Research On Some Issues Of Direct Financing Market Development In China

With the reform and opening policy being thoroughly carried out, China’seconomic construction has made great achievements; the socialist market economicsystem has been established. We successfully coped with the impacts of theinternational financial tsunami, and took the opportunity to accelerate the economictransformation. However, the unbalanced development of financial market is stillsignificant in China, the slow developing of direct financing market being one of themost remarkable problems.After the reform and opening up, China has made great achievements in theconstruction of the financial market system; the proportion of direct financing hasbeen improving stably. But compared with other countries, the development level ofChina’s direct financing market is still rather low, and the multi-level capital markethas not been fully established, which causes a series of problems. This is not onlyunfavorable to the reform and development of the financial market, but also notconducive to the development of the real economy through financial support.Therefore the Third Plenary Session of the Eighteenth Central Committee of theCPC proposed the strategic deployment of raising the proportion of direct financing,and put forward such measures as improving the multi-level capital market,promoting the reform of stock issuing and registration, adding channels to promoteequity investment, and standardizing the bond market. China’s direct financingmarket has been growing rapidly ever since.After a brief account of the research background and significance, this articlesystematically introduces the related theoretical background. Through a comprehensive analysis of the experience and lessons of the development practice ofdomestic and foreign capital markets, especially the direct financing markets, thisarticle gives some countermeasures and suggestions on the healthy development ofChina’s direct financing market, especially on how it can better serve the small andmedium sized enterprises and the real economy. The suggestions include improvingthe formal equity financing market, vigorously developing the risk investment,standardizing and improving the informal equity financing market, strengthening thereform and innovation of financial industry, and expanding direct financing channelsfor small and medium enterprises. In the meanwhile, the construction of directfinancing of SMEs is a complicated systematic project; to implement it, somesupport system is needed.