing problems with accounting profession in China).
80. See Fang, supra note 25, at 183-84 (describing lawyers' fabrication of reports during issuing process).
81. See Jian, supra note 38, at 11.
82. See id.
83. See Securities Law, supra note 1, art. 213.
84. See Matthew K. Wong, Note, Securities Regulations in China and Their Corporate Finance Implications on State Enterprise Reform, 65 FORDHAM L. REV. 1221, 1238-40 (1996).
85. See Lao Zhao, Hongguang to Pump Up Tube Output, Bus. WEEKLY, Jan. 18, 1993, available in 1993 WL 10860000.
86. According to Hongguang's prospectus, the company's profits for the three years before its public offering were: Year Total Profits (in yuan) Profit/Share (in yuan) 1994 60,000,000 0.38 1995 78,000,000 0.49 1996 54,000,000 0.339 See Wu Ming, Gupiao Benshi Wu Quing Wu [This Stock Is Merciless], SICHUAN JINRONG TOUZHI BAO [SICHUAN FINANCE AND INVESTMENT NEWSPAPER], June 13, 1998, at 6.
87. See Tube Firm Shares, CHINA DAILY, May 25, 1997, at 3, available in 1997 WL 8259991.
88. See Wu, supra note 81, at 6. The reporter discovered this information by interviewing a former worker on Hongguang's production line. See id.
89. See id.
90. See id.
91. See Hongguang Shiye Yuji Kuisun 1.6 Yi Yuan [Hongguang Industrial Predicts Loss of 160 Million Yuan], ZHONGGUO ZHENQUAN BAO [CHINA SEC. NEWSPAPER], June 3, 1998, available in China Securities Newspaper Website (visited Oct. 28, 1998) 〈http://www.chinasecurities.com.cn/enp/st/ shidian1.html〉.
92. See China: Nine More Companies Become "Special Treatment Shares," DOW JONES INT'L NEWS SERVICE, Apr. 30, 1998, available in WL 4/30/98 DJINS 06:10:00.
93. See Hu Shen Zhengjiaosuo Banbu ≪Gupiao Shangshi Guice≫ [Shanghai, Shenzhen Exchanges Promulgate "Rules for Publicly Traded Stocks"], ZHONGGUO ZHENQUAN BAO [CHINA SEC. NEWSPAPER], Jan. 1, 1998, available in China Securities Newspaper Website (visited Oct. 28, 1998) 〈http://www.chinasecurities.com.cn/enp/st/beijing.html〉.
94. Foo Choy Peng, Firms Fined Over Fund Rule Breach, S. CHINA MORNING POST, June 11, 1998, at 5, available in 1998 WL 2982698.
95. See Zhongguo Zhengjianhui Guanyu Chengdu Hongguang Shiye Gufen Youxian Gongsi Yanzhong Weifa Weigui Anjian De Tongbao [CSRC Announcement About Chengdu Hongguang Industrial Limited-stock Company's Serious Violations of Law and Regulations], ZHONGGUO ZHENGQUAN BAO [CHINA SEC. NEWSPAPER], Nov. 20, 1998, at 1, available in China Securities Newspaper Website (last modified Nov. 20, 1998) 〈http://www.chinasecurities.com.cn/enp/NPARTICLE.HTM〉.
96. See id.
97. See Zhu Jun, Shei Wei Qiongminyuan Fuze? [Who Is Responsible for Hainan Minyuan?], MONEY ZAZHI [MONEY MAGAZINE], Apr. 1998, at 12-21.
98. See id. at 15.
99. See id.
100. See id.
101. See id.
102. See id.
103. See id.
104. See id. at 17.
105. See id. at 19.
106. Foo Choy Peng, Infamous Five Stay Free as Hainan Minyuan Exposes Regulator's Limits, S. CHINA MORNING POST, May 1, 1998, Business Post, at 6.
107. See Zhu, supra note 92, at 20.
108. See Foo Choy Peng, Deng's Son Linked to Securities Fraud Case, S. CHINA MORNING POST, Apr. 30, 1998, Business Post, at 1.
109. See Foo Choy Peng, CSRC to Punish Fraud Directors, S. CHINA MORNING POST, May 1, 1998, Business Post, at 6.
110. Foo, supra note 103, at 1.
111. Foo, supra note 101, at 6.
112. See Foo, supra note 104, at 6.
113. COX ET AL., supra note 73, at 43.
114. See id.
115. Securities Law, supra note 1, art. 71(1). Article 71 prohibits anyone from obtaining improper benefits or transferring risks to others in certain enumerated ways, including manipulation. See id.
116. See id. art. 184.
117. See, e.g., Provisional Measures, supra note 24, art. 8.
118. These organizations are reminiscent of institutional traders in the United States. A key difference is that these organizations may be linked with the State apparatus and may serve as a conduit for State funds. See HERTZ, supra note 8, at 191.
119. Individual speculators taught me to watch the volume of shares traded in order to guess the actions of the jigou.
120. See infra notes 179-83 and accompanying text.
121. Certainly, one could argue that the market worked in this case. Investors bought the shares of a company that was performing well. One could also argue, given the rampant manipulation on the market, that it did not matter what the earnings were in the annual report. It only mattered that the price was being driven upwards by investors flocking to buy shares. In other words, deciding to buy may have involved an analysis of the annual report, but the other factor is whether the shares were trading at a volume that drove up their price.
122. See, e.g., TANG ET AL., supra note 74, at 142 (citing study of companies listed on the Shanghai Stock Exchange).
123. See id.
124. See id.
125. See, e.g., Joaquim F. Matias, From Work-Units to Corporations: The Role of Chinese Corporate Governance in a Transitional Market Economy, 12 N.Y. INT'L L. REV. 1, 10-22 (1999) (describing the reform of Chinese enterprises that resulted in economic decisionmaking being shifted from the central government to local governments and the enterprises themselves).
126. See Clarke, supra note 5, at 289 (explaining the need for the State to monitor managers who direct the use of assets bought with the State's money); see also JULIA KWONG, THE POLITICAL ECONOMY OF CORRUPTION IN CHINA 58 (1997) (describing the opportunities that exist for managers to divert resources for their own benefit in the Chinese system).
127. See Cox ET AL., supra note 73, at 44 (describing how accounting and financial reports can monitor management).
128. Reports have not indicated whether Hongguang or Minyuan managers or directors used their own accounts to trade their company's shares. Because of the high degree of autonomy enjoyed by Chinese managers and their ability to use the company coffer for their own purposes, it may not matter whether they used their own accounts or not.
129. See Provisional Measures, supra note 24, arts. 3-7.
130. See Securities Law, supra note 1, arts. 68-69.
131. See id. at art. 68. According to the Securities Law, the following groups of persons are considered "informed" persons with inside information: 1) the directors, supervisors, managers, deputy managers, and relevant senior management personnel of a listed company; 2) shareholders who hold more than five percent of the shares in a company; 3) the senior management personnel of the holding company that has issued shares; 4) persons who are able to obtain relevant company information concerning the trading of its securities by virtue of their positions in the company; 5) the working personnel of the securities regulatory authority and other persons that administrate securities trading pursuant to their statutory authority; 6) the relevant personnel of social intermediary organizations that participate in securities trading pursuant to their statutory duties and the relevant personnel of securities registration and clearing institutions and securities trading service organizations; and 7) other persons specified by the State Council's securities regulatory authority. See id.
132. See id. at art. 69. "Insider information is information that, in the course of securities trading, has not yet been disclosed and concerns the company's business or financial affairs or may have a major effect on the market price of the company's securities." Id. The article lists eight types of inside information. See id.
133. See id. at art. 202.
134. Id. at art. 166.
135. See id. at art. 168.
136. See id. at art. 171.
137. False accounts are widely used in Chengdu and can be purchased on a black market. The accounts on the Shanghai and Shenzhen exchanges are legitimately opened with a government-issued status card. Both the status card and the account cards are sold, and the purchaser can use them to open trading accounts in securities brokerage houses. The use of these false accounts makes it difficult to track the persons who are actually orchestrating the trades.
138. See Trish Saywell, Law: Demanding Action: Ordinary Chinese Are Starting to Take Their Grievances to Court as They Become Increasingly Aware of Their Legal Rights, FAR E. ECON. REV., May 13, 1999, at 42;
139. Chinese Investor Sues Hongguang Over Share Issue, ASIAN WALL ST. J., Dec. 16, 1998, at 3.
140. See Chinese Investor Sues Hongguang Over Share Issue, supra note 133, at 3.
141. See Henry Sender, In Hong Kong: China Court Ruling Shows Market Reforms' Slow Pace; Shareholder-Rights Case Points Up CSRC's Power, ASIAN WALL ST. J., July 23, 1999, at 13.
142. See id.
143. See Securities Law, supra note 1, art. 63.
144. See Sender, supra note 135 (reporting comments by Nicholas Howson of Paul, Weiss, Rifkind, Wharton & Garrison in Beijing).
145. Gordon Chang, China Is Not Yet Ready for Privatization, ASIAN WALL ST. J., July 7, 1999, at 8.
146. HERTZ, supra note 8, at 13 (citing HILL GATES, CHINA'S MOTOR: A THOUSAND YEARS OF PETTY CAPITALISM 8 (1996)).
147. See id. at 14-15.
148. See Securities Law, supra note 1, art. 11.
149. See Company Law, supra note 27, art. 152.
150. See Securities Law, supra note 1, at 14.
151. See id. at art. 15.
152. See id. at art. 16.
153. See id. at art. 153.
154. In November 1997, China Eastern Airlines, Anshan Iron and Steel, and Shanghai Automobile all listed 300 million shares over a two-week span. See Chinese Market Taking On Large State Finns, XINHUA NEWS AGENCY, Nov. 27, 1997, available in 1997 WL 13733466.
155. See NPC Resolution to Amend the PRC Company Law, CHINA ONLINE (visited Mar. 14, 2000) 〈http://www.chinaonline.com/features/legal/newsarchive/secure/2000/January/ C00011770.asp〉.
156. See infra note 159 and accompanying text.
157. See supra notes 83-85 and accompanying text.
158. See Nancy L. Wong, Easing Down the Merit-Disclosure Continuum: A Case Study of Malaysia and Taiwan, 28 LAW & POL'Y INT'L BUS. 49, 49 (1996).
159. See id. at 49 n.2.
160. See id.
161. See HERTZ, supra note 8, at 47. Hertz points out that this might not be a technical determination of "bankrupt" since the new bankruptcy law had not yet come into effect. In this context, the term means that companies were faced with "increasingly demanding creditors and no one willing to lend them more money." Id. at 47 n.7.
162. See Fang, supra note 25, at 178.
163. See William D. Holmes, China's Financial Reforms in the Global Markets, 28 LAW & POL'Y INT'L BUS. 715, 751 (1996).
164. See id.
165. See id. Holmes also criticizes the quota process for its lack of predictability as quotas are often announced at irregular times and are subject to change midyear based on market conditions. See id.
166. See Nicholas C. Howson, China's Company Law: One Step Forward, Two Steps Back? A Modest Complaint, 11 COLUM. J. ASIAN L. 127, 157 (1997) (describing the requirement as "most extraordinary, and unprecedented in any local listing regulations or the [Interim] Regulations").
167. See Shanghai, Shenzhen Exchanges Promulgate "Rules for Publicly Traded Stocks," supra note 88.
168. See Bowles & White, supra note 8, at 579.
169. See HERTZ, supra note 8, at 175 n.1. In 1991, the Shanghai exchange allowed price movements of one percent per day of 3/1000 of total shares issued. When the political winds began to support the market in 1992, the Shanghai exchange provided for some new shares to fluctuate within a five percent margin and price ceilings were not imposed for other new shares. The result was an unwieldy system of three different regimes operating at the same time. Eventually, all shares were allowed to fluctuate at the five percent limit, and finally, all price ceilings were lifted on May 21, 1992. See id. at 175.
170. See Party Newspaper Article Warns of Overheated Stock Markets, BBC SUMMARY OF WORLD BROADCASTS, FE/D2799/G, Dec. 19, 1996, available in LEXIS, News Library, BBC Summary of World Broadcast-Asian Pacific Stories File.
171. See News Analysis: China's Stock Market Expected to Grow Stably, XINHUA NEWS AGENCY, Sep. 30, 1997, available in 1997 WL 13731837.
172. See Shanghai, Shenzhen Exchanges Promulgate "Rules for Publicly Traded Stocks," supra note 88.
173. See Zou Bing, Gupiao Tebie Chuli Dui Touzhi Linian De Yingxiang [The Influence of Stock Special Treatment on Investment Logic], ZHONGGUO ZHENQUAN BAO [CHINA SEC. NEWSPAPER], June 3, 1998, available in China Securities Newspaper Website (last modified June 3, 1998) 〈http:// www.chinasecurities.com.cn/enp/st/shidian6.html〉.
174. Wang Guowang, PRC: Theoretical Discussion on China's Capital Market, CAIMAO JINGJI [FLNANCE AND TRADE ECONOMICS], Apr. 11, 1996, at 11, available in FBIS-CHI-96-138.
175. An example from another context serves to demonstrate this point: it is well-known that the roster of attendees at State meetings is a clue as to which leaders are at the center of power.
176. See supra notes 7-9 and accompanying text.
177. Stock prices in 1995 were stable, as opposed to the volatile market of 1994. In 1995, the Shanghai A-Share Index fluctuated between 600 and 800 points. In 1994, the Shanghai A-Share Index had reached a high of more than 1500 points and a low of 300 points. The Shenzhen A-Share Index fluctuated between 1030 and 1300 points in 1995. See China's Stock Market Stable Amid Standardization, XINHUA NEWS AGENCY, Jan. 9, 1996, available in 1996 WL 3774291.
178. In January 1996, the Shanghai A-Share Index was less than 560 points, and the Shenzhen A-Share Index was less than 1000. See Lao Fei, Gaobie Xiongshi, Zuo Xiang Guifan [Goodbye Bear Market, Moving Towards Regularization], ZHENGQUAN SHICHANG ZHOUKAN [SEC. MARKET WKLY.], Feb. 2, 1997, at 2.
179. See Chinese Stocks Extend Plunge; Officials Cite Speculation, N.Y. TIMES, Dec. 16, 1996, at D10.
180. See Lao, supra note 171. The Shanghai A-Share Index rose from less than 560 points to 1258 points, and the Shenzhen A-Share Index rose from less than 100 points to 4523 points. See id.
181. See Party Newspaper Article Warns of Overheated Stock Markets, supra note 164.
182. See HERTZ, supra note 8, at 66 (referring to Shanghai investors).
183. Party Newspaper Article Warns of Overheated Stock Markets, supra note 164.
184. See id.
185. See CHINA: Push for More Listings, FAR E. ECON. REV., Sep. 18, 1997, at 69, available in 1997 WL-FEER 11441742.
186. See Foo Choy Peng & Christine Chan, CSRC in Share Price Crackdown, S. CHINA MORNING POST, May 17, 1997, Business News, at 1, available in 1997 WL 2263541. The suspension was authorized under article 57 of the Regulations Governing Securities Exchanges published in August 1996 by the State Council Securities Committee. See id.
187. See id.
188. See id.
189. See Stock Speculation by State Enterprises, Listed Companies Banned, XINHUA NEWS AGENCY, May 22, 1997, available in 1997 WL 8995894.
190. See Chinese Banks Banned From Stock Market, XINHUA NEWS AGENCY, June 6, 1997, available in 1997 WL 8996381.
191. See Solomon M. Karmel, Securities Markets and China's International Economic Integration, COLUM. J. INT'L AFFAIRS, Winter 1996, available in Columbia Journal of International Affairs Website (visited Feb. 19, 1999) 〈http://www.columbia.edu/cu/sipa/PUBS/JOURNAL/Karmel.html〉.
192. See id.
193. See HERTZ, supra note 8, at 66.
194. See Securities Law, supra note 1, art. 68.
195. See id. at art. 70 ("No informed person with knowledge of inside information on securities trading or other person who has illegally obtained inside information may purchase or sell securities of the company on which he has inside information, divulge such information or counsel another person to purchase or sell such securities.").
196. See id. at art. 69.
197. See id. at art. 172.
198. Randy Peerenboom, Ruling the Country in Accordance with Law: Reflections on the Rule and Role of Law in Contemporary China, 11 CULTURAL DYNAMICS 315, 333 (1999).
199. See id. (describing the draft Legislation Law).
200. See KENNETH LIEBERTHAL, GOVERNING CHINA 197-99 (1995) (describing the apparatus of state control over the media).
201. See Securities Law, supra note 1, art. 64.
202. Id.
203. "The dissemination of price and product information was crucial to the development of national markets in Britain and America from the 17th through the 19th century." DOUG HENWOOD, WALL STREET 102 (1998)
204. (citing WAYNE PARSONS, THE POWER OF THE FINANCIAL PRESS 27, 41(1990)).
205. See Foo Choy Peng, Securities Body Launches Blitz on Cowboy Investment Advisers, S. CHINA MORNING POST, Jan. 1, 1998, Business News, at 3, available in 1998 WL 2962533.
206. See id.
207. See Seth Faison, Citing Security, China will Curb Foreign Financial News Agencies, N.Y. TIMES, Jan. 17, 1996, at A1.
208. See id.
209. See Ann P. Vandevelde, Note, Realizing the Re-Emergence of the Chinese Stock Market: Fact or Fiction?, 30 VAND. J. TRANSNAT'L L. 579, 613 (1997).
210. See id. at 614.
211. One reporter for a Chengdu financial newspaper told me that the local newspapers are often privy to news about companies before it is published in the designated newspapers. See Interview with Reporter A, in Chengdu (Summer 1998) (name withheld to protect the identity of the reporter).
212. See id.
213. See id.
214. Securities Law, supra note 1, art. 188.
215. See Criminal Law, supra note 29, art. 181.
216. See Mitchell A. Silk, Cracking Down on Economic Crime: Will China's Latest Anti-Corruption Campaign Have Any Impact?, CHINA Bus. REV., May 1, 1994, available in 1994 WL 11291268.
217. See id.
218. The best analogy is "day trading" in the U.S.
219. One center where I conducted research provided investors with daily summaries of stock news.
220. See China Revokes Securities Licenses, ASIAN WALL ST. J., Apr. 7, 1999, at 18, available in 1999 WL-WSJA 5431163.