| China's equity market was born and developed in the process of system transition from the planned economy to the socialist market economy. Gradualism of transition leaved behind heavy brand of planned economy to the stock market. As a result, equity market also faced the transition issue from the planned economy to the market economy.There are two problems need to be solve in economy transition: (1) Economic marketization, namely deregulation; (2) Advance state-owned economy restructure and adjustment. The two problems have close relationship with equity market. With regard to the former, the market-oriented reform of stock market should belong to economy marketzation. The latter involved the state-owned enterprise reform and state-owned capital withdrawal will accomplish via public stock and private equity market.Planned Economy characteristics of China Stock market mainly represented in three aspects: (1) Government adopted the supervising way of planned economy; (2) Equity was divided into circulating stock and non-circulating stock; (3) Government frequently intervened market and made market running according to its will.In comparison with international, the author of the dissertation find deposits to GDP ratio in China far exceed other countries' in choosing samples. However following indexes in China were lower than other countries' obviously, such as stock market cap to GDP, companies to pop (number of companies to population is the ratio o number of domestic companies), equity issues to GFCF (gross fixed capital formation), local resident's market participant rate, foreign investor's stockholding rate.This comparison showed that stock market developing level in China not only was lower than developed countries' in samples, but also was lower than close-income and low-income countries'. But took a close look at price earnings ratio and market turnover, we could find that even if market was bear in the year from2001 to 2003, China data still was higher than all countries' in samples. When turning our research to state-owned equity withdrawal, we found state-owned equity could exchange with very low price-earnings ratio.For this problem, the dissertation explains that there existed bubbles in the stock market, that is to say, stock price was higher than its inherent value. Bubbles' existing caused investor's unwillingness to take part in the market who are aware of that bubbles would be dashed to the ground. Statistic date reflect this that China stock market's participating rate of resident and foreign capital were distinctly lower than similar culture background and income level market's. While price-earnings ratio and market turnover were poles apart. The dissertation think that the ratio of companies to pop, equity issues to GFCF and stock market cap to GDP were lower than other counties' in samples should attribute to government's regulation measures to market planned economy, external conditions of bubble expanding such as strictly control enterprise financing, forbid short selling, when stock market had bubbles.Institutional factors didn't result in bubbles directly. Government's regulation only restricted rational market players' arbitrary action correcting pricing mistakes. This dissertation challenged prevailing equity split theory, and suggest using investment theory of "manipulate game" to explain china stock market bubbles and abnormal. The author also analyzed bubbles' forming and devastating mechanism in china stock market.Along with transition went deeply, state-owned capital withdraw competitive area largely. While planned economy characteristic of equity market request that state-owned equity can't been split and trade-off. Thus ordinarily investors can't attach themselves to "state-owned capital withdrawal", which made supply of state-owned capital had withdraw from market exceeds demand heavily. Under this market condition and deputy transition's institution of state-owned capital, market price of state-owned capital transition depends on transfer...
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