Improve The Efficiency Of The Stock Market To Solve The Problem Of State-owned Shares In Circulation

It has been believed since long ago that Chinese stock market is severely affected by the government policy, and hence quite a few man-made problems in this market. At the beginning of 2001, the stock market responded the government plan of decreasing state-owned shares with a steep slump and a debate broke out among Chinese economists on the contradictions in and the future of the Chinese stock market. Neither the government nor the investors want to see the collapse of the market, however its recovering lies to the settlement of the problems.In Chinese stock market, the major problem should be the wrong ideology of the government, who is performing the role of both the organizer and manager in the stock market.I don' t mean to challenge the authority of the government in its responsibility of guiding the market, but there should be a prerequisite in the market ?the principle of equality. However, our government is taking the stock market as a tool to solve the difficulties of the state-owned enterprises and sometimes even purposely helping them raking in exorbitant profits. Some regulations and initiatives are thereforemaking the stock market quite ineffective.The way out in settling the historic problems of the Chinese stock market is recommended as following:- Perfecting the foundation of the stock market. The government should treat all the stakeholders equally.- Properly solving the problem on the circulation of the state-held shares. The nut to be cracked lies in how to confirm the price of state-held shares.- Making practical and effective measures to create a favorable environment gradually. All the stakeholders will have to observe the market economy laws.The article focuses on how to realize the circulation of state-held shares and trying to work out a price formula for the government to decrease the state-held shares.